How the Hospitality Industry Can Offset Rising Power Costs

Artificial Intelligence (AI) has become a game-changer across multiple industries. However, its soaring energy demands might pose challenges for businesses, particularly restaurants, who often operate with slim margins that could be dramatically affected by a larger-than-normal electricity bill. Fortunately, there are simple strategies to help offset potential rising costs. 

AI's Impact on Commercial Energy Bills: Navigating the Future

There’s no doubt that  AI has taken off in the hospitality and restaurant industries, resulting in better customer experiences and more efficient team workflows (among other uses). But the tech that runs AI systems is incredibly energy-intensive, requiring extensive data and continuous processing. 

Already, this sharp rise in energy demand is challenging the markets: The most recent capacity auction for PJM,  the regional transmission organization that coordinates the movement of wholesale electricity throughout 13 states and Washington, D.C.,  cleared at an all-time high. This auction, for the June 2025 to May 2026 capacity year, resulted in a clearing price of $269.92 megawatts (MW) per day for most of the PJM footprint, compared to $28.92 MW per day for the June 2024 to May 2025 capacity year. This change in cost will affect millions of PJM customers, affecting commercial customers uniquely based on their peak usage.

Of course, this AI-driven demand is only one cause of higher prices.  There are power plant retirements and market design changes at play as well, but continued use of this tech is likely to have long-term implications for energy bills.

Strategies to Mitigate Rising Energy Costs

As many retailers and restaurants are feeling the impact of rising inflation, increasing labor costs, and other supply chain challenges, making any reduction in energy costs can be an immensely helpful step toward better budget management. 

Step 1: Conduct an energy audit 

Running your properties more efficiently is beneficial year-round. Before you can take steps to reduce your usage, though, you’ll need to benchmark where you are today. With an understanding of where operations are today, you can determine when and how your team is using energy, as well as the impact on energy costs. 

At the heart of any efficient energy usage strategy lies the need for a holistic approach. In addition to your operational and maintenance teams, engaging with finance and accounting teams will provide a more rounded insight into your energy usage and associated costs. You can further enhance your understanding by consulting with external energy management experts, particularly if you're running a small team with limited resources. Start by connecting with your energy supplier for help with the audit. 

Step 2: Explore options for reducing peak demand

A thorough review of your operations can provide a detailed understanding of when and how energy is being used and the extent of its impact on your energy costs. One of the most effective ways to save on power costs is to reduce your organization’s peak demand. Peak demand is simply the time when your organization’s energy usage is highest and is most common when your team is at its busiest. 

Efficiency upgrades help save organizations money by lowering the demand required to power a building and being able to flex your energy load through efficiency solutions is one of the simplest ways to reduce your energy spend. To learn if the peak demand your organization is being billed for happens often, start by reviewing a year’s worth of interval meter data.

It may also be time to consider a demand-side management product. Demand-side management involves shifting energy use to off-peak times when electricity rates are lower. This can be particularly effective for businesses that run around the clock, like restaurants. Automated systems can help schedule energy-intensive tasks for off-peak hours.

From here, you can begin to reduce energy demand by adjusting processes to conserve more energy during the day.

Step 3: Make upgrades

After your assessment, implementing a real-time monitoring program can help identify opportunities for improvement, establish benchmarks before any changes, and measure the impact of these changes. As for specific upgrades, energy-efficient lighting, smart HVAC systems, and modern appliances can significantly reduce overall electricity usage.

If your team hasn’t yet replaced old, energy-draining lightbulbs with more efficient LED lighting, now is the time. LED technology offers countless advantages over traditional options: It’s highly customizable and between 75 and 90 percent more efficient. 

Preparing for What's Next