Manufacturers across America's industrial heartland report that rising energy costs—driven largely by soaring demand from AI-powered data centers—are forcing businesses to increase prices, reconsider expansion plans, and explore alternative energy sources to stay afloat.
Among those feeling the pressure is Belden Brick Company, a 141-year-old manufacturer based in Sugarcreek, Ohio, whose bricks have been used in historic landmarks including the Texas Alamo and the University of Notre Dame.
For decades, the company's electricity costs remained relatively predictable. That changed dramatically over the past year when monthly capacity charges—a fee paid to ensure sufficient electricity is available during periods of peak demand—rose from about $1,600 to $12,000, contributing to an overall 90% increase in its power costs.
"That capacity charge just jumped off the page," said company president Brad Belden, a fifth-generation leader of the family-owned business.
Capacity charges are designed to compensate power producers for maintaining enough generating capacity to meet peak electricity demand while encouraging investment in new energy infrastructure. Although these charges typically account for around 10% of residential electricity bills, they can represent a significantly larger share of industrial energy costs.
The increases have been particularly severe in the region served by PJM Interconnection, the largest electricity grid operator in the United States, which supplies power across 13 states stretching from the Midwest to the Mid-Atlantic.
According to PJM, demand from newly built data centers is growing faster than new power generation can be added to the grid.
Data centers, PJM spokesperson Jeff Shields noted, "can be built faster than the generation needed to serve them, driving up demand faster than supply."
That imbalance has fueled an extraordinary rise in capacity prices. PJM's capacity auction price climbed from $28.92 per megawatt-day in 2024 to $329.17 per megawatt-day, representing an increase of more than 1,000%.
The consequences are becoming evident across manufacturing-heavy states that are also emerging as major data center hubs. Reuters calculations based on U.S. Energy Department data show industrial electricity prices increased by 31% in Pennsylvania and 26% in Ohio over a one-year period ending in December 2025, far exceeding the national average increase of 7% for industrial users.
Residential customers also experienced higher electricity costs, though the increases were less pronounced than those facing manufacturers.
Last week, PJM was even forced to implement emergency measures, asking some customers to reduce electricity consumption during a period of extreme heat to avoid potential rolling blackouts after power demand reached a record high.
Manufacturers say the rising costs come at a particularly difficult time, as many factories operate on narrow profit margins while consuming large amounts of electricity.
"There are going to be some companies that are on the razor's edge," Belden warned.
Belden Brick has already increased the price of its products by about 4%, yet the company says its profit margins have continued to shrink because energy costs have risen even faster.
Other manufacturers are experiencing similar challenges.
Plastic products manufacturer Plaskolite reported that annual capacity charges at its Ohio and Pennsylvania operations jumped from $200,000 to $1.2 million within a year. The company is now evaluating whether to rely more heavily on direct natural gas supplies instead of grid electricity.
"Electricity has become the highest-drama form of energy," said Timothy Ling, Plaskolite's senior environmental director.
Meanwhile, electronics materials manufacturer Tosoh SMD is exploring changes to its production schedule by shifting more operations to overnight hours when electricity demand and prices tend to be lower.
"We're trying to be as creative as possible just to maintain competitiveness," said John Holeman, the company's director of facilities and maintenance.
The growing influence of AI infrastructure has also triggered policy debates at both state and federal levels. Governments are considering measures to ensure technology companies bear a larger share of the costs associated with expanding electricity infrastructure. However, manufacturers argue that some proposals unintentionally treat factories the same as hyperscale data centers despite their vastly different energy profiles.
"Manufacturers are not data centers," said Paul Cicio, president of the Industrial Energy Consumers of America. "We should not be impacted by their effort to manage data centers."
The White House said President Donald Trump has taken steps to protect manufacturers, pointing to agreements with major technology companies to help shield consumers from rising electricity costs and initiatives encouraging the construction of additional power generation funded by large technology firms.
Representatives of the data center industry argue that the rapid expansion of AI infrastructure is also accelerating long-overdue investments in America's aging power grid. They contend that other factors—including power plant retirements and transmission bottlenecks—are also contributing to higher electricity prices.
"Making us finally grapple with the difficult decisions that we were always going to have to face," said Aaron Tinjum, vice president of energy at the Data Center Coalition, referring to the industry's role in exposing long-standing grid challenges.
For many manufacturers, however, the immediate priority is controlling costs and ensuring reliable access to electricity.
Belden said his company is now considering installing its own onsite power generation to reduce dependence on the increasingly expensive electricity grid.
"You start to look at alternatives," he said. "Manufacturing goes as power goes."