Published in La Tribune, on June 16, 2026
Since the early 2020s, electricity demand linked to investments in data centers (DCs) has accelerated. The International Energy Agency (2025) forecasts that upcoming massive investments in DCs will increase their share of global electricity demand to approximately 4.4% of GDP by 2030, three times the 2024 level. In Ireland, CD-based power plants already consume 20% of the electricity generated, and the figure is 25% in the U.S. state of Virginia.
This projected sharp rise in electricity demand could lead to a significant increase in prices in many countries while waiting for generation capacity to expand sufficiently to meet the needs of new entrants. However, building a data center takes one to three years depending on its size, while it takes between three and ten years—or even longer—to build the additional grid capacity needed to power it. This explains why, in several U.S. states, electricity prices are higher in areas with a high concentration of DCs (see Abecasis and Wei , 2026).
Demand Shock and Regulation of the Electric Power Industry
These price hikes are provoking hostile reactions from residents and certain political leaders. To address this, regulation in the electricity sector must be updated to ensure smoother integration of DCs as a new major consumer. Maintaining the sector’s current price regulation is no longer an option for many countries that plan to host massive DCs in the near future. Regulatory adjustments are necessary and will need to evolve to distinguish between incumbent users and new large-scale users.
Regulation has begun to adapt, albeit slowly. In the United States, for example, growing public outcry over electricity price hikes observed in the midst of an election year led President Trump to sign an agreement with seven Bigtech—Amazon, xAI, Oracle, Microsoft, Meta, Google, and OpenAI. They agree “to build, bring or buy new power to support their DCs in order to prevent higher electricity costs for consumers”.
However, this solution will not be applicable everywhere because not all leaders share the same view on how to absorb the demand shock. In Asia, for example, there is a clear desire to actively manage electricity prices to attract CD projects. In many Asian countries, CD projects benefit from an average 7% discount on grid tariffs compared to a standard industrial user (see Wood-MacKenzie, 2025). In Africa, policymakers are seeking to ensure that CDs will accelerate investment in the electricity sector and that this will allow for the sharing of infrastructure investment costs with new entrants, which will ultimately reduce the cost per kilowatt-hour for residential and commercial customers (see Africa Energy Chamber, 2025). DCs are therefore expected to help accelerate investment in power generation.
Heterogeneity of Data Center Host Countries
The debate on the optimal adjustment of electricity price regulation is just beginning, and it is likely to become increasingly difficult to gain political acceptance if authorities delay in addressing its technical nuances and the characteristics of the energy markets they are supposed to regulate. Country- and context-specific analyses will be necessary, as the arrival of a data center in a region where part of the population does not yet have access to electricity will require a different regulation than in countries where the entire population is supplied. The foreseeable short-term price increases conceal different challenges and therefore require targeted rather than generic adjustments.
That said, the main message from the recent electricity price hikes attributable to DCs in several countries—and the political debates they fuel—is that, without regulatory adjustments, incumbent users, and in particular the most disadvantaged, will often lose out in terms of price and access to electricity supply.
It’s not just households. Commercial and industrial electricity consumers are also affected. Authorities will need to account for the indirect effects of retail price increases for goods and services attributable to rising energy costs while waiting for the regulation to adapt. Not only do these increases have a direct impact on household purchasing power, but households are also affected by job losses associated with rising production costs for electricity-consuming businesses.
Negotiations between the CD and the electricity regulator
While debates regarding the effects of the growth of Artificial Intelligence focus on the medium-term replacement of humans by machines, short-term impacts such as those discussed here are often overlooked. We believe the short-term social impact of the transition to new sector regulation is significant enough that the debate on how to minimize it should be placed on the agenda of politicians and authorities responsible for the electricity sector.
The entry of a new massive electricity consumer such as a DC will not be socially and politically manageable everywhere. In some regions, the social and political risks of the transition will not be offset by the potential long-term benefits of DCs. In others, the arrival of DCs will be a sound investment. But without an objective and comprehensive assessment that takes into account the economic, financial, and social risks of the transition, the arrival of DCs and the political pressure they exert will bring their share of tensions, such as those observed in the U.S. and several European countries.
In the short term, in countries where the introduction of CD is considered desirable, the rapid implementation of a new regulation for the electricity sector has a role to play in managing the transition and reducing the risk of supply shortages. Its effectiveness will depend on how and how quickly the authorities establish new pricing rules for the sector. It will also depend on the bargaining power of CD owners in their interactions with regulators and electric utilities. In the longer term, in most of these countries, it will often be rational for authorities to ensure that CD companies invest in and finance their own electricity (and water) supply needs. This will protect residential and commercial electricity users, particularly those most exposed to the risks of price increases, and thus, of course, the least affluent.
Photo: İsmail Enes Ayhan Unsplash
