Charlotte Pipe and Foundry runs on electricity — a lot of electricity.

The North Carolina-based company needs 13 megawatts to power the plastics plant where it makes plumbing essentials, enough to power more than 9,600 local homes. The company’s iron foundry, with its six furnaces, uses nearly six times as much. 

So when electricity prices started to rise a few years back, Brad Muller, the company’s government affairs manager, took notice. And as the state emerged as a hot spot for AI data centers, with projections of future power demand shooting straight upwards, he became concerned. 

“Our lobbyist was asking me just the other day, ‘Is Charlotte pipe opposed to data centers?’ And, no, not in principle,” Muller said. “But we don’t want to have to pay for them.”

Muller isn’t alone: energy-intensive manufacturers and the advocates who represent them are increasingly on edge.

Manufacturing accounts for nearly a quarter of US energy use annually. Industrial companies have generally benefited from lower electricity rates than residential consumers, preventing energy costs from dragging down business. But a new class of industrial power users — data centers — are rapidly multiplying, and they have an insatiable appetite for electricity. It’s made a future of continued energy affordability, for some manufacturers, feel suddenly uncertain.

These concerns in some way mirror those of residential consumers, who have seen their electric bills soar as the AI boom unfolds. But while those frustrations have become a political rallying point around affordability and opposition to big tech, the stakes are more complicated for industrial companies.

Data centers have been good business for manufacturers whose products are needed for their buildout — steel, construction equipment, HVAC, electrical products and more. But they’ve strained the grid, injected chaos into energy markets and shifted the policy landscape around how to regulate industrial consumers.

“We’re at a very interesting point where we are large loads, and we’ve been reliably served for decades,” Electricity Consumers Resource Council President Kate Onaran, who represents large manufacturers, said. “All of a sudden we’ve got this new player, and it causes all this chaos, and everybody’s like, ‘What do we do?’” 

An inflection point

Data centers are already driving up electricity costs: in the PJM power market, home to the largest concentration of data centers in the world, year-over-year prices have soared 76%. Costs in some areas particularly close to data centers have risen as much as 267% over the past five years. 

After decades of relatively flat electricity demand in the US, experts say the grid is at an inflection point, facing a mismatch of capacity and demand unprecedented in the modern era. 

Hyperscalers — the cloud provider tech giants, including Amazon, Oracle and Microsoft, working to rapidly build sprawling data centers — are bumping up against a world of utility development and regulation that usually plans with a horizon of decades. 

Complicating it all is the fact that projections about data centers’ electricity use are speculative: the economic success AI will enjoy is still unknown, and computing efficiency gains could shrink its power demand over time. 

Many utility companies are incentivized to err on the higher end of that speculation: they profit through investing in new infrastructure and recovering the cost, plus a certain amount of revenue, from ratepayers. That’s especially true in regulated markets, where one monopoly utility owns the entire power system; but it’s often the case among utilities that handle transmission and distribution in deregulated markets, too. 

It all makes for a difficult tightrope for regulators and policymakers to walk. In the meantime, some manufacturers are already feeling the effects. 

Some larger companies looking to grow are hitting a wall as data centers clog up interconnection queues and max out regional power. A December survey of food and beverage manufacturers found that among those looking to expand their operations, 52% said their utilities did not have the capacity to accommodate them. 

Smaller manufacturers, meanwhile, are searching for ways to cut power costs. SM Engineering, a firm that helps companies save money by auditing their utility bills for errors and misclassifications, used to work mostly with large manufacturers. Recently, they’ve seen more demand from small- and mid-size companies that have been stung by high bills, said Angela Collura Ames, the group’s CEO.

“Bills keep climbing, and utility explanations are vague,” she said.

Walking a fine line 

Both over- and under-building power infrastructure creates financial risks for ratepayers.

Without enough generation and transmission infrastructure to accommodate electricity demand, a region faces rolling blackouts and spiking prices in periods of short supply. That’s partially what’s driving up prices in the PJM region, which is a deregulated power market.

But if too much infrastructure is built for demand that doesn’t materialize, consumers are left with the cost of those stranded investments. With utilities across the country planning to spend $1.4 trillion on infrastructure through 2030, some manufacturers worry that they are intentionally inflating demand forecasts, a tactic called “gold-plating.” 

Overbuilding concerns are a top issue in Ohio, another data center hot spot, where one trade group recently made headlines for going head-to-head with utilities. The Ohio Manufacturers’ Association hired experts to study power provider AEP’s demand projections, and said they found evidence of extremely loose logic in the calculations. 

“Don’t look at the data center, look at the utility company,” OMA President Ryan Ausburger said. “They’re overbuilding the grid based on overstated, inflated forecasts.”

For others, concerns about a weak grid or insufficient power supply take precedence. 

Philip Bell, president of the Steel Manufacturers Association, counts over one hundred electric-powered steel mills as his constituents. The industry is in the middle of a burgeoning comeback after years of difficulty; Bell says he worries that it now faces a “structural shortage of firm energy.”

And while his members’ prices might rise due to rate hikes, demand spikes from energy shortages don’t exactly save money, either.

“When a data center comes into town, they’re going to want to use as much electricity as they can get their hands on,” he said. “The basic laws of supply and demand are going to drive the prices up for us.”

One solution that has been widely embraced by manufacturers is requiring data centers to supply their own electricity, a policy known as ‘bring your own power.’ It’s politically popular: in early March, seven tech giants signed President Trump’s Ratepayer Protection Pledge, promising to finance and build new generation for their data centers so as not to spread costs among consumers. Hyperscalers have plenty of cash to spend, and they’re painfully aware of their PR problem, so they’ve jumped on the chance to publicly embrace the idea. 

But it won’t be a simple path forward. The pledge is nonbinding with little in the way of specifics, and numerous regulations will have to change in order to bring it to fruition. Utility companies, which make less profit in a scenario where they’re building less, could pose a barrier in some regions, according to Industrial Energy Consumers of America President Paul Cicio.

“Utilities are trying to extract the maximum amount of revenue they can from these data centers, period,” Cicio said. 

New industrial on the block

Manufacturers need to strike a careful balance as their new industrial neighbors multiply: supporting policies requiring data centers to pay their own way, while making sure that the 

new regulations don’t catch them in the dragnet. 

Numerous states are introducing large load tariffs intended to make data centers pay into the system at a higher rate. But these categories are only separated by megawatt usage, meaning that large-load manufacturers are often subject to them as well. 

North Carolina hasn’t proposed legislation on the issue yet, but policymakers are considering it. Muller is worried that his company’s iron foundry, which uses 72 megawatts, could be impacted. 

“You’ve got to set those loads high enough that you don’t sweep up big large-load customers like us,” he said. 

But between the pitfalls that seem to be around every corner, manufacturing advocates see opportunity in the “speed-to-power” rush, if it’s done right. With a consistent push for reshoring from several administrations in a row, the industry may soon be at a tipping point of its own when it comes to load growth. Policies that enable quicker, more flexible access to power could prove crucial in the coming years.

“We talk a lot about speed-to-power, and we talk about it in terms of data center companies in a global race for AI dominance,” said Electricity Customer Alliance Executive Director Jeff Dennis. “But industrial load growth is also a worldwide competition.”