AI data centers are pushing up electricity costs for Rust Belt factories

In short: Many factories in the US Rust Belt are seeing their electricity bills rise fast as new AI data centers increase demand on the PJM power grid.

What's going on

A growing number of AI data centers, meaning large buildings filled with computers that run online services and AI tools, are using a lot of electricity. In the 13-state region served by PJM Interconnection, the largest US grid operator, this is putting pressure on the power system and pushing up certain charges on electric bills.

Reuters highlighted one example in Ohio. Belden Brick Company said its monthly electricity bill jumped from about $1,600 to $12,000. The increase was tied to a higher “capacity” charge, which is a fee for keeping enough power available during peak times (like paying to reserve seats, even if you do not use them).

Steelmakers are also feeling the squeeze. The Steel Manufacturers Association said some US steel companies in the PJM region are paying tens of millions of dollars more per year for power. Electricity can make up 20 to 40 percent of the cost of producing steel, and big machines like electric arc furnaces can draw huge amounts of power.

PJM’s capacity prices have risen sharply, from $28.92 per megawatt-day in 2024 to $329.17 in 2026, according to Reuters. PJM has also warned that, starting in 2027, demand could exceed available supply by 6.6 gigawatts, which the Wall Street Journal compared to more than six nuclear power plants.

What to watch

Some manufacturers are raising prices or considering moving, according to Reuters. Policymakers are discussing ways to add more power plants and new transmission lines, but those projects take time. If demand keeps rising faster than supply, both factory costs and the risk of local power shortages could increase.

Source: Arstechnica