Data Centers Are Concentrated in a Handful of States, and Here’s What’s Happening to Electricity Prices

In the era of AI-driven innovation and cloud computing dominance, data centers have become the unsung powerhouses of the digital economy. But this boom comes at a cost—literally. Concentrated in just a few states, these massive facilities are guzzling electricity like never before, driving up prices for everyday consumers. As we head into the 2026 midterms, Democrats appear to be positioning high energy costs as a key campaign issue, even as the root causes often trace back to policies in Democrat-led states. Let’s break down the data, the impacts, and the political undercurrents.

Where the Data Centers Are Clustering

The United States hosts the world’s largest concentration of data centers, but they’re not evenly distributed. Virginia leads the pack with the highest number globally, thanks to its proximity to Washington, D.C., and robust infrastructure. Texas follows closely with over 400 facilities, leveraging its independent grid for rapid expansions. California ranks third, benefiting from tech hubs in Silicon Valley and beyond.

Other notable states include Illinois and Ohio, part of the PJM Interconnection grid, which has seen explosive growth in data center demand. These facilities aren’t small operations—they can consume a gigawatt or more of power, equivalent to the electricity needs of over 800,000 homes or an entire mid-sized city.

This concentration is driven by factors like grid reliability, tax incentives, and access to fiber optics, but it’s straining local utilities.

The Price Surge: State-by-State Breakdown

The energy appetite of data centers is directly translating to higher electricity bills, with variations by state. Nationally, residential electricity prices rose about 6% year-over-year as of August 2025.

But in states heavy with data centers, the hikes are often steeper:Virginia: Prices surged 13%, far outpacing the national average. As the data center capital, Virginia’s PJM grid is under immense pressure, with costs passed directly to consumers through capacity charges.
Illinois: A whopping 16% increase, the highest among top data center states. Illinois, another PJM member, is seeing utilities scramble to meet demand.

Ohio: Up 12%, also tied to PJM dynamics, where data center loads are blamed for two-thirds of recent capacity price jumps.
Texas: A more modest 4% rise, below the national average, thanks to ERCOT’s flexible market that allows quicker supply additions.
California: Only a 1% uptick, well below average, possibly due to aggressive renewable mandates and pricing controls, though long-term sustainability remains questionable.

Experts predict utility bills won’t decline this decade due to tight supply-demand balances.

In Texas and California, more market-oriented or regulated approaches have tempered hikes, but PJM’s structure—common in Democrat-leaning or swing states—allows costs to flow more directly to households.

The Political Storm Brewing for 2026 Midterms

As winter heating bills loom, voter frustration over these price spikes is palpable, setting the stage for the 2026 midterms.