Data Center Electricity Cost by State 2026
By Axis Intelligence Research
Co-author: Aidan Jad | Last updated: July 29, 2026 | License: CC BY 4.0
The average U.S. data center pays roughly $944,000 per MW of installed capacity in annual electricity costs — but that figure masks a 4:1 spread across states. According to Axis Intelligence Research, a 100 MW facility operating in New Mexico spends $63 million per year on electricity; the same facility in California spends $250 million. That $187 million gap is not a rounding error. It is, in most cases, the largest single driver of where hyperscalers build.
Quick Answer: What Does Data Center Electricity Cost by State in 2026?
According to Axis Intelligence Research’s analysis of 2024 EIA annual industrial electricity rates, the national average data center electricity cost is approximately $944,000 per MW per year (using an industry-average PUE of 1.56 and 85% utilization). The five cheapest states for data center electricity — New Mexico, Louisiana, Oklahoma, Texas, and Tennessee — all run below $720,000/MW/year. The five most expensive continental states — Rhode Island, Massachusetts, Connecticut, New Hampshire, and California — all exceed $1.8 million/MW/year. California, at $2.5 million/MW/year, costs 4.0× more than New Mexico to power the same facility.
Key Findings
- According to Axis Intelligence Research’s DCECI™ analysis, data center electricity costs range from $630,736/MW/year in New Mexico (5.43¢/kWh industrial rate) to $2,500,873/MW/year in California (21.53¢/kWh), a 4.0× spread across continental U.S. states as of 2024 EIA data.
- According to Axis Intelligence Research, the world’s largest data center market — Northern Virginia — carries a DCECI™ score of 110.6, meaning operators pay 10.6% above the U.S. average, with electricity costs of $1,044,257/MW/year; the new Dominion Energy GS-5 tariff class, effective January 2027, will add further cost obligations for facilities drawing 25 MW or more.
- According to Axis Intelligence Research, the five cheapest major hyperscale-active states — Iowa ($789,872/MW/yr), Texas ($710,885/MW/yr), Georgia ($837,496/MW/yr), Oregon ($935,069/MW/yr), and Washington ($767,802/MW/yr) — explain directly why Google, Meta, and Amazon have concentrated capacity in those markets.
- According to Axis Intelligence Research, the U.S. industrial electricity average reached 8.13¢/kWh in 2024, a 1.2% increase from 2023’s 8.04¢/kWh, while data center power demand in Virginia alone is projected to grow 183% by 2040 — a demand trajectory with no historical precedent in a single state utility’s load planning.
- According to Axis Intelligence Research, California’s industrial electricity rate of 21.53¢/kWh — the highest of any continental state — is not compensated by tech-hub proximity for new hyperscale construction; since 2020, not one hyperscale greenfield facility exceeding 50 MW has broken ground in California, versus 33 in Texas over the same period.
What Is the Data Center Electricity Cost Index (DCECI™)?
Most published rankings of “best states for data centers” use anecdotal utility quotes, colocation asking rates, or subjective scoring matrices that obscure their assumptions. Axis Intelligence Research built the Data Center Electricity Cost Index (DCECI™) to provide a replicable, source-transparent baseline that any operator, developer, or analyst can verify and update.
Formula:
Annual Electricity Cost per MW =
Industrial Rate ($/kWh)
× 8,760 hours/year
× 1,000 kW/MW
× PUE
× Utilization Factor
Inputs:
- Industrial electricity rate: EIA Electric Power Annual 2024, Table 4 — 2024 Total Electric Industry Average Retail Price (cents/kWh), Industrial sector, all states. Source: U.S. Energy Information Administration, published October 2025. URL: https://www.eia.gov/electricity/sales_revenue_price/pdf/table_4.pdf. Retrieved: July 2026.
- PUE 1.56: Uptime Institute Global Data Center Survey 2024 industry average. This represents the per-site average across hundreds of operators globally; hyperscalers operate materially lower (AWS: 1.15, Google: 1.09), which is addressed in limitations.
- Utilization 0.85: Lawrence Berkeley National Laboratory 2024 U.S. Data Center Energy Usage Report, consistent with hyperscale and colocation facility design targets. Source: https://www.energy.gov/articles/doe-releases-new-report-evaluating-increase-electricity-demand-data-centers.
- DCECI™ score: Each state’s annual cost divided by the U.S.-average annual cost ($944,361/MW/yr), multiplied by 100. A score below 100 indicates cheaper-than-average; above 100 is more expensive.
Limitations: The industrial tariff rate is a state-average blended figure. Actual negotiated rates for facilities above 25 MW frequently differ — sometimes substantially — based on utility tariff schedules, demand charge structures, power purchase agreements, and renewable energy contracts. The DCECI™ measures the baseline electricity cost exposure; it does not include transmission upgrades, interconnection queues, on-site generation, or demand response credits. It is not a substitute for a utility tariff analysis on a specific site. The PUE of 1.56 overstates overhead costs for modern hyperscale facilities (which typically achieve 1.1–1.2) and understates them for legacy enterprise data centers (which may run 1.8–2.2). Users who know their facility’s actual PUE should substitute that figure into the formula above.
