Energy Costs and CFO Concerns
Energy, once an operational issue, is increasingly capturing the attention of CFOs. Data from Arcadia reveals that commercial energy rates in the US rose by a median of 9.7% annually from 2020 to 2025. Nearly all commercial facilities faced higher costs, with 71% experiencing increases that outpaced inflation.
For some companies, these increases can be drastic. For instance, the Belden Brick Company in Ohio saw its electricity costs jump from $1,600 to $12,000 monthly—a 90% hike.
Shifting Focus to the C-Suite
Kiran Bhatraju, CEO of Arcadia, notes a shift in responsibility for energy decisions from operations to the C-suite. This sentiment is echoed by a recent Wells Fargo analysis showing that mentions of “power,” “electricity,” and “energy” in S&P 500 earnings calls more than doubled since 2024.
Historically, energy demand was stable, allowing finance leaders to budget based on predictable inflationary adjustments. However, following 2020, US power consumption has surged by 1.7% annually, with the commercial sector seeing a 2.6% increase.
The AI Impact
The rise in energy demand is closely tied to the rapid growth of artificial intelligence. In 2023, data centers in the US consumed energy equivalent to the entire nation of Ireland, representing 6% of US energy demand—a figure projected to rise to 8.5% by next summer.
Suchet Singh, CFO of renewable startup Exowatt, warns that AI-related energy demands may lead to significant volatility in energy markets.
Variability in Energy Costs
Energy prices also show wide variability depending on location. For example, commercial rates in San Diego can be twice those in Los Angeles. This makes exploring new company locations increasingly complex as ongoing energy costs become a crucial factor.
On-site Power Solutions
To mitigate rising costs, some companies are turning to on-site energy solutions, such as solar power. The costs of solar technology have decreased, making it a more viable option. On-site systems can allow companies to lock in energy prices for prolonged periods.
Yet, this approach is primarily beneficial for firms with substantial energy needs. According to Mandanas of Onyx Renewables, solar power can meet a significant portion of a company’s energy requirements, making it attractive for data centers.
Conclusion
As energy costs rise and consumption patterns evolve, CFOs must adapt by integrating energy management into financial strategies. On-site power generation offers a promising solution, particularly for companies with high energy demands. The intersection of AI and energy consumption is likely to shape future trends in corporate finance and operational strategies.
