A 1 MW continuous electric load consumes approximately 720 MWh during a 30-day month. At a hypothetical energy-only rate of $0.10/kWh, that is $72,000 per month before demand, transmission, distribution, taxes and other tariff charges. Data center electricity cost depends on whether that 1 MW refers to IT equipment or the entire facility’s utility meter.
This article separates power from energy and provides transparent examples instead of claiming one universal U.S. price per MW. Utility tariff structures, minimum billing demand, peak-load patterns and power usage effectiveness (PUE) can change the answer more than a single cents-per-kWh figure.
Data Center Electricity Cost: 1 MW Calculation
A megawatt is 1,000 kilowatts. At a constant 1 MW meter demand, daily energy equals 24,000 kWh. Over 30 days it becomes 1,000 kW × 24 × 30 = 720,000 kWh, or 720 MWh. At $0.10/kWh the example energy charge is $72,000. Multiply by 12 for a simple 360-day comparison: $864,000, but a 365-day year costs $876,000 at this rate.
| Average utility load | 30-day energy | Energy charge at $0.10/kWh |
|---|---|---|
| 1 MW | 720 MWh | $72,000 |
| 5 MW | 3,600 MWh | $360,000 |
| 10 MW | 7,200 MWh | $720,000 |
| 25 MW | 18,000 MWh | $1,800,000 |
These energy-only amounts are scenario calculations, not live electricity quotes from a particular provider. The marginal cost of a new data center can also reflect transmission construction, substation upgrades, special contracts and delivery timelines.
IT Power vs. Facility Power: Why PUE Matters
A facility with 1 MW of average IT load and PUE 1.30 uses about 1.3 MW at the utility meter. The extra 0.3 MW represents cooling, electrical losses and other supporting loads. Its 30-day energy becomes 1.3 × 720 = 936 MWh, rather than 720 MWh.
At $0.10/kWh, 936 MWh is $93,600. The difference from treating the IT load as the total meter load is $21,600 per 30-day month in this simplified example. Real PUE changes with climate, operating conditions and facility utilization.
Related guide: AI Data Center Power Consumption in the U.S..
What Does a Demand Charge Add?
Many commercial tariffs bill measured peak demand in kW or kVA. Assume 1.3 MW peak demand and a hypothetical $15/kW demand charge: 1,300 × $15 = $19,500 for the billing month. Add that to the $93,600 energy example and the subtotal becomes $113,100, before the other bill lines.
A tariff may apply different seasonal rates, coincident peaks, ratchets or special high-load provisions. Carefully distinguish measured demand, billed demand and contracted capacity. Energy use alone cannot predict the final amount.
Related guide: Commercial Electricity Bills Explained: kWh, Demand Charges and Power Factor.
Monthly vs. Annual Bill: A Load Factor Example
A site with 10 MW maximum capacity does not necessarily draw 10 MW constantly. If the monthly average is 7 MW, its load factor relative to the 10 MW peak is 70%. The 30-day energy is 7 × 720 = 5,040 MWh. At the same illustrative energy rate, the energy line is $504,000—not $720,000.
Meanwhile a demand charge may still be based on its 10 MW peak. This is why utilization, equipment commissioning schedules and workload management must be modeled separately from nameplate megawatts.
Large-Load Agreements Can Create Additional Cost
A utility may reserve capacity, build a dedicated substation or require minimum billing demand before the data center reaches full utilization. Minimum charges are not simply payment for unused kWh. They can be designed to recover capacity-related costs and allocate risk associated with serving a very large customer.
Related guide: Why Do Data Centers Pay for Power They Don’t Use?.
How to Build a Realistic Budget Model
- Identify whether the input MW is IT power, utility-meter peak or contractual capacity
- Use hourly or 15-minute interval data and a defensible PUE assumption
- Apply tariff energy blocks, time-of-use rates and demand charges separately
- Include transmission, distribution, minimum charges and taxes where applicable
- Run low-, base- and high-price scenarios over a full operating year
- Separate utility bills from capital expenditures for power infrastructure
A simple spreadsheet should preserve every assumption. Treat the rate in the example as an editable variable, not as the national price in 2026. EIA’s sector averages are useful context but are not substitutes for an individual large-load tariff.
Can BESS or Demand Response Reduce the Bill?
A battery can help reduce short peak intervals or shift electricity purchases, but it does not automatically reduce every tariff component. Storage losses, battery availability, control strategy and the exact peak-demand definition determine what can be saved. Large customers may also be subject to unique service agreements and limitations on demand response.
Related guide: Can Battery Storage Reduce Data Center Grid Costs?.
Bottom Line
Start with MW × operating hours = MWh, then add facility overhead, demand charges and the actual contract. One continuous meter MW requires 720 MWh in a 30-day month. The correct data center electricity cost is obtained from the relevant tariff and interval profile—not by multiplying IT nameplate MW by a national average price.
About the author
I have practical experience in electrical construction and electrical project coordination in South Korea. For U.S.-focused guides, I research official codes, government data, utility documents, and manufacturer specifications to explain electrical and energy topics as accurately and practically as possible.
Sources & Official References
- U.S. EIA — Electric Power Monthly Prices by End-Use Sector
- U.S. Department of Energy — Evaluating Utility Rate Options
- U.S. DOE — Better Buildings Energy Performance
Is there something you’d like to see?
Suggest an electrical topic, practical guide, or calculator you would like to see on JHOTAS-LAB. Your suggestion may help shape future content.