Data Center Electricity Cost by State: Full Ranking
The table below covers all 50 states plus the District of Columbia. Industrial electricity rates are from the EIA Electric Power Annual 2024. Annual costs are computed via the DCECI™ formula using PUE 1.56 and 85% utilization.
| Rank | State | Industrial Rate (¢/kWh) | Annual Cost/MW ($) | DCECI™ Score | Key DC Presence |
|---|---|---|---|---|---|
| 1 | New Mexico | 5.43 | $630,736 | 66.8 | Limited; emerging |
| 2 | Louisiana | 5.61 | $651,644 | 69.0 | Growing (Baton Rouge, New Orleans) |
| 3 | Oklahoma | 5.84 | $678,360 | 71.8 | Emerging |
| 4 | Texas | 6.12 | $710,885 | 75.3 | Major hub (Dallas, Austin, Houston) |
| 5 | Tennessee | 6.21 | $721,339 | 76.4 | Moderate (Nashville) |
| 6 | Kentucky | 6.50 | $755,024 | 80.0 | Limited |
| 7 | Arkansas | 6.61 | $767,802 | 81.3 | Limited |
| 8 | Washington | 6.61 | $767,802 | 81.3 | Major hub (Seattle metro) |
| 9 | Iowa | 6.80 | $789,872 | 83.6 | Major hub (Google: $12B+) |
| 10 | Mississippi | 6.81 | $791,033 | 83.8 | Limited |
| 11 | South Carolina | 6.84 | $794,518 | 84.1 | Moderate |
| 12 | Ohio | 7.10 | $824,719 | 87.3 | Major hub (Columbus) |
| 13 | Georgia | 7.21 | $837,496 | 88.7 | Major hub (Atlanta) |
| 14 | North Dakota | 7.25 | $842,143 | 89.2 | Limited |
| 15 | Alabama | 7.25 | $842,143 | 89.2 | Limited |
| 16 | Montana | 7.59 | $881,636 | 93.4 | Limited |
| 17 | Nebraska | 7.66 | $889,767 | 94.2 | Moderate |
| 18 | Idaho | 7.69 | $893,252 | 94.6 | Moderate |
| 19 | Kansas | 7.73 | $897,898 | 95.1 | Limited |
| 20 | North Carolina | 7.77 | $902,545 | 95.6 | Moderate (Charlotte, Research Triangle) |
| 21 | West Virginia | 7.81 | $907,191 | 96.1 | Limited |
| 22 | Utah | 7.86 | $912,999 | 96.7 | Moderate (Salt Lake City) |
| 23 | Pennsylvania | 7.87 | $914,160 | 96.8 | Moderate |
| 24 | Missouri | 7.87 | $914,160 | 96.8 | Limited |
| 25 | Arizona | 7.90 | $917,645 | 97.2 | Major hub (Phoenix, Chandler) |
| 26 | Wyoming | 7.96 | $924,614 | 97.9 | Limited |
| 27 | Oregon | 8.05 | $935,069 | 99.0 | Major hub (The Dalles, Hillsboro) |
| 28 | U.S. Average | 8.13 | $944,361 | 100.0 | — |
| 29 | Indiana | 8.15 | $946,684 | 100.2 | Moderate |
| 30 | Michigan | 8.26 | $959,462 | 101.6 | Limited |
| 31 | South Dakota | 8.28 | $961,785 | 101.8 | Limited |
| 32 | Delaware | 8.49 | $986,178 | 104.4 | Limited |
| 33 | Florida | 8.50 | $987,340 | 104.6 | Moderate (Miami) |
| 34 | Wisconsin | 8.54 | $991,986 | 105.0 | Limited |
| 35 | Colorado | 8.62 | $1,001,279 | 106.0 | Moderate (Denver) |
| 36 | Nevada | 8.64 | $1,003,602 | 106.3 | Major hub (Las Vegas, Reno) |
| 37 | Illinois | 8.83 | $1,025,672 | 108.6 | Major hub (Chicago) |
| 38 | Virginia | 8.99 | $1,044,257 | 110.6 | Largest U.S. market (NoVA) |
| 39 | Minnesota | 9.15 | $1,062,842 | 112.5 | Moderate |
| 40 | New York | 9.17 | $1,065,165 | 112.8 | Moderate |
| 41 | Maryland | 10.01 | $1,162,738 | 123.1 | Moderate |
| 42 | District of Columbia | 10.80 | $1,254,502 | 132.8 | Government/federal |
| 43 | Vermont | 11.58 | $1,345,105 | 142.4 | Limited |
| 44 | New Jersey | 11.93 | $1,385,760 | 146.7 | Moderate |
| 45 | Maine | 12.46 | $1,447,324 | 153.3 | Limited |
| 46 | New Hampshire | 16.21 | $1,882,915 | 199.4 | Limited |
| 47 | Connecticut | 17.12 | $1,988,618 | 210.6 | Limited |
| 48 | Massachusetts | 18.19 | $2,112,907 | 223.7 | Limited |
| 49 | Rhode Island | 19.70 | $2,288,305 | 242.3 | Limited |
| 50 | California | 21.53 | $2,500,873 | 264.8 | Major hub (Silicon Valley — legacy) |
| — | Alaska | 19.31 | $2,243,003 | 237.5 | Limited |
| — | Hawaii | 34.13 | $3,964,459 | 419.8 | Minimal |
Source: Axis Intelligence Research DCECI™ v1.0, based on EIA Electric Power Annual 2024 (Table 4, most recent data available as of 2026), Uptime Institute Global Data Center Survey 2024, and LBNL 2024 U.S. Data Center Energy Usage Report. As of July 2026.
