While uncertain economic conditions remain top of mind for many, one certainty will continue for the near future: energy availability and costs.
Area Development recently released findings from its 39th Annual Corporate Survey and 21st Annual Consultants Survey, highlighting the top factors influencing business expansion and location decisions in 2025. Unsurprisingly, energy availability and costs rank among the leading concerns. For those in the site selection or location consulting industries, electricity is a central, ongoing discussion point.
Businesses are grappling with power availability, but there are best practices that could help mitigate these challenges moving forward.
Understanding the Current Landscape
Electricity demand has reached unprecedented levels globally, and the United States is no exception. Moreover, domestic demand is not expected to decline in the near future. A primary driver of this surge is artificial intelligence (AI) and the rapid expansion of data centers.
To put this into perspective, according to The Wall Street Journal, by 2030, data centers will require more energy than the country of Japan consumes today. An AI-focused data center alone can consume as much electricity as 100,000 households. The rising energy needs of data centers, paired with the increasing reliance on AI, pose a significant challenge for businesses looking for locations with reliable and affordable electricity.
For manufacturers scouting potential sites for new facilities, this demand can present a major obstacle—especially when a location meets all other criteria except for power availability. With the current administration’s renewed focus on reshoring manufacturing, competition for electricity will be fierce and only exacerbate this competition for electricity. Industries such as semiconductors, pharmaceuticals, metals, and automobiles—key priorities for reshoring efforts—are all highly energy-intensive. Adding another layer of complexity is the aging electrical grid across the United States.
The future belongs to companies that treat energy not as a cost—but as a competitive differentiator.
According to the Joint Economic Committee, more than 70 percent of the national grid is over 25 years old and has never been upgraded. As demand surges, technologies evolve, and extreme weather events become more frequent and severe, the grid is being stressed in ways it has not been before. This makes ensuring reliable power availability a critical issue, particularly as energy systems struggle to adapt to both rising demand and the evolving energy landscape.
Volatile energy pricing further compounds the challenges. Contributing factors include geopolitical tensions, trade wars, supply chain disruptions, and climate-related events—all of which create an unpredictable energy landscape. For companies planning for long-term growth, this volatility creates a significant risk to operational costs and profitability.
Moreover, ESG (Environmental, Social and Governance) initiatives have continued to contribute to the bottleneck of electricity availability. In recent years, providers have begun transitioning to more renewable energy sources such as solar, wind, and hydro. These sources do not rely on fossil-fuel based generation (such as coal and gas), which have contributed to greenhouse gas emissions. While environmentally friendly, they are not without their challenges. Renewable energy can be intermittent—for example, wind and solar output can drop during periods of low wind or cloudy days.
Other ESG initiatives include regulatory compliance in areas such as cybersecurity, as well as addressing various social issues.
Overcoming the Challenges
While there is no one-size-fits-all solution to today’s energy issues businesses face today, several best practices can help businesses chart a path forward and navigate the evolving landscape.
Developing an extensive energy strategy is an important first step. Companies should create a comprehensive plan that aligns with corporate goals and includes input from all key stakeholders—both internal and external. Partnering with energy consultants and legal experts can save time and money by helping to evaluate load structures, navigate regulations, and streamline negotiations. A proactive approach to energy strategy enables businesses to anticipate challenges and minimize disruptions.
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Conducting an energy assessment is equally important. Companies should work closely with their energy consultant to analyze energy load profiles, operating hours, peak demand times, and future expansion plans. A detailed, data-driven strategy ensures clarity on project requirements and avoids wasting time on sites that cannot meet those needs. This will also help identify potential areas for efficiency improvements, such as upgrading equipment to lower energy consumption.
Engaging utility providers early is another best practice. Companies should initiate discussions with utility companies at the start of any site selection or expansion project. This will help confirm power availability and ensure timelines are aligned. At the right time, companies should involve the utility company as a strategic stakeholder—not just a service provider. Early communication is key to project success.
Understanding the local market can also provide a competitive advantage. Energy rates and tariffs vary significantly by region. Here, energy consultants add substantial value by analyzing rate structures, demand charges, and available economic development incentives. In deregulated markets, users can often negotiate favorable supply contracts.
Finally, planning for flexibility, redundancy and resilience is critical. In regions prone to outages or extreme weather, energy infrastructure should incorporate backup generation and redundant supply lines to maintain operational continuity.
Emerging Tailwinds
Encouraging signs are emerging as federal policy increasingly supports infrastructure modernization and energy independence. Trends to watch include:
Renewables are promising—but intermittency and infrastructure delays can undermine even the most sustainable energy plan.
The expansion of renewable energy capacity. The federal government and utility companies are investing heavily in expanding renewable energy capacity.
Federal funding for grid modernization. The allocation of significant resources toward upgrading the national grid should help alleviate some of the strain on the aging infrastructure and improve reliability.
The development of microgrids. Microgrids will offer businesses the ability to generate, store and distribute their own electricity, while reducing reliance on the main grid and providing energy security.
The growth in energy storage solutions. Energy storage technologies continue to advance, which will provide businesses more opportunities to store excess renewable energy and utilize it during peak demand periods.
These initiatives could provide a competitive edge for companies that align their energy strategies with national policy trends.
Navigating energy infrastructure requires a proactive approach to utility engagement and risk management. Whether operating a data center or a manufacturing facility, aligning energy decisions with technological and policy shifts is critical.
By building strong partnerships, developing forward-thinking strategies, and planning for evolving challenges, businesses can stay ahead of future disruptions. Staying informed, adaptable, and strategic is no longer optional—it is essential.
