The U.S. may have a secret weapon against rising electricity prices

The United States may be able to slow rising electricity prices by better using unused grid capacity and encouraging large energy users like data centers to shift their power consumption away from peak demand periods.

Electricity prices have climbed steadily in the United States in recent years, becoming a growing concern for households and businesses alike. A large part of the cost increases stems from the way the country’s electric grid is designed and operated. The grid must be capable of meeting rare peaks in demand—such as on the hottest summer afternoons or coldest winter nights—which means utilities must build and maintain more capacity than is typically needed. That extra capacity sits idle much of the time, but its cost is still woven into consumer electricity bills. As a result, customers end up paying not just for the electricity they use, but also for the spare infrastructure required to serve occasional high peaks.

On average, much of the grid operates well below full capacity, with estimates suggesting that only a fraction of total generation capacity is used during non-peak hours. Building and maintaining the hardware that can deliver power for brief peak events drives up fixed costs for utilities. These fixed costs are passed on to consumers regardless of when or how much electricity they actually use, which keeps average electricity prices higher than the cost of energy alone would suggest. If utilities could make better use of existing capacity, the argument goes, overall prices could shrink because those fixed costs would be spread across a greater volume of electricity delivered.

At the same time, electricity demand in the United States is expected to grow in the coming years, in part because of new types of loads such as data centers and artificial intelligence computing facilities. These facilities consume enormous amounts of power around the clock for processing and cooling, and industry projections show their electricity demand rising rapidly. Traditionally, increased demand from large users like these can strain the grid, prompting costly infrastructure upgrades that further raise prices for all customers.

But some researchers and energy experts see an opportunity in the mismatch between peak grid capacity and daily usage. Instead of allowing that capacity to sit idle most of the time, they propose engaging large and flexible electricity consumers to absorb that excess capacity. The logic is simple: if data centers and similar facilities can be incentivized to use more power when demand from households is low, and dial back during peak periods, they would effectively smooth the load on the grid. That smoother profile would reduce the need for utilities to build new capacity for rare peak events and could help lower the average cost of electricity.

Under this model, data centers would not only shift their usage patterns but also partner with utilities or grid operators through demand-response programs. In such arrangements, a data center might agree to curtail its power use during just a few peak load days each year in exchange for lower overall rates or other financial incentives. Meanwhile, during times when the grid has spare capacity, the facility could draw more power, helping ensure existing infrastructure is used more fully. Economists point out that spreading fixed infrastructure costs over a larger total of consumed electricity can reduce the per-kilowatt-hour price for everyone.

Pilot programs along these lines are already being tested in some regions. Technology companies and startups are experimenting with ways to make data center energy use more dynamic, tying consumption to grid conditions and available capacity. Some utility partnerships have begun offering incentives for flexible usage, encouraging facilities to shift loads into off-peak hours or low demand windows. Early results suggest that a significant amount of unused capacity could be tapped if large users adjust their consumption patterns. Tens of gigawatts of otherwise idle capacity could be brought into more consistent use, a figure comparable to the output of numerous large power plants.

Despite the promise, there are obstacles to widespread adoption of this strategy. Some utility planners caution that demand shifting alone cannot replace the need for traditional grid upgrades, especially in areas where electricity use is growing rapidly and existing infrastructure is already nearing capacity limits. In such cases, new generation plants, transmission lines, and other investments will still be necessary to ensure reliability.

There is also skepticism about whether large tech companies and other major electricity consumers will fully participate in flexible grid programs. Data center operators often secure long-term power contracts and have the financial means to absorb higher energy costs without being motivated by marginal rate reductions. Unless incentives are substantial and well structured, some facilities may choose not to alter their operations.

Critics further argue that even if unused grid capacity is put to better use, this strategy does not fully address other major drivers of rising electricity prices. Aging infrastructure, regulatory hurdles in building new transmission lines, and the costs associated with integrating renewable energy sources continue to push up utility expenses. Modernizing the grid and expanding capacity in a way that is both cost-effective and timely remains a significant policy challenge.

Still, proponents of the flexible consumption model see it as a valuable complement to existing solutions. By making better use of what is already built, the grid could operate more efficiently, delaying or lessening the need for some infrastructure investments. This could help alleviate pressure on electricity prices while maintaining reliability. In addition, if flexible load strategies are paired with increased use of renewable energy and storage technologies, they could contribute to a more resilient and lower-emission electricity system.

Policymakers, utilities, and grid operators are watching these developments closely as demand patterns evolve. The rapid growth of data centers and other large energy users presents both challenges and opportunities for the electricity sector. If the sector can harness underused capacity and shift demand in smart ways, it may have a powerful tool to help curb rising electricity costs without compromising service reliability.

As discussions continue, the key question remains whether flexible grid usage can move beyond pilot programs and limited partnerships to become a mainstream part of U.S. energy policy. If so, it could transform a long-standing grid inefficiency into an asset that benefits consumers and contributes to a more adaptable and affordable electricity system.

Tags: electricity prices, U.S. grid, data centers, demand response, energy policy, peak demand, infrastructure costs, renewable energy, electricity bills, AI energy use, grid optimization, utility strategy, climate solutions