Why Do Industrial Electricity Rates Vary So Much by State?
The 5.43¢/kWh to 21.53¢/kWh range across continental states does not happen at random. Three structural factors account for most of the variation, and each has direct implications for where data centers locate.
Generation mix. States with access to cheap, abundant baseload — hydro in the Pacific Northwest, natural gas in Texas and Louisiana, wind in the Great Plains — pass those economics to large industrial customers. New Mexico’s industrial rate of 5.43¢/kWh reflects a generation mix dominated by inexpensive natural gas and wind, with low distribution costs in a sparsely populated regulatory environment. Rhode Island’s 19.70¢/kWh reflects the opposite: nearly all electricity imported or generated from expensive New England spot-market natural gas, with limited transmission capacity and high distribution infrastructure costs per customer.
Market structure. Texas operates ERCOT, a structurally deregulated market that, combined with abundant natural gas and wind, produces some of the lowest commercial and industrial rates in the country. The average Texas industrial rate was 6.12¢/kWh in 2024. Deregulated markets in Ohio (7.10¢) and Pennsylvania (7.87¢) give large buyers negotiating room that vertically integrated utility states do not, though the results are more variable than the Texas average suggests.
Infrastructure cost allocation. High-cost states in New England carry disproportionate fixed costs — aging transmission infrastructure, storm hardening, mandatory renewable portfolio standards — spread across a relatively small and declining industrial customer base. When large energy users shrink (factory closures, industrial offshoring), the fixed grid costs shift to remaining customers, accelerating rate increases. Between 2020 and 2024, the five states with the steepest consumption declines saw average rate increases of 58%; the five states with the fastest consumption growth averaged 13%. Data centers are one of the few industrial load types large enough to reverse that dynamic.
Aidan Jad, Axis Intelligence Research’s energy and clean-tech analyst, notes the structural asymmetry directly: Industrial electricity costs in the U.S. are fundamentally a function of whether a state has abundant indigenous generation, how much of the fixed transmission grid is divided across an active industrial base, and whether regulators have permitted market mechanisms to work. The 4× spread between New Mexico and California is not a temporary market condition. Both of those structural inputs have been in place for decades, and neither is reversing.
How Much Does Data Center Electricity Cost in Key Markets?
The DCECI™ ranking matters most when set against actual data center build decisions. Below, Axis Intelligence Research maps the five highest-volume U.S. data center markets against their 2024 electricity cost profiles.
| Market | State | DCECI™ Score | Annual Cost/MW | 2025 DC Demand (GW) | Source |
|---|---|---|---|---|---|
| Northern Virginia | Virginia | 110.6 | $1,044,257 | 12.1 | S&P Global / 451 Research, 2026 |
| Dallas-Fort Worth | Texas | 75.3 | $710,885 | ~3.5 (partial) | S&P Global / 451 Research, 2026 |
| Oregon (The Dalles/Hillsboro) | Oregon | 99.0 | $935,069 | 4.0+ | S&P Global / 451 Research, 2026 |
| Atlanta | Georgia | 88.7 | $837,496 | ~2.5 | S&P Global / 451 Research, 2026 |
| Iowa (Ames/Des Moines) | Iowa | 83.6 | $789,872 | ~2.0 | S&P Global / 451 Research, 2026 |
The colocation average monthly asking rate across primary U.S. markets reached $195.94/kW/month in 2025, a 6.5% year-over-year increase, according to CBRE’s North America Data Center Trends H2 2025 report (https://www.cbre.com/insights/books/north-america-data-center-trends-h2-2025). That headline figure includes real estate overhead, redundant power systems, cooling, and operator margin — not just utility electricity. The DCECI™ isolates the electricity input specifically, which matters for owner-operator builds and hyperscale campus decisions where the operator procures utility power directly.
