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The Forces Impacting Electricity Demand, Consumption and Pricing
- Westchester Clean Energy
- Jun 24
- 2 min read
Electricity markets are complex, shaped by regional capacity structures, state-specific supply and demand dynamics, and the varying needs of residential, commercial, and industrial users.
Many recent headlines have focused on rising residential electricity prices and the surging demand from hyperscale data centers. While, traditional commercial and industrial energy users often receive less attention—despite being integral to the broader energy ecosystem. The truth is that this is all connected, and it’s all complicated.
Split Between Industrial, Commercial, Residenital Electricity Consumption
The residential sector accounts for 35% of total U.S. electricity consumption, followed by commercial at 33% and industrial at 24%. For context, data centers (categorized under commercial use) made up about approx. 5% of total consumption in 2023.
Data centers' share of electricity consumption is expected to rise significantly, potentially reaching 10% in 2030, and easily surpassing that threshold in certain markets, such as Virginia, where data centers already consume a quarter of the power.
"Driven by AI use, the US economy is set to consume more electricity in 2030 for processing data than for manufacturing all energy-intensive goods combined, including aluminium, steel, cement and chemicals" via IEA
It's All Of The Above That's Contributing To Increasing Electricity Prices
Electricity prices are rising for many reasons. There’s no single cause.
The shift from fossil fuels to electricity for machinery, heating, and transportation is increasing overall demand. Add in the rapid growth of data centers, a rising population, an aging grid, and the challenges of balancing intermittent renewables with traditional generation.
On top of that, utilities face rising costs to meet seasonal demand peaks and the investment required for long-overdue infrastructure upgrades. All of these use cases require investment, which is why it's expected that utility bills will continue to trend upwards over the next few years.
