Current Crisis

Electricity prices have been rising faster than overall inflation. A report from Lawrence Berkeley National Laboratory (LBNL) indicates that while retail electricity prices historically rose at a moderate rate, recent increases have been more substantial. Over the last five years, the electricity component of the US Consumer Price Index (CPI) rose at a 6.6% CAGR over the last five years versus 4.6% for the overall inflation index. The increase is notable, especially in the context of overall energy deflation as a result of decreasing prices for energy sources like oil and gasoline.

Increased demand from AI datacenters coupled with the broader electrification trend and the need to modernize the grid are likely to push power prices up further in the near future. According to LBNL, datacenter power consumption had already increased to 4.4% of total US electricity consumption in 2023, up from just 1.9% in 2018. Given the accelerated spending plans for power-hungry datacenters, it is likely that electricity consumption will grow at an even faster pace over the next five years and that is even excluding the impact of climate change on grid demand.

Source: US Bureau of Labor Statistics, Bloomberg, July 2025.