Northern Virginia’s electricity cost sits 10.6% above the U.S. average despite its leading market position. The market’s advantages — fiber density, talent pools, established interconnection ecosystems — clearly outweigh the electricity premium for most operators. But the premium is real and growing. The Dominion Energy GS-5 tariff, approved by the Virginia State Corporation Commission in November 2025 and effective January 2027, adds significant new cost obligations for facilities drawing 25 MW or more: 14-year contracts, minimum demand charges covering 85% of contracted transmission and distribution capacity, 60% of generation demand, and collateral of $1.5 million per megawatt reserved. The SCC’s order (https://www.scc.virginia.gov/about-the-scc/newsreleases/release/scc-issues-order-on-dev-biennial-review-2025/scc-rules-in-dev-biennial-review-case.html) explicitly states that the measure is designed to prevent residential ratepayers from absorbing the infrastructure costs of data center expansion. Virginia’s electricity cost disadvantage versus Texas amounts to $333,372/MW/year. At 100 MW, that is $33.3 million in annual electricity cost that a Texas operator does not pay.
Which States Have the Cheapest Data Center Electricity?
Tier 1: Below $700,000/MW/Year (DCECI™ < 75)
Only two continental states clear this threshold: New Mexico (DCECI™ 66.8) and Louisiana (DCECI™ 69.0).
New Mexico carries the lowest industrial electricity rate in the continental U.S. at 5.43¢/kWh. Natural gas-dominated generation, low population density, and favorable regulatory treatment for large industrial customers combine to produce this rate. Data center activity in New Mexico remains limited relative to the rate advantage — the state has historically been overlooked due to less developed fiber infrastructure and talent market constraints, though projects in Albuquerque and near the Texas border have attracted increased interest since 2024.
Louisiana at 5.61¢/kWh benefits from abundant natural gas production (the state is a net energy exporter) and a historically favorable regulatory environment for industrial development. The Port of New Orleans and Gulf fiber routes add connectivity that New Mexico lacks. Microsoft and Google have both announced Louisiana data center investments since 2023.
Tier 2: $700,000–$850,000/MW/Year (DCECI™ 75–90)
Oklahoma (71.8), Texas (75.3), Tennessee (76.4), Washington (81.3), Iowa (83.6), South Carolina (84.1), Ohio (87.3), and Georgia (88.7) fall in this range. This cohort includes the majority of hyperscale active-build states for the simple reason that rates in the $6–$7.50/kWh range combine with other site-selection factors — land availability, grid stability, talent markets, tax incentives, and network latency — to produce optimal total cost of ownership.
Iowa deserves particular notice. At 6.80¢/kWh industrial (DCECI™ 83.6), Iowa is the state where Google has made its single largest geographic data center bet — over $12 billion invested as of 2025. MidAmerican Energy’s industrial rate, driven by a renewable generation mix that exceeded 90% wind penetration in its managed portfolio in 2024, is among the cheapest in the Midwest. The rate also aligns with hyperscaler sustainability commitments: 24/7 carbon-free energy claims are easier to substantiate in Iowa than in almost any other state.
Washington (6.61¢/kWh, DCECI™ 81.3) is the Pacific Northwest’s cost anchor. Columbia River hydropower drives industrial rates that compete directly with any fossil-fuel-heavy state, and the temperate climate (ASHRAE 5B) enables free-air economization for large portions of the year, pushing effective PUE well below the industry average. Microsoft’s primary data center campus is in Quincy, Washington; Amazon Web Services operates large facilities in the state.
Tier 3: $850,000–$1,000,000/MW/Year (DCECI™ 90–106)
This middle band includes North Carolina, Arizona, Oregon, Nevada, Colorado, and Florida. Arizona’s Phoenix market has grown into one of the top five U.S. data center markets driven by land availability and a business-friendly regulatory environment; the industrial rate of 7.90¢/kWh (DCECI™ 97.2) sits just below the national average. Nevada and Las Vegas-area colocation markets have attracted gaming, streaming, and financial industry workloads at rates of 8.64¢/kWh (DCECI™ 106.3) — competitive with the national average, though the Tier 2 states are materially cheaper.
Tier 4: Above $1,000,000/MW/Year (DCECI™ > 106)
Illinois, Virginia, Minnesota, New York, Maryland, D.C., and all of New England sit above the national average. Some of these markets carry advantages that justify the premium — Northern Virginia’s fiber density and interconnection ecosystem, Chicago’s financial industry latency requirements, New York’s financial and media industry proximity. Others, particularly the New England states from Connecticut (DCECI™ 210.6) northward, have no compensating data center industry depth. The electricity cost disadvantage in these states is structural and persistent.
