September 24, 2026
Ask a plant owner what they have done about costs in the last three years and you will get a detailed answer. Renegotiated freight and logistics costs. Diversified supplier lists. Automated where possible or reworked shift patterns to cut overtime. The work has been relentless, and most of the obvious savings are already gone.
Ask the same question about electricity and the answer usually gets shorter. For most manufacturers, the utility bill is a fact of the building — something that arrives, gets paid, and sometimes gets complained about. Of all the significant inputs on the P&L, it is one of the last that is still managed primarily by absorbing it.
That was a defensible posture when utility rates moved slowly, but it is a much harder one to defend now.
Why the number stopped sitting still
According to data from the U.S. Energy Information Administration (EIA), industrial electricity prices in the U.S. have risen nearly 30% over the past five years. Rates have steadily been climbing, and four major forces behind the increase are structural rather than cyclical — meaning that none of them are expected to resolve on a quarterly horizon.
Demand is growing after decades of being flat. Rapid electrification, the reshoring of manufacturing and reindustrialization of the American economy, and, of course, AI and data centers, are all adding demand at the same time. Utilities are planning against demand growth they have not had to forecast since the 1990s.
Supply is moving slower than demand. While some sources of energy generation like solar are quick to build and offer speed to power, other kinds of generation that already have exceptionally long lead-times have been exacerbated even more by supply chain issues. The backlog for gas-fired turbines, for example, stretches into 2031 for some of the leading suppliers (not to mention their cost has increased up to 2.5 times in some markets due to demand growth forecasts).
Your rate carries a fuel price you do not set. Across much of the country, the cost of power is heavily influenced by fossil fuels – natural gas in particular. As recent disruptions in global oil and gas markets have shown, grid reliance on these kinds of fuels has contributed to price volatility and created real business risk.
Utility pass throughs are impacting electric rates. Energy transmission and distribution investment, storm hardening, and interconnection upgrades all enter the rate base. What enters the rate base eventually shows up on your bill.
The practical consequence for manufacturers is not only a higher numberon your energy bill, but a less predictable one.
Volatility can cost more than the increase itself
A higher energy bill is a number that some manufacturers can absorb. A moving one is harder, because the movement lands in places that never show upon the utility invoice.
Manufacturers rarely get to pass an increase through. Customer contracts and price lists are set for a season or a year while utility rates are not, and a mid-year adjustment arrives with no corresponding change on the revenue site. It comes straight out of margin.
It also slows decisions. Adding a shift, a new line, or an energy-intensive piece of equipment means modeling an operating cost you cannot forecast with confidence, so the analysis carries a wider range, a larger contingency, or a delay until the volatility decreases. And with electricity consumption projected to keep growing through 2050, the volatility is likely to remain.
The good news? Proven solutions for manufacturers and businesses to hedge against these volatile utility rates are as abundant as ever.
Three levers to take control of your energy costs
1. Reduce the load first. The cheapest kilowatt-hour is the one you never buy. Compressed air leaks, lighting, motor and drive upgrades, and scheduling around peak windows are unglamorous and still the highest-return work available to most plants. Start by understanding how much of your bill is demand charges rather than consumption — many manufacturers are surprised, and demand charges respond to operational changes that cost nothing.
2. Look at how you buy. In deregulated markets, supply is contracted separately from delivery, and the structure of that contract — fixed, indexed, blended, and for how long — determines how much volatility reaches you. Having a conversation about how you buy is worth revisiting on a schedule rather than at renewal. Note that this addresses the supply portion only as delivery charges stay with the utility.
3. Generate it onsite. This is the lever that changes the energy cost structure rather than optimizing within it, which is why it belongs in the conversation even for operations that have already done the first two well.
What onsite generation actually changes (and what it doesn’t)
An onsite solar or solar-plus-storage system sits behind your energy meter, which means the power it produces offsets electricity you would otherwise buy at your full retail rate.
Under a third-party ownership structure like a power purchase agreement, a developer finances, builds, owns and maintains the solar system, and the manufacturer buys the power it produces at a rate set in the contract. There is zero capital outlay from the manufacturer, and the portion of load the system serves is priced years ahead instead of re-priced by a rate case. For a business trying to hold a quote, a contracted rate is worth something on its own, before any comparison to what the utility would have charged.
It is worth being equally clear about the limits. Onsite generation typically does not cover all of your load, and solar and batteries alone will not take you off the grid — you still remain a utility customer for the balance. Roof age and condition, available roof space, land, or parking area, and your interconnection situation all play a factor in what is possible for a particular site. Additionally, the value can sometimes depend on how well the generation profile lines up with your production schedule: a single-shift daytime operation and a three-shift plant get materially different results from the same array.
None of which is a reason to skip the analysis. It is a reason to do itwith your own numbers rather than an industry average.
Five key things to have ready before you evaluate anything
Whether you end up talking to a developer, an energy services provider, or your own in house team, the same inputs make the conversation productive, and having them assembled is useful regardless of what you decide.
• Twelve months of utility bills — including the demand and delivery detail most people never read.
• Your rate schedule — the tariff you are actually on.
• Interval data if your utility provides it — an hourly load profile tells you far more than a monthly total.
• Roof age, condition and structural capacity, or available land and parking space — a roof with five years left may change the feasibility of the project.
• Your planning horizon — whether you own the building, how long your lease runs, and how far out you are willing to commit.
Download our Self-Evaluation Form for a full picture of what's needed for a free, custom cost-savings analysis.
It’s time to hedge against volatile energy prices
By leveraging onsite energy solutions like solar and battery storage, industrial businesses can stabilize their electricity prices over the long term and potentially save on input costs — in some cases by millions of dollars over the life of a contract.
What is inside a manufacturer’s control is how much of the cost structure stays exposed to increasing utility rate volatility. For most operations, energy is the last major input still treated as an inevitable input cost rather than a strategic business decision, which also makes it the one with the most room left to work with.
If you want to know what that looks like for your own facility, Onyx Renewables offers a no-cost evaluation where we review your utility bills, usage patterns, facility constraints, and unique goals to quickly determine whether an onsite solar or solar-plus storage project makes sense for your site. If this sounds of interest, request a no-obligation site evaluation below. Fifteen minutes on a call is usually enough to know whether your facility is worth a closer look.
Schedule your free evaluation.
Onyx Renewables develops, finances, owns and operates onsite solar and energy storage projects for commercial and industrial customers across the U.S.
