NASHVILLE, Tenn. (WSMV) – Home power bills are feeling the impact of data centers opening across Tennessee communities, according to a new report from ThinkTennessee.

Researchers found electricity usage has increased by more than 7.2 times over the past five years as data centers opened in the Tennessee Valley region. Areas with data centers saw average power bills rise more than the state average, but the increase was not distributed evenly among customers in those areas.

“Tennessee’s data center growth is arriving faster than the rules designed to manage that growth,” research director Chris Candelaria said. “Our report isn’t saying whether data centers are good or bad. Instead, we’re trying to highlight the issues that communities and policymakers need to know about.”

Residential customers hit harder than businesses

Residential customers in communities with data centers saw their bills jump 3.2 percent, to an average of $149 a month, between 2023 and 2024, the report found.

During that same period, commercial customers, including data centers themselves, saw their bills slightly decrease. By comparison, the statewide average power bill over the same period increased 1.3 percent.

Candelaria said the findings are tied directly to where the data centers are located and signal what may be ahead for the rest of the state.

“Residents seeing these higher prices and that’s associated with where the data centers are located,” Candelaria said. “We know that the data centers are coming, and the report’s really just forecasting that this situation may play out in more places across the state. This is an issue that city and community leaders will need to address directly.”

He said the trend warrants close attention, but stopped short of drawing firm conclusions in their report based on the data analyzed.

Tennessee emerges as a data center hub

The report, titled “Powering the Boom,” describes Tennessee as an emerging data center market that has likely not yet seen the full scale of potential growth. For roughly 15 years, the state’s electricity consumption was essentially flat or declining before the current surge began around 2020.

Data center facilities planned, operating or under construction in Tennessee represent approximately 2,177 megawatts of demand capacity which is roughly equivalent to powering more than 1.3 million homes for a year. Those facilities are concentrated in and around Memphis, Nashville and Knoxville.

Grid strain, costly outages a concern

Candelaria said the study drew on data from across the country to examine how data centers are already affecting communities and what Middle Tennessee should plan for.

“As we get requests for more data centers, there’s an issue with how is that going to affect our current grid infrastructure? This is the key question,” Candelaria said. “We also provide in the report some studies from other states. If you over-strain the system, what does that mean? Well, it could lead to costly outages. We’re just trying to think strategically.”

Alex Kardokus is among the more than 500,000 people who signed a petition against a proposed data center near the Nashville Zoo. He said his concerns have since expanded to the broader impact data centers could have across the city after learning about this report.

“NES, we don’t want that (bill) to go higher because it’s already expensive in Nashville. Don’t want that to be a raising,” Kardokus said.

Policy seen as key to managing growth

Candelaria said policies, including data center zoning restrictions Metro Council is currently working on, will be key to protecting families from further cost increases. He said the decisions made now will shape whether the growth benefits or burdens Tennessee residents.

“The policy choices that we make now on pricing and grid planning will determine whether that growth is going to strengthen the state’s economy or whether that’s going to shift costs onto everyday households,” Candelaria said.

He added that the situation requires a balancing act, as data centers also bring jobs and economic opportunities to the communities where they operate.

ThinkTennessee said a second installment of the “Powering the Boom” series is expected to lay out policy options aimed at protecting ratepayers while the sector continues to grow.