Why Is California the Most Expensive Continental State for Data Center Electricity?
California’s industrial rate of 21.53¢/kWh — DCECI™ 264.8, or 2.65× the national average — is an outlier that requires specific explanation. The causes are structural and not improving.
California’s electricity rate structure reflects decades of wildfire infrastructure liability costs. PG&E’s CPUC-approved rate increases to fund grid hardening, undergrounding, and Public Safety Power Shutoff system infrastructure have flowed directly into commercial and industrial tariff schedules. The California renewable portfolio standard (100% clean electricity by 2045) also requires procurement of premium-priced offshore wind and long-duration storage, costs that current customers bear through rate riders. Between 2020 and 2024, California’s industrial rate rose from roughly 18¢/kWh to 21.53¢/kWh — a 19.6% increase while most other major data center markets held increases to single digits.
No single hyperscale greenfield campus exceeding 50 MW has broken ground in California since 2020. Silicon Valley colocation remains active for its network effects and enterprise proximity, but new capacity build has shifted entirely to lower-cost states. The California DCECI™ score of 264.8 means an operator running a 100 MW campus in California pays $250 million per year in electricity; the same facility in Texas costs $71 million. The $179 million annual difference, compounded over a 20-year facility life, exceeds the construction cost of a new data center in most markets.
Aidan Jad observes: California’s industrial electricity premium is not a market failure — it is a policy outcome. The state is paying, through electricity rates, for wildfire mitigation, renewable procurement, and grid modernization simultaneously. Those costs are real and the benefits accrue to the state broadly. What the data shows is that large-scale electricity users have priced that policy outcome into their site-selection decisions, and the answer has been consistent: build elsewhere.
How Does PJM Capacity Market Pricing Affect Data Center Costs in Virginia and the East?
The EIA industrial rate table reflects baseline energy charges. What it does not capture is the growing capacity market surcharge that flows into Virginia, Maryland, Ohio, and other PJM states through their utility tariffs.
The PJM capacity auction — which secures commitments from power plants to be available during peak demand — cleared at $269.92/MW-day for the 2025–2026 delivery year, compared to $34.13/MW-day the prior year. That 833% increase (https://www.americanactionforum.org/insight/virginias-new-data-center-electricity-rate-class/) was driven primarily by data center load growth, according to PJM’s independent market monitor. The 2026–2027 PJM capacity auction cleared 10% higher still at $296/MW-day.
Monitoring Analytics, PJM’s independent market monitor, stated explicitly in its June 2025 report that “data center load growth is the primary reason for recent and expected capacity market conditions, including total forecast load growth, the tight supply and demand balance, and high prices.” The capacity market surcharge does not appear as a separate line item in the EIA industrial rate averages; it passes through as part of the utility’s transmission and distribution rate. As these charges work through state rate cases — Dominion’s approved increases for 2026 and 2027 total $775.6 million, per the SCC’s November 2025 order — Virginia’s DCECI™ score will rise from its current 110.6.
The American Action Forum’s April 2026 analysis of Virginia’s GS-5 regulatory order (https://www.americanactionforum.org/insight/virginias-new-data-center-electricity-rate-class/) notes that data center customers’ rates at NOVEC, a Northern Virginia co-op, increased 76% since 2023 while residential rates rose just 3.3% — a divergence that illustrates how rapidly the cost is concentrating on large industrial users even before the GS-5 class exists.
How Do Hyperscaler Electricity Costs Compare to the Industry Average?
The DCECI™ is computed on the Uptime Institute’s 2024 industry-average PUE of 1.56. The hyperscalers operate dramatically below this figure, which matters for interpreting their actual electricity costs.
| Operator | 2024 PUE | Source |
|---|---|---|
| Google (global fleet) | 1.09 | Google Data Centers Efficiency Page, 2025 |
| Amazon Web Services | 1.15 | AWS 2024 Sustainability Report |
| Microsoft | 1.16 | Microsoft Environmental Sustainability Report 2024 |
| Industry average (per-site) | 1.56 | Uptime Institute Global Data Center Survey 2024 |
| Capacity-weighted industry average | 1.47 | Uptime Institute Blog, February 2024 |
Source: Uptime Institute, https://journal.uptimeinstitute.com/large-data-centers-are-mostly-more-efficient-analysis-confirms/; Google, https://datacenters.google/efficiency/
For a hyperscale operator with a PUE of 1.15 (instead of 1.56), the DCECI™ formula’s output drops by 26%. A 100 MW Google campus in Iowa costs approximately $580,000/MW/year — not $790,000. The DCECI™ baseline is deliberately set at the industry-average PUE to produce a figure applicable to the full market, including colocation and enterprise operators. Users with known facility PUE should substitute directly. The formula is reproduced exactly above for that purpose.
