Demographics & Culture
Categories
Chart in Focus
AI supercharges rise in electricity prices
Andre Meade
October 29, 2025
Residential electricity prices in the U.S. recently reached a record high amid the AI data centre gold rush, raising concerns around energy supplies and the cost burden for consumers.
Rising prices also stem from tightness in power markets and the massive costs to upgrade and expand aging electricity infrastructure. The average price of electricity in the U.S. touched 19 cents per kilowatt hour in August of 2025, according to the U.S. Bureau of Labor Statistics, compared to about 14 cents in August 2015.
U.S. electricity bills surge as data centres expand
Source: U.S. Bureau of Labor Statistics, U.S. Federal Reserve Bank of St. Louis. Data from September 1, 2015, to September 1, 2025. As of October 24, 2025.
Power demand is growing for the first time in close to 20 years, which is helping raise electricity prices. Various utility firms are positioning themselves to benefit from the data centre boom.
“The power generation industry is entering a bull market driven in part by AI’s growth,” says utilities analyst Andre Meade. “Electricity demand is expected to increase materially if the AI boom continues adding a tailwind to the overall utility sector.”
Independent power producers (IPPs) such as U.S.-based Constellation Energy, Vistra and NRG Energy benefit from higher power prices and volatility. They are deregulated and sell electricity at market rates. IPPs produce power through a diverse set of sources and have been tapped by AI hyperscalers such as Meta and Amazon to secure their energy needs.
Regulated utilities including Entergy, Southern Company and NiSource do not benefit directly from surging electricity prices. However, the large investments needed to upgrade and expand grid infrastructure may drive earnings higher. Companies producing grid-enhancing technologies and energy resource management systems, including Schneider Electric and Hitachi, are also integral to the ongoing power boom.
Along those lines, the S&P 500 Utilities Index is projected to post the second highest earnings growth among all S&P 500 sectors in the third quarter, based on consensus estimates compiled by FactSet. Moving forward, double-digit earnings growth is expected for three of the next four quarters, according to FactSet. The S&P 500 Utilities Index has posted a total return of 24% year to date, versus the S&P 500 at 18%, as of October 27, 2025.
Looking ahead, other factors are set to drive electricity demand, including the rapid expansion of semiconductor manufacturing and the wider adoption of electric vehicles. While AI spending remains the dominant force, any slowdown in investment could temper electricity demand, leading to price volatility. As companies assess their long-term energy needs, periods of fluctuation should not surprise investors.
Learn more about
The S&P 500 Utilities Index comprises those companies included in the S&P 500 that are classified as members of the Global Industry Classification Standard (GICS®) utilities sector.
Our latest insights
-
-
-
Economic Indicators
-
U.S. Equities
-
Economic Indicators
RELATED INSIGHTS
-
-
Economic Indicators
-
Chart in Focus
Commissions, trailing commissions, management fees and expenses all may be associated with investments in investment funds. Please read the prospectus before investing. Investment funds are not guaranteed or covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer. For investment funds other than money market funds, their values change frequently. For money market funds, there can be no assurances that the fund will be able to maintain its net asset value per security at a constant amount or that the full amount of your investment in the fund will be returned to you. Past performance may not be repeated.
Unless otherwise indicated, the investment professionals featured do not manage Capital Group‘s Canadian investment funds.
References to particular companies or securities, if any, are included for informational or illustrative purposes only and should not be considered as an endorsement by Capital Group. Views expressed regarding a particular company, security, industry or market sector should not be considered an indication of trading intent of any investment funds or current holdings of any investment funds. These views should not be considered as investment advice nor should they be considered a recommendation to buy or sell.
Statements attributed to an individual represent the opinions of that individual as of the date published and do not necessarily reflect the opinions of Capital Group or its affiliates. This information is intended to highlight issues and not be comprehensive or to provide advice. For informational purposes only; not intended to provide tax, legal or financial advice. Capital Group funds are available in Canada through registered dealers. For more information, please consult your financial and tax advisors for your individual situation.
Forward-looking statements are not guarantees of future performance, and actual events and results could differ materially from those expressed or implied in any forward-looking statements made herein. We encourage you to consider these and other factors carefully before making any investment decisions and we urge you to avoid placing undue reliance on forward-looking statements.
The S&P 500 Composite Index (“Index”) is a product of S&P Dow Jones Indices LLC and/or its affiliates and has been licensed for use by Capital Group. Copyright © 2025 S&P Dow Jones Indices LLC, a division of S&P Global, and/or its affiliates. All rights reserved. Redistribution or reproduction in whole or in part are prohibited without written permission of S&P Dow Jones Indices LLC.
FTSE source: London Stock Exchange Group plc and its group undertakings (collectively, the "LSE Group"). © LSE Group 2025. FTSE Russell is a trading name of certain of the LSE Group companies. "FTSE®" is a trade mark of the relevant LSE Group companies and is used by any other LSE Group company under licence. All rights in the FTSE Russell indices or data vest in the relevant LSE Group company which owns the index or the data. Neither LSE Group nor its licensors accept any liability for any errors or omissions in the indices or data and no party may rely on any indices or data contained in this communication. No further distribution of data from the LSE Group is permitted without the relevant LSE Group company's express written consent. The LSE Group does not promote, sponsor or endorse the content of this communication. The index is unmanaged and cannot be invested in directly.
BLOOMBERG® is a trademark and service mark of Bloomberg Finance L.P. and its affiliates (collectively “Bloomberg”). Bloomberg or Bloomberg’s licensors own all proprietary rights in the Bloomberg Indices. Neither Bloomberg nor Bloomberg’s licensors approves or endorses this material, or guarantees the accuracy or completeness of any information herein, or makes any warranty, express or implied, as to the results to be obtained therefrom and, to the maximum extent allowed by law, neither shall have any liability or responsibility for injury or damages arising in connection therewith.
The MSCI information may only be used for your internal use, may not be reproduced or redisseminated in any form and may not be used as a basis for or a component of any financial instruments or products or indices. None of the MSCI information is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such. Historical data and analysis should not be taken as an indication or guarantee of any future performance analysis, forecast or prediction. The MSCI information is provided on an “as is” basis and the user of this information assumes the entire risk of any use made of this information. MSCI, each of its affiliates and each other person involved in or related to compiling, computing or creating any MSCI information (collectively, the “MSCI Parties”) expressly disclaims all warranties (including, without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall any MSCI Party have any liability for any direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits) or any other damages. (www.msci.com)
Capital believes the software and information from FactSet to be reliable. However, Capital cannot be responsible for inaccuracies, incomplete information or updating of the information furnished by FactSet. The information provided in this report is meant to give you an approximate account of the fund/manager's characteristics for the specified date. This information is not indicative of future Capital investment decisions and is not used as part of our investment decision-making process.
Indices are unmanaged and cannot be invested in directly. Returns represent past performance, are not a guarantee of future performance, and are not indicative of any specific investment.
All Capital Group trademarks are owned by The Capital Group Companies, Inc. or an affiliated company in Canada, the U.S. and other countries. All other company names mentioned are the property of their respective companies.
Capital Group funds are offered in Canada by Capital International Asset Management (Canada), Inc., part of Capital Group, a global investment management firm originating in Los Angeles, California in 1931. Capital Group manages equity assets through three investment groups. These groups make investment and proxy voting decisions independently. Fixed income investment professionals provide fixed income research and investment management across the Capital organization; however, for securities with equity characteristics, they act solely on behalf of one of the three equity investment groups.
The Capital Group funds offered on this website are available only to Canadian residents.