Frick, Natalie Mims [Lawrence Berkeley National Laboratory (LBNL), Berkeley, CA (United States)]

DOE OSTI2026

Electricity Rate Designs for Large Loads: Evolving Practices and Opportunities 2026 Update

Electricity demand from large-load customers such as data centers is projected to grow significantly in the near term. While these large loads play an important role in advancing technology innovation and economic growth in the United States, meeting their energy needs requires utilities and regulators to consider important operational and financial risks, such as insufficient energy supply or underutilized investments, that can impact all customers. This paper builds on similar research published in January 2025, providing an overview of how utilities and regulators are managing these risks through different tariffs, including rate structures and electric service agreements. Regulators, utilities, customers, and other stakeholders can use this paper as a foundation when discussing issues and sharing perspectives on developing or reviewing large-load tariffs.

24 POWER TRANSMISSION AND DISTRIBUTION↗

DOE OSTI2026

Integrating AI Data Centers with the Power Grid

The rapid expansion of artificial intelligence (AI) has triggered an unprecedented surge in electricity demand, with US data center energy use projected to double or triple 2023 levels by 2028. This exponential growth places strain on grid infrastructure, which can hinder timely construction of desired computing capacity. To bridge this supply-demand gap, utilities and AI developers are increasingly turning to demand flexibility, a strategy that incentivizes shifting or reducing power use during peak periods of grid stress. Data centers are uniquely equipped for flexible operations due to their digital workloads, built-in redundancy, and onsite energy assets. This article outlines four primary mechanisms to enable data center flexibility: computational load flexibility (shifting tasks temporally or geographically), flexible use of core facility infrastructure adjustments, energy storage utilization, and onsite electricity generation. To encourage adoption, utilities are deploying new tariff designs, including voluntary interruptible service riders, mandated flexibility requirements, and streamlined interconnection processes for flexible loads. For the highly capitalized and rapidly growing AI industry, the primary motivators for embracing these strategies are expediting facility interconnection, satisfying emerging regulatory mandates, and mitigating community resistance. While demand flexibility cannot substitute the long-term need for new bulk power generation, it serves as an essential, immediate solution for enabling near-term deployment. By transforming data centers from grid stressors into stabilizing assets, flexible operations can ensure reliable grid integration, ease market pressures, and support a resilient power system.

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