On the predictability of the effects of data centers electricity demand shocks

Claude Crampes and Antonio Estache

No 2026-08, Working Papers ECARES from ULB -- Universite Libre de Bruxelles

Abstract: The paper shows that the entry of data centers in the electricity market leads to priceand consumption effects observed in the real world that were quite predictable froma simple conceptual modelling exercise. The size of the associated welfare losses issensitive to specific electricity market characteristics, explaining why they are oftennot comparable across regions or countries. In general, the historical users are likelyto be worse off in the short run. They will recover their losses in the longer run, butonly if the entrant finances its own capacity needs and if the data centers do not haveexcessive bargaining power. The differences in possible outcomes according to contextsuggests that one-size-fits-all policies to manage the shock across countries or regionswill fail to mitigate undesirable effects in some contexts.

Keywords: Data centers; Electricity; Pricing; Regulation; Incidence (search for similar items in EconPapers)
JEL-codes: D63 L16 L50 L94 O33 Q41 Q48 (search for similar items in EconPapers)
Pages: 29 p.
Date: 2026-03-15
New Economics Papers: this item is included in nep-ene and nep-reg
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Related works:
Working Paper: On the predictability of the effects of data centers electricity demand shocks (2026)
Working Paper: On the predictability of the effects of data centers electricity demand shocks (2026)
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