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A data center drawing 1 gigawatt continuously consumes 8.76 terawatt-hours of electricity in a 365-day year. Using U.S. Energy Information Administration 2025 preliminary average retail prices as benchmarks, the energy alone works out to roughly $755 million a year at the industrial average or $1.17 billion at the commercial average. Those are transparent scale calculations, not a quote for a particular facility: the meaning of “1 GW,” the site’s location, tariff, demand charges and supply contract can change the actual bill substantially.
What “1 GW data center” actually means
“1 GW” is a power figure, while electricity bills are based on energy consumed over time. A project description can use the term for several different things:
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Average operating load
If the facility averages 1 GW every hour of the year, the annual-energy calculation is direct. This is the interpretation that produces 8.76 TWh in a non-leap year.
Maximum capacity or grid interconnection
A site may have a 1 GW electrical capacity, transformer rating or utility interconnection even when its average draw is much lower. Capacity indicates what the infrastructure can support; it does not establish annual consumption. A facility averaging 500 MW would use half as much energy as one averaging 1 GW, even if both have a 1 GW connection.
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IT load rather than whole-facility load
Some announcements describe the power available to servers, accelerators and storage, while others describe the electricity entering the entire campus. Cooling, pumps, fans, power conversion and other building systems add to the whole-facility figure. The Congressional Research Service says roughly one-half or more of data-center electricity demand comes directly from IT equipment, with the remainder including cooling and other facility loads (CRS FAQ). Do not treat an IT-only number as the site’s total meter draw.
The basic energy calculation
For a continuously operating load, multiply average power by the hours in the period:
Annual energy = average power (GW) × 8,760 hours
A 365-day year has 8,760 hours. Therefore, 1 GW × 8,760 hours equals 8,760 GWh, or 8.76 TWh. That is also 8.76 billion kWh, the unit used for the price multiplication below.
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Illustrative utilization scenarios
The following rows are arithmetic scenarios, not claims about a typical data-center utilization rate. They show how the result changes when the average draw is below the headline capacity.
| Assumed average facility draw | Annual energy | Cost at 8.62¢/kWh | Cost at 13.41¢/kWh |
|---|---|---|---|
| 1.00 GW, continuous | 8.76 TWh | About $755 million | About $1.174 billion |
| 0.75 GW average | 6.57 TWh | About $566 million | About $881 million |
| 0.50 GW average | 4.38 TWh | About $378 million | About $587 million |
Each dollar column is the annual kWh total multiplied by the indicated cents-per-kWh benchmark. The figures are rounded, and they cover the energy-price arithmetic only.
What the U.S. benchmark prices imply
The U.S. Energy Information Administration’s preliminary 2025 averages, reported in 2026, were 8.62¢/kWh for industrial customers and 13.41¢/kWh for commercial customers. Applying those national averages to the continuous-load case gives this simple view:
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|---|---|---|---|
| Industrial average | 8.62¢/kWh | About $755.1 million | About $62.9 million |
| Commercial average | 13.41¢/kWh | About $1.174 billion | About $97.8 million |
The monthly values divide the annual arithmetic by 12; they are not a utility’s monthly billing schedule. The underlying figures are from EIA Electric Power Monthly Table 5.3.
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EIA also reports a 2025 preliminary average of 17.30¢/kWh for residential customers and 13.63¢/kWh across all customer classes. Those figures are useful context but are not the best proxies for a hyperscale industrial load.
Why an average price is not a project tariff
EIA explains that its published prices are weighted averages of utility revenue and sales, not the rate charged to one named customer. Retail revenue can include energy, demand, service, environmental, fuel-adjustment and other charges. The agency’s explanation of price differences is available at Prices and factors affecting prices.
Location alone can move the result dramatically. In EIA’s 2025 all-customer state averages, prices ranged from 8.20¢/kWh in North Dakota to 35.72¢/kWh in Hawaii. Industrial customers often pay prices nearer wholesale levels than commercial customers, but geography, fuel mix, regulation, delivery arrangements and the negotiated contract determine the actual outcome.
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Charges that can make the real bill higher or lower
A facility-scale power agreement is more than annual kWh multiplied by one national average. The following items need separate treatment in a serious estimate:
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Demand charges
Utilities may bill for the highest measured demand during a billing interval, not just total energy. A short peak can therefore affect the bill even if monthly kWh stays unchanged.
Connection and system-upgrade costs
A gigawatt-class interconnection can require substations, transmission work, protection equipment and construction contributions. These may appear as one-time capital payments, recurring delivery charges or negotiated cost-sharing.
Standby and backup supply
Sites that rely on utility service while also operating generators, batteries or other onsite resources may pay for reserved capacity or standby service. The treatment varies by utility and contract.
