Data Center Power Demand Is Driving Up Electricity Costs for Rust Belt Manufacturers

A Grid Under Pressure

PJM Interconnection, the grid operator covering 13 states from New Jersey to Illinois, is at the center of a collision between two industries the Trump administration wants to win: manufacturing and artificial intelligence.

Capacity prices on the PJM grid — payments made to power generators based on supply-and-demand forecasts — rose from $28.92 per megawatt-day in 2024 to $329.17 per megawatt-day in 2026, according to Reuters. That is an increase of more than 1,000 percent in two years. The driver is straightforward: data centers requiring massive, continuous power loads have flooded PJM's territory, and the grid is struggling to keep pace.

PJM has already projected that electricity demand in its region will exceed available supply by 6.6 gigawatts starting in 2027, according to the Wall Street Journal. That is roughly the equivalent of six nuclear power plants worth of unmet demand.

Who's Paying the Bill

The companies absorbing these rising costs are not tech giants. They are manufacturers in the Rust Belt — the exact industrial base the Trump administration has repeatedly cited as central to its economic agenda.

Belden Brick Company, a 141-year-old brick manufacturer in Ohio, saw its monthly electricity bill climb from $1,600 to $12,000, according to Reuters. That increase is driven largely by the higher monthly capacity charge that PJM now passes along to large power users in its territory.

For steelmakers, the numbers are larger. The Steel Manufacturers Association warned that US steel companies in PJM territory are paying tens of millions of dollars in higher power costs per year. Electricity represents between 20 and 40 percent of total steel production costs. Grid pricing is a fundamental cost-of-business problem.

Metallus, an Ohio-based steelmaker, reported a 70 percent increase in electricity costs since 2024, translating to an extra $15 million in annual energy expenses, according to the Wall Street Journal.

The Conflict Inside the Policy

The policy tension here is real. Trump has pushed tariffs and trade pressure specifically to revive US steel and manufacturing. At the same time, his administration has been openly enthusiastic about AI data center investment, treating it as a symbol of American technological dominance.

Data centers do create some demand for US steel. An estimated 1 million tons per year is needed for construction, according to the Wall Street Journal. That is a genuine benefit to the industry. But the energy costs those same data centers generate are now increasing operating expenses for steelmakers by amounts that can exceed what the construction steel revenue offsets.

The Strongest Counterargument

A fair version of the pro-data center position is this: the United States needs to build AI infrastructure to remain competitive with China, and that requires accepting some near-term energy market disruption. Grid constraints are a solvable infrastructure problem—more generation capacity, faster permitting, nuclear investment—and the long-term economic value of AI leadership could far outweigh transitional costs to legacy manufacturers. Advocates would also argue that manufacturers have options: pass costs to customers, invest in on-site generation, or negotiate long-term power contracts.

The assumption underlying this argument is that the grid buildout happens fast enough to matter. PJM's own forecast says supply falls short of demand by 2027. Grid infrastructure does not get built in 18 months.

Real Operational Consequences

Manufacturers are already reacting. Some have raised prices to customers to offset rising electricity bills. Others, according to Reuters, are considering relocating their facilities entirely—which would be a direct reversal of the reshoring the Trump trade policy is designed to encourage.

Steel industry executives have gone further, warning the Wall Street Journal that production outages become more likely if local grids are overwhelmed. An electric arc furnace draws between 40 and 200 megawatts of power. The entire US steel industry pulls up to 11 gigawatts at peak production across all facilities. Grid instability is not an abstract risk for these operations.

The Unresolved Question

The Trump administration has not publicly addressed the direct conflict between its manufacturing goals and the energy cost effects of the data center buildout it is simultaneously promoting. PJM has flagged the projected 6.6-gigawatt supply shortfall beginning in 2027 with no announced federal solution. Whether the administration will prioritize grid expansion for manufacturers, tech infrastructure, or both—and how it plans to sequence that—remains unanswered as of July 7, 2026.