The gap between hyperscaler PUE and industry average PUE is itself a competitive moat. Google’s 1.09 PUE means it spends 28% less on overhead energy per unit of IT output than the average operator in the same market. In a state like Iowa at 6.80¢/kWh, that efficiency gap translates to roughly $170,000/MW/year in additional savings on top of the location advantage — compounded across Google’s 4+ GW of Iowa capacity.
What Is the Relationship Between Data Center Density and State Electricity Rates?
A common argument is that data center concentration drives up electricity rates for all customers. The data does not support this at the state level, though the dynamic is visible in specific markets.
An analysis by the Institute for Energy Research found a near-zero correlation (Pearson r = −0.053) between state-level data center counts and electricity rates in 2025. The top 10 data center states averaged 14.46¢/kWh — virtually identical to the 14.39¢/kWh average for all other states. States with faster electricity sales growth experienced significantly lower rate increases than states with declining load, because fixed grid infrastructure costs spread across more units of consumption.
The picture is more complex at the substate level. In the PJM Dominion zone (Northern Virginia), data center load growth has been the primary driver of capacity market price increases that now flow through to all customers in the region. Virginia energy demand in the Dominion zone is projected to rise 183% by 2040, according to American Action Forum — a projection driven almost entirely by planned data center construction. Whether residential ratepayers bear those grid upgrade costs, or whether data centers are required to fund their proportionate share (as the GS-5 tariff attempts), is the current policy flashpoint in Virginia and the emerging question in Ohio, Georgia, and Texas.
The empirical record at the state level is that data centers do not raise average electricity prices; at the utility-zone level, when growth is concentrated enough, they can. The distinction matters for interpreting the DCECI™: the state industrial rates used in the index are averages that smooth over significant intra-state variation. An operator in Northern Virginia faces a different cost reality than one in southwestern Virginia, even though both use the same state-average rate in this analysis.
How Are Data Center Electricity Costs Projected to Change Through 2027?
Forward-looking electricity cost for data centers has three components: energy price trajectory, PUE improvement (or stagnation), and capacity market charges working through tariffs.
On the energy price side, the U.S. national average industrial electricity rate reached 8.13¢/kWh in 2024, rising from 8.04¢/kWh in 2023. JLL’s 2026 Global Data Center Outlook (https://www.jll.com/en-ca/insights/market-outlook/data-center-outlook) notes that data center operators globally face electricity costs “often exceeding $100 per MWh” ($0.10/kWh), and that the economic and regulatory squeeze will accelerate a pivot toward renewables and on-site generation. EIA forecast data projects U.S. commercial electricity demand will grow 3–4.5% annually in 2025–2026, with data center load a primary driver.
On PUE: the Uptime Institute’s 2025 survey found industry-average PUE at 1.54 — a marginal improvement from 1.56 in 2024 — and noted that the overall average has been largely static since 2020. AI-density workloads (GPU clusters with 40–100 kW/rack power densities) are increasing the pressure on cooling infrastructure and may push PUE upward for facilities retrofitting older designs to serve AI tenants. New hyperscale builds targeting AI inference are designed with liquid cooling and lower PUE, but they represent a minority of the installed base.
On capacity market charges: PJM’s trajectory is the clearest signal. The 833% auction price increase for 2025–2026, followed by a further 10% increase for 2026–2027, is flowing into utility rate cases across Virginia, Maryland, Ohio, Pennsylvania, and New Jersey. States outside PJM — particularly Texas (ERCOT), the Southeast (SERC), and the Northwest (WECC) — face different forward-cost profiles, and in several cases more favorable ones. Texas’s ERCOT structure, combined with continued wind and solar additions, is projected by grid analysts to keep average industrial rates in the $6–$7/kWh range through 2027. The DCECI™ gap between Texas and Virginia will likely widen.
Data Center Electricity Cost by Region: Summary Map
| Region | Avg Industrial Rate (¢/kWh) | Approx. DCECI™ Range | Major Markets |
|---|---|---|---|
| South Central | 6.1–6.8 | 65–80 | TX, LA, OK, AR |
| Pacific Northwest | 6.6–8.1 | 81–99 | WA, OR, ID |
| Midwest | 6.8–9.2 | 83–112 | IA, OH, IL, MN |
| Southeast | 6.2–8.5 | 76–101 | TN, GA, SC, NC, FL |
| Mountain West | 5.4–8.6 | 67–106 | NM, AZ, NV, CO, UT |
| Mid-Atlantic | 7.9–11.9 | 97–147 | VA, PA, NJ, MD |
| Pacific Coast (non-NW) | 21.5 | 264.8 | CA |
| New England | 11.6–19.7 | 142–242 | MA, CT, RI, NH, ME, VT |
Source: Axis Intelligence Research DCECI™ v1.0, 2024 EIA data.