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Power may be purchased through a utility tariff, a wholesale market, a bilateral contract, a power-purchase agreement or a combination. Fuel costs, congestion, renewable credits, emissions requirements and generator operating costs can change the effective price.
The U.S. Department of Energy identifies fair allocation of grid-system costs, the risk of underused utility investments, resource adequacy when demand grows faster than supply, and risk-sharing for newer supply technologies as rate-design issues for large loads. Its January 2025 discussion also points to matching consumption with carbon-free resources and using onsite generation as possible approaches (DOE, Electricity Rate Designs for Large Loads). None of these items can be priced from the national averages alone.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How IT power, cooling and efficiency change the estimate
If the stated gigawatt is an IT-load limit, the facility’s utility meter will normally show more. Servers convert electricity to heat, and cooling equipment must remove that heat; power distribution losses, lighting, controls and other support systems add further consumption.
A power-usage-effectiveness (PUE) multiplier can be useful when a specific project publishes both its IT load and its PUE, but applying an assumed PUE to every 1 GW announcement would create false precision. The available evidence establishes that non-IT loads are substantial; it does not provide one universal multiplier for all facilities. Clarify whether the published number is:
- IT equipment demand;
- total facility demand at the utility meter;
- maximum electrical capacity; or
- the contracted grid-interconnection amount.
How a 1 GW site compares with U.S. data-center demand
The U.S. Department of Energy’s summary of the Lawrence Berkeley National Laboratory report says U.S. data centers consumed 176 TWh in 2023, about 4.4% of total U.S. electricity, and projects 325–580 TWh in 2028 (DOE report announcement). The annual energy from a continuously drawing 1 GW facility is roughly 5% of the 2023 national data-center total; that percentage is a derived comparison, not a measurement of any particular site.
Lawrence Berkeley National Laboratory’s June 2026 update estimates 521–843 TWh of U.S. data-center consumption in 2030 under compounded-uncertainty scenarios, with a central estimate equal to 11.8% of U.S. electricity. The report builds its estimates from planned IT-equipment shipments, device-energy models, cooling simulations, and facility-type and location information (LBNL, United States Data Center Energy Usage Report: 2025 Update). These are sector scenarios, not guarantees for an individual project.
A practical method for pricing a specific project
- Identify the metric. Ask whether the gigawatt is average demand, peak capacity, IT load, whole-facility load or interconnection capacity. Record the measurement point and the date or project phase.
- Build an hourly load profile. Replace a nameplate assumption with expected commissioning, ramp-up, maintenance and workload patterns. Calculate both average and peak MW.
- Convert demand to energy. Multiply each operating period’s average MW by its hours, then add the periods. Use 8,760 hours only for a genuinely continuous 365-day case.
- Obtain the applicable tariff or contract. Use the utility’s industrial schedule or the negotiated wholesale and delivery terms for the project location, rather than a national average.
- Add non-energy charges. Model demand charges, transmission and distribution, interconnection work, standby service, taxes, environmental charges and any capacity commitments.
- Model onsite resources separately. Show generator fuel, battery charging losses, renewable contracts and outage operation as distinct line items. State whether the headline cost is gross consumption, net grid purchases or total energy-system cost.
- Run sensitivity cases. At minimum, show a lower, central and higher average draw and test plausible tariff changes. Keep IT and facility totals in separate columns if the source announcement does not define the boundary.
Common mistakes and how to avoid them
| Mistake | Why it misleads | Better practice |
|---|---|---|
| Multiplying 1 GW by a year without checking utilization | Capacity is not necessarily average demand. | Use an hourly or monthly load profile and label the utilization assumption. |
| Calling the result a utility quote | National averages include multiple customer and charge components. | Describe the result as an illustrative benchmark until a tariff or contract is known. |
| Mixing IT and whole-facility figures | Cooling and electrical infrastructure consume additional power. | State the measurement boundary and keep the two loads separate. |
| Ignoring peak-demand billing | A short maximum can raise charges even when annual energy is unchanged. | Model both kWh and the tariff’s demand intervals. |
| Applying one assumed PUE everywhere | Efficiency varies with climate, cooling design, workload and operating point. | Use a published project metric or present PUE as an explicit sensitivity. |
| Using national forecasts as a site prediction | Sector models cover many facility types, locations and scenarios. | Use forecasts for context, then estimate the individual project from its own equipment and operating plan. |
Bottom line for readers and planners
The clean benchmark is straightforward: a true 1 GW average draw running every hour consumes 8.76 billion kWh in a 365-day year. At the EIA’s preliminary 2025 U.S. industrial and commercial averages, that produces an energy-only arithmetic result of approximately $755 million to $1.174 billion annually. Treat those numbers as scale markers. To price a real data center, first establish what the gigawatt measures, then apply the site-specific tariff, demand rules, interconnection terms and onsite-supply costs.
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