Tennessee households living close to data centers are paying more for electricity than their neighbors elsewhere in the state, according to a new report from the nonpartisan think tank Think Tennessee.
The report, released Tuesday, is the first installment of a two-part series examining how data centers affect Tennessee communities. Between 2023 and 2024, residents near data centers saw their electricity bills climb by an average of 3.2 percent. Commercial consumers, including the data centers themselves, actually saw a 0.2 percent decrease over the same period.
The disparity extends beyond individual households. Regions home to data centers experienced a 1.6 percent increase in electricity costs between 2023 and 2024, compared to the statewide average of 1.3 percent. Looking further ahead, Think Tennessee projects that while commercial consumers will use energy at twice the rate of residents, it’s households that will feel the sharpest price increases, an expected 5.1 percent jump between 2022 and 2027.
Tennessee has become an attractive destination for data center developers thanks to its available land, energy resources and booming tech sector. More than 60 data centers already operate across the state, and 13 are either running or under construction in Nashville alone.
That growth is reshaping the state’s energy consumption. Data centers in the Tennessee Valley region used more than 9.2 million megawatts in 2025, a sevenfold jump over five years. According to the report, the electricity needed to run Tennessee’s current, under-construction and planned data centers adds up to roughly what it would take to power 1.3 million homes annually.
The findings arrive as debate over data centers intensifies locally. Proposed projects near the Nashville Zoo and Fisk University have drawn significant attention, and roughly 150 people showed up to speak at a Metro Planning Commission hearing in June on new data center zoning rules.
“A data center does not belong near our homes, let alone the Nashville Zoo,” said Santiago, a District 20 resident, at the meeting. He pointed to January’s ice storm as evidence the local grid already struggles to keep up.
Metro Council will take up the zoning regulations and a proposed data center moratorium at public hearings Tuesday. Mayor Freddie O’Connell supports the measures and filed legislation of his own last month that would begin condemnation proceedings on property next to the zoo, letting Metro purchase it at fair market value without the owner’s consent.
“We can support economic development while also making smart choices about the highest and best use of our land,” O’Connell said in a video statement.
Grid reliability concerns aren’t hypothetical. More than 230,000 Nashville Electric Service customers lost power during January’s ice storm, with some households waiting two weeks for restoration. NES estimated the storm caused between $100 million and $140 million in damage.
Think Tennessee’s report emphasized the need for policy that balances the economic upside of data centers against the strain they place on the grid.
“Data centers are very quickly changing the energy needs of our state,” said Erin Hafkenschiel, president of Think Tennessee. “And the decisions made now about planning, pricing and infrastructure will determine who bears the costs of this growth. If we don’t get it right, the potential risks to household energy costs might outweigh the positive economic growth impacts.”