The crux for [[AI is unlikely to make construction much cheaper]]: the one channel that could break construction's cost-stickiness is **cheap energy lowering the cost of energy-intensive materials** (cement, steel ≈ half of construction cost). But delivered energy is currently getting **more expensive**, driven by the same AI build-out behind [[AI capex]] — so this channel is blocked for now. ## Delivered electricity is rising faster than inflation - US residential price: **~18.2 ¢/kWh in 2026** (~+5% over 2025), per [EIA STEO](https://www.eia.gov/outlooks/steo/). EIA: retail electricity has **risen faster than inflation since 2022** (a break from 2013–2023, when it tracked inflation), and will through 2026. Wholesale load-weighted ~$47/MWh in 2025 (+23% YoY). - **Data centers are the primary driver.** The PJM capacity auction cleared at its **$333/MW-day cap** for a third straight year ($16.4B total, ~40% attributed to data-center load) — roughly **~10× the ~$29/MW-day** of two cycles earlier ([Utility Dive](https://www.utilitydive.com/news/data-centers-pjm-capacity-auction/808951/)). - Data centers used **176 TWh = 4.4% of US electricity in 2023**, projected to **6.7–12% by 2028** ([LBNL 2024 Data Center report](https://eta-publications.lbl.gov/sites/default/files/2024-12/lbnl-2024-united-states-data-center-energy-usage-report_1.pdf)). [Grid Strategies](https://gridstrategiesllc.com/wp-content/uploads/Grid-Strategies-National-Load-Growth-Report-2025.pdf) has data centers at ~55% of a 166 GW peak-demand increase by 2030. ## The "energy gets cheap" counter-narrative - New-build **solar is genuinely cheap and still falling**: unsubsidized utility-scale solar LCOE **$38–78/MWh** ([Lazard 2025](https://www.lazard.com/research-insights/levelized-cost-of-energyplus/)); solar on a ~15%/yr cost-decline curve (Casey Handmer's [radical energy abundance](https://caseyhandmer.wordpress.com/2023/10/11/radical-energy-abundance/) thesis). - But it's **not reaching the meter.** ~2.6 TW stuck in interconnection queues (>2× the existing fleet), median request-to-operation >4 years ([LBNL Queued Up](https://emp.lbl.gov/publications/queued-2025-edition-characteristics)). Cheap LCOE at the busbar ≠ cheap delivered retail; transmission, capacity payments, and gas-price exposure dominate. The bulls and bears are pricing *different* electrons. ## Industrial energy (the materials channel) - **Natural gas (process heat) is cheap and flat**: Henry Hub ~$3.5–4/MMBtu (2025–26). Favorable for cement/steel thermal energy. - Energy is a **minority share** of materials cost — cement ~23%, EAF steel 20–50% — so even cheap energy moves total construction cost only single digits. And the two inputs diverge: cheap/flat gas vs. rising electricity. Where to find it: - [EIA Short-Term Energy Outlook](https://www.eia.gov/outlooks/steo/) — residential ¢/kWh and Henry Hub gas (monthly). - [PJM auction results](https://www.pjm.com/markets-and-operations/rpm) — capacity prices (annual). - [LBNL data-center report](https://eta-publications.lbl.gov/sites/default/files/2024-12/lbnl-2024-united-states-data-center-energy-usage-report_1.pdf) and [Grid Strategies load-growth report](https://gridstrategiesllc.com/) — demand growth. - [Lazard LCOE+](https://www.lazard.com/research-insights/levelized-cost-of-energyplus/) — solar/storage generation costs (June).