The use of AI has rapidly become commonplace in the business world. A survey by McKinsey found that 88% of businesses are now regularly using AI for at least one function, with many using it across several areas.
As AI use continues to become a part of the everyday routine for companies of all industries and sizes, accidentally spending a half billion dollars on Claude tokens isn’t the only potential issue businesses need to worry about.
As Jordy Pickel, Director of Marketing at Indra Energy, explains, businesses need to be especially aware of AI’s growing energy demands, and how they could impact their operations now and in the future.
Impacts On Energy Cost
Unsurprisingly, much of the public-facing concern surrounding AI use has been its impact on energy costs. A report from CNBC found that data center energy demand has contributed to increasing electricity prices nationwide, particularly in the West and Northeast.
“As the data centers that power AI become more heavily used, it’s only natural that their demand on the energy grid is going to increase,” Smith says. “The problem we’re seeing in many areas is that electricity demand is now starting to outpace supply. And when we follow the laws of supply and demand, this means that energy prices are going to go up. This has a direct impact on both residential household budgets and business operating expenses.”
As energy costs continue to increase, this means that businesses may need to adjust their budgeting or even their energy use practices to keep costs at a manageable level. The more that businesses rely on AI for their operations, the more these energy demands will increase.
AI Driving Renewable Investments
While AI data centers are straining existing energy supplies, this has also led to growing investments in new energy developments — with interest in renewables surprisingly leading the way.
Indra Energy reports that corporate data centers have become a key driver in overall demand and long-term contracts in the growth of renewable energy, which has become the cheapest form of generating electricity in many areas.
Similarly, Entrepreneur reports that tech companies pursuing clean energy are leading to record funding for solar, wind and battery storage projects, as well as the development of nuclear power startups. Often driven by ESG requirements, AI that can be verified to be powered by renewable energy is becoming a key marketing differentiator.
“Many people are rightfully worried about AI’s impact on the environment, so it makes sense that using renewable energy is the go-to strategy to offset those concerns,” Jordy explains. “The average business that uses AI isn’t going to be building a data center for its own use. But these trends show us what the public wants to see. Business owners should consider partnering with verified ‘green AI’ companies, as well as making sure their own energy comes from renewables or is offset by renewable energy credits.”
Indra Energy’s report found that its own REC-backed electricity plans grew a full 73% between 2023 and 2024 — a clear indicator of growing public interest in renewable energy, even when options like solar panel installations aren’t available. Business owners should consider how these trends may influence how customers choose who they do business with.
The Need for Smarter Energy Management
With increased demand for renewables and increased pressure on traditional energy providers, Smith notes that businesses concerned with AI’s growing energy demands should start by carefully considering their own energy management practices.
“The U.S. Department of Energy estimates about 30% of commercial building energy is wasted. Whether you’re a heavy AI user or not, that’s a statistic that your business should never overlook,” he says. “Making targeted improvements to areas like HVAC and lighting can go a long way in making your facility more energy-efficient so you can balance out potential cost increases linked to AI.”
Other experts also recommend that heavy AI users in the business world closely monitor their AI usage and its impact on energy costs. An analysis from the Harvard Business review advises that leaders ask for energy dashboards that reflect how much electricity their AI tasks use. Perhaps even more importantly, companies should also look into ways to reduce their AI demand. Reducing AI use can lower energy costs while also lowering fees associated with professional AI systems.
“Ultimately, you need to have someone who is responsible for overseeing your organization’s sustainability strategy,” Smith advises. “Understanding how AI comes into play, both directly and indirectly, and then making foundational changes that improve your overall energy management, is how you can better navigate being both energy-efficient and efficient in running your business. A clear strategy that is able to look at both the big picture and the smaller energy changes you can make will reduce your impact on the environment and your budget.
AI Energy Demands Can’t Be Overlooked
As Smith’s insights reveal, AI’s impact on energy demands are complex. Even smaller businesses that only use AI for a few functions are going to feel this impact, whether through higher electricity rates or their own increased energy usage.
Smart businesses that are proactive in understanding and addressing AI energy use in their own operations will be the best equipped to keep these expenses sustainable for the long term.
