Graduation Year

2026

Date of Submission

4-2026

Document Type

Campus Only Senior Thesis

Degree Name

Bachelor of Arts

Department

Economics

Reader 1

Michael Gelman

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2026 Ethan J Zhang

Abstract

This paper examines whether the geographic concentration of data center infrastructure raises wholesale on-peak electricity prices at the hub level. Using a constructed panel of seven North American electricity hubs over 2016-2025, I estimate a two-way fixed effects regression of log annual average on-peak prices on log cumulative installed data center capacity, exploiting staggered, heterogeneous accumulation of capacity across hubs and over time. Hub fixed effects absorb time-invariant differences across markets and year fixed effects absorb common energy price shocks. Across four specifications, the coefficient on log cumulative data center capacity is consistently positive. The preferred specification yields an elasticity of +0.035, implying price premiums of approximately 30% at the most heavily concentrated hubs relative to a no-growth counterfactual. Results fall short of conventional significance thresholds, reflecting a fundamental cluster constraint of seven hubs, but are directionally robust and suggest the true elasticity is understated due to treatment variable measurement error.

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