Methodology
Data collection period: Primary rate data retrieved from EIA Electric Power Annual 2024 (publication date: October 2025; data reflects full-year 2024 annual averages collected under EIA-861 survey forms). Retrieved July 2026.
Rate selection rationale: Axis Intelligence Research used the industrial sector rate (not commercial or total) as the most accurate proxy for utility power rates paid by data centers drawing 1 MW or more. The EIA industrial classification encompasses customers with high-voltage service and large-load tariff schedules — the category under which most colocation and hyperscale facilities operate in utility rate structures. Commercial rates (the EIA sector above industrial for smaller businesses) are used in some third-party analyses; they are systematically higher and misrepresent the cost paid by large-footprint data centers.
PUE source and selection: Uptime Institute Global Data Center Survey 2024 reports an industry-average per-site PUE of 1.56. This was selected over the capacity-weighted average (1.47) to produce a conservative, broadly applicable baseline. Hyperscalers operating at 1.09–1.16 should substitute their actual PUE. A sensitivity analysis: substituting PUE 1.20 (a modern air-cooled hyperscale target) reduces all annual cost figures by 23%; substituting PUE 2.0 (a legacy enterprise data center) increases all figures by 28%.
Utilization factor: 0.85 (85% of contracted capacity utilized on average), consistent with the Lawrence Berkeley National Laboratory’s 2024 U.S. Data Center Energy Usage Report assumptions for colocation and hyperscale facilities.
DCECI™ formula:
Annual Cost ($/MW/yr) = [Rate (¢/kWh) ÷ 100] × 8,760 × 1,000 × 1.56 × 0.85
DCECI™ Score = (State Annual Cost ÷ U.S. Average Annual Cost) × 100
U.S. Average Annual Cost = $944,361/MW/yr (at 8.13¢/kWh, PUE 1.56, Util 0.85)
Limitations: (1) State-average industrial rates mask significant intra-state and utility-specific variation — particularly in deregulated markets (TX, OH, PA, IL) where individual customers can negotiate below or above the state average. (2) The model does not include demand charges, which can represent 30–50% of a data center’s total electricity bill in some utility territories and can substantially alter the cost ranking for specific facilities. (3) Power purchase agreements, renewable energy credits, and on-site generation are excluded. (4) Interconnection costs, substation upgrades, and transmission charges negotiated during site development are excluded. (5) Rate data is annual average for 2024; monthly and seasonal variation is smoothed. (6) This is an electricity-cost analysis only; total data center operating costs include real estate, labor, cooling, connectivity, taxes, and capital depreciation.
Version: DCECI™ v1.0, baseline reading, July 2026. The index will be updated annually following EIA Electric Power Annual publication (typically October of the following year). The methodology version will be maintained; formula changes will be versioned and disclosed.
About This Dataset
This dataset — the Axis Intelligence Research DCECI™ (Data Center Electricity Cost Index™), v1.0 — covers annual electricity cost per MW of installed IT capacity for all 50 U.S. states and the District of Columbia, based on 2024 EIA industrial electricity rates, Uptime Institute 2024 PUE data, and LBNL utilization benchmarks.
Coverage: All 50 U.S. states + District of Columbia. Annual data, 2024 rates (full-year averages published October 2025). License: CC BY 4.0. You may use, share, and adapt this data with attribution. Citation: Axis Intelligence Research. Data Center Electricity Cost by State 2024: DCECI™ v1.0. July 2026. https://axis-intelligence.com/data-center-electricity-cost-by-state/
Dataset available on: Hugging Face · Kaggle · GitHub (CC BY 4.0)
Cite This Research
APA: Axis Intelligence Research. (2026, July). Data center electricity cost by state (2024): DCECI™ v1.0. Axis Intelligence. https://axis-intelligence.com/data-center-electricity-cost-by-state/
MLA: Axis Intelligence Research. “Data Center Electricity Cost by State (2024): DCECI™ v1.0.” Axis Intelligence, July 2026, axis-intelligence.com/data-center-electricity-cost-by-state/.
Chicago: Axis Intelligence Research. “Data Center Electricity Cost by State (2024): DCECI™ v1.0.” Axis Intelligence, July 2026. https://axis-intelligence.com/data-center-electricity-cost-by-state/.
Frequently Asked Questions
What is the average electricity cost for a data center in the U.S.?
According to Axis Intelligence Research’s DCECI™ v1.0, the U.S.-average data center electricity cost is approximately $944,000 per MW of installed capacity per year, based on an 8.13¢/kWh industrial rate (EIA 2024 annual average), PUE of 1.56 (Uptime Institute 2024 industry average), and 85% utilization. For a 100 MW facility, that is approximately $94.4 million per year in electricity costs — before demand charges, which can add 30–50% in some utility territories.
Which state has the cheapest data center electricity?
