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Over the past year, many customers have been asking OnSwitch why their electricity bills have skyrocketed. The answer is: it’s about structural shifts in the energy system. So rising electricity bills will be a very long-term experience for most businesses in the U.S. Aside from high interest rates and inflation continuing to push up electricity bills, here we will discuss some other system-wide factors.
There are five key structural shifts at work in our nation’s energy system:
- AI Data Centers Reshaping Demand
- U.S. Natural Gas Exports
- Heat Waves Stressing Supply
- Aging Infrastructure Raising Delivery Costs
- Policy Bottlenecks Slowing New Capacity
AI Data Centers Reshaping Demand. The surge in artificial intelligence has unleashed a gold rush in data center construction, and it’s quickly becoming one of the most powerful forces driving electricity demand. These facilities are energy-intensive, often consuming 30 times more electricity than traditional data centers. By 2030, data centers are projected to require new electricity capacity equivalent of 30 nuclear reactors.
U.S. Natural Gas Exports. Natural gas powers about 40% of U.S. electricity generation, and U.S. exports of the liquefied version of that have risen by nearly a factor of seven in the past seven years. Put simply, you are now competing with the world for the same fuel—and unfortunately for you the global demand is strong with no end in sight.
Heatwaves Stressing Supply. This summer saw record-breaking temperatures across much of the country, with a “heat dome” trapping high humidity and driving peak electricity demands to national records. Air conditioning loads surged, and in many regions, utilities had to buy expensive spot-market electricity to meet demand. These record-breaking temperatures are expected to continue and rise with global warming. The cost for utilities to buy expensive spot pricing to handle these temperature surges gets socialized across their customers’ monthly bills.
Aging Infrastructure Raising Delivery Costs. The U.S. electricity grid built out largely in the 1960’s and 1970’s is now old and straining under new loads. Replacing and upgrading the grid is both essential and expensive. Delivery charges—the part of your bill that covers the poles, wires, and transformers needed to move electricity—have climbed sharply in recent years. For electricity users, that means even if fuel costs ease or demand moderates, the higher cost of maintaining and upgrading the grid will keep electricity prices rising.
Policy Bottlenecks Slowing New Capacity. Unfortunately, U.S. policy isn’t keeping up with these powerful structural shifts in our nation’s energy. The repeal of clean energy tax credits under the so-called “Big Beautiful Bill” slowed the deployment of renewables, which can be deployed and operating many years sooner than fossil fuel plants. At the same time, permitting bottlenecks have delayed new transmission and generation. Layer on top of that the electrification push—electric vehicles, heat pumps, electric appliances—and electricity demand is rising much faster than utilities can build capacity. The mismatch creates structural upward pressure on rates, regardless of any short-term market moves.
A study by CEBA (Clean Energy Buyers Association), representing one-fifth of the Fortune 500, in February 2025 projected that the repeal of clean energy tax credits would result in an average C&I electric rate increase of 10.6% nationwide in 2029 (vs a base case of continued tax credits), due primarily to constrained supply in the face of continued demand growth. Below is an excerpt of 5 states from the study:
| Increase in Average Commercial & Industrial Electricity Prices in 2029 with repeal of clean energy tax credits States with best solar economics (Nominal dollars) |
||
|---|---|---|
| State | Cents/kWh Increase | % Change |
| CA | 3.2 | 12.8% |
| IL | 3.2 | 28.8% |
| NJ | 2.8 | 19.1% |
| MD | 2.7 | 20.8% |
| AZ | 1.8 | 15.9% |
So what’s the take-away for businesses? Higher electricity bills of recent years aren’t just a fluke—they’re the new normal. The time is now to buy solar electricity from a solar system on your business’ roof or parking lot, to immediately reduce your current cost of electricity and to hedge the future rises in utility electricity in the coming decades.
