Budget shock: CFOs contend with rising energy costs

Sponsored by

Don’t go chasin’ AI trends. Applying AI to the business challenges that matter most to your organization is where the real potential lies. From productivity and workforce transformation to growth and operational efficiency, learn more with PwC.

Energy, once a topic largely relegated to operations, is now becoming a concern for CFOs.

Commercial energy rates in the US grew at a median 9.7% YoY annually between 2020 and 2025, data from energy intelligence platform Arcadia shows. Almost all commercial facilities (98%) paid more for energy over that time period, and for 71% of them, the cost jumps outpaced inflation.

For some companies, energy cost increases can be substantial. Ohio brick manufacturer Belden Brick Company’s electricity costs jumped 90% last year, ballooning from a $1,600 monthly capacity charge to $12,000, Reuters reported.

Arcadia CEO and founder Kiran Bhatraju told CFO Brew that he’s been speaking with more CFOs and finance leaders lately. “Energy decisions used to live in an operations and building management sort of role,” he said. “It’s really sort of risen up the ranks to more of a C-suite level.”

In fact, a Wells Fargo analysis of S&P 500 earnings calls in Q3 2025 found that use of the words “power,” “electricity,” and “energy” had more than doubled since 2024.

A key reason is that costs haven’t just grown: they’ve also become harder to predict. “For the last 30 years,” Bhatraju said, in the US and globally, “energy demand was relatively flat.” Electric consumption in the US rose only 0.1% per year between 2005 and 2019, data from the US Energy Information Administration (EIA) shows. Finance leaders could “predict a basic inflationary adjustment year over year, and that was the thing you penciled in to your budgets and your expenses,” Bhatraju said.

But since 2020, US power consumption has grown 1.7% per year, and 2.6% per year in the commercial sector, according to the EIA. In 2025, it reached a record high, and is on track to do so again in 2026 and 2027.

Power hogs. What happened? In an acronym, AI.

Even in 2023, data centers in the US used about as much energy as the entire nation of Ireland. In that year, they accounted for 4.4% of US energy demand. Now, they’re responsible for around 6% of US energy consumption, and that figure’s likely to rise. Goldman Sachs estimates data centers will account for 8.5% of peak summer demand in the US by next year, “creating significant tightening across the national power market.”

The AI boom has left the grid struggling to keep up. “The AI-related power demand, that’s going to cause a lot of volatility in the system, especially when the generation facilities have not come online,” CFO Suchet Singh of renewable energy startup Exowatt, which aims to bring on-site solar power to data centers, told CFO Brew.

Other factors are driving high energy costs. Improvements to the grid are still making their way through the system—“now the hardening, like all the historical capex, is now just coming into rates,” Mary Beth Mandanas, CEO of clean energy distributor Onyx Renewables, told CFO Brew. Climate change is also pushing up demand through “higher heat points and peak heat points” and disruptions in the form of natural disasters, Bhatraju said.

Making things more complicated, energy prices can vary widely by state. Utilities are “all these little cottage markets,” Bhatraju said. Rates for some commercial classes in San Diego might be twice those in Los Angeles, he said. That poses a challenge when companies are increasing their physical footprint: Now ongoing power costs are yet another input CFOs need to understand when seeking out new locations, he said.

On-site power. Some companies are going “behind the meter”: using on-site power as a way of hedging their energy costs. “What can I do on-site?” is one of the most common questions Arcadia gets, Bhatraju said.

On-site solar, for example, has become a more viable solution in recent years. Costs of solar panels and racking have gone down, Onyx Renewables’s Mandanas said, and batteries can store the power and release it when the sun’s not out. “Batteries and energy storage are somewhat of the holy grail for on-site.”

Even if the rates utilities charge fluctuate, costs for on-site power can be locked in for years or decades. For most forms of energy, like natural gas, oil, or uranium, “the fuel itself costs something, regardless of all the other infrastructure around it,” Mandanas said. With solar, “the fuel is free.” Companies can also lease or finance solar power systems from providers, Bhatraju said, so they may not need to incur any up-front costs from installing them.

But on-site power makes most sense for companies with high power needs, such as manufacturers, Mandanas said, and solar panels require land or locations such as rooftops and carports where they can be installed. Exowatt’s systems don’t quite have the same reliability as the grid yet, Singh said. And solar power won’t fulfill all a company’s energy needs: Exowatt describes it as able to handle “a significant portion of your baseload energy mix.”

AI companies, though, are betting that solar can be at least a partial solution to their energy problems. Around 30% of planned data centers now include some form of on-site energy, and Exowatt’s investors include Sam Altman.