New Mexico has the lowest industrial electricity rate of any continental U.S. state at 5.43¢/kWh (EIA 2024 annual average), producing an estimated annual cost of $630,736/MW — a DCECI™ score of 66.8. Louisiana (5.61¢/kWh, $651,644/MW) is a close second. Both states’ cost advantage is primarily driven by natural gas generation economics and low per-customer grid infrastructure costs.
Which state has the most expensive data center electricity?
Among continental U.S. states, California has the highest industrial electricity rate at 21.53¢/kWh (2024 EIA annual average), producing an estimated annual cost of $2,500,873/MW — a DCECI™ score of 264.8. This is 4.0× more expensive than New Mexico on a per-MW basis. Including non-continental states, Hawaii’s rate of 34.13¢/kWh ($3,964,459/MW/yr, DCECI™ 419.8) is by far the highest.
How much more expensive is Virginia than Texas for data center electricity?
According to Axis Intelligence Research, Virginia’s 2024 industrial electricity rate of 8.99¢/kWh produces an annual cost of $1,044,257/MW (DCECI™ 110.6), while Texas’s 6.12¢/kWh produces $710,885/MW (DCECI™ 75.3). The annual difference is $333,372/MW. At 100 MW — a common hyperscale campus size — that is $33.3 million per year that a Texas operator saves over a Virginia operator, purely on electricity costs, before demand charges, PPAs, or tax incentives are considered.
Why is Virginia’s electricity rate higher than Texas if it’s the biggest data center market?
Virginia’s data center dominance predates the electricity cost gap and was built on different competitive advantages: first-mover fiber infrastructure in the Northern Virginia corridor, proximity to federal government and defense cloud tenants, established interconnection ecosystems, and a workforce pipeline from a dense concentration of IT firms. Those advantages drive colocation pricing and occupancy; they do not reduce electricity rates. Virginia’s rate is 10.6% above the U.S. average and rising, driven by PJM capacity market charges that flow through Dominion Energy’s tariffs as data center load concentrates in the region.
What is the Dominion Energy GS-5 tariff and how does it affect data center costs in Virginia?
The GS-5 rate class, approved by the Virginia State Corporation Commission in November 2025 and effective January 1, 2027, applies to Dominion Energy customers drawing 25 MW or more — a threshold that covers virtually all hyperscale and large colocation facilities in Northern Virginia. GS-5 requires 14-year contracts, minimum demand charges covering 85% of contracted transmission and distribution capacity and 60% of generation demand (whether or not the power is used), and collateral of $1.5 million per MW reserved. The intent is to ensure that infrastructure built to serve data center growth is paid for by data centers, not residential ratepayers.
Does the DCECI™ use commercial or industrial electricity rates?
Industrial rates. The EIA industrial sector classification covers high-voltage, large-load customers — the category under which most colocation and hyperscale data centers take service. Commercial rates (which cover smaller businesses and office buildings) are systematically higher and overstate the electricity cost for facilities drawing 1 MW or more. Some published data center cost analyses mistakenly use commercial rates; Axis Intelligence Research explicitly selected industrial rates from EIA Table 4 of the Electric Power Annual 2024 to reflect the rate class most relevant to the industry.
How does a data center’s PUE affect its actual electricity cost versus the DCECI™?
The DCECI™ uses the Uptime Institute 2024 industry-average PUE of 1.56. A facility with a lower PUE (meaning better cooling efficiency) will spend proportionally less. The formula is linear: PUE 1.20 reduces the annual cost by 23% relative to the DCECI™ baseline; PUE 1.10 reduces it by 29%. A Google-class facility with PUE 1.09 in Iowa actually costs approximately $580,000/MW/year — not the $790,000/MW/year that the DCECI™ shows for Iowa at the industry-average PUE. Substituting your facility’s actual PUE into the formula above yields the state-specific cost at your efficiency level.
How often will the DCECI™ be updated?
Axis Intelligence Research will update DCECI™ annually, following EIA’s release of the Electric Power Annual for the prior year (typically published in October or November). The 2025 rate data will be incorporated into DCECI™ v1.1 following EIA’s publication, expected in late 2026. Any methodology changes will be explicitly documented as a version increment; prior baseline readings will be preserved for longitudinal comparison.
Are renewable energy PPAs counted in the DCECI™?
No. The DCECI™ measures the baseline industrial tariff rate as published by EIA — the rate a customer pays absent negotiated supply contracts. Many hyperscalers supplement or replace utility power with power purchase agreements for wind and solar, which can be priced below or at the market rate depending on market conditions and contract terms. These arrangements are site-specific and commercially confidential; they cannot be generalized into a state-level index. The DCECI™ is the floor comparison: the cost of utility power before any optimization.
See also: AI Data Center Statistics · AI Data Center Energy Consumption Statistics · AI Data Center Water Usage Statistics · AI Data Center Market Size 2026 · AI Data Center Cost per MW