AI Data Centers Are Squeezing Out Food and Beverage Expansions

Food & beverage processors are facing unprecedented energy constraints — from multi-year grid interconnection delays to steep increases in electricity costs — that threaten the industry’s growth and possibly even its ability to survive at its present state.

Data points to a worsening energy bottleneck that is delaying facility expansions, straining supply chains and forcing processors to compete with fast-growing AI data centers for scarce grid capacity — according to “Kilowatts into Calories: Surveying Food Processors on Energy Challenges,” a new survey released today by AlphaStruxure, Schneider Electric, Endeavor Business Intelligence and Food Processing magazine.

Key findings include:

* 57% of food processors planning expansions can’t secure enough grid power.

* 52% say their utilities lack capacity to support growth.

* 70% face waits of three years or more for grid upgrades — some exceeding six years.

* 91% pay above the U.S. industrial average ($0.08/kWh) for electricity, with nearly half seeing costs rise 26%+ in five years.

* 81% rely on backup generators, but 63% don’t have enough capacity for outages beyond a few hours.

The report is based on responses from 145 senior energy decision-makers at consumer packaged goods manufacturers, overwhelmingly in the food & beverage industry.

For decades, food processing facilities secured large-scale utility interconnections with relative ease. After the AI industry took off, food processors are now in competition with data centers to secure electricity from the grid, and this scarcity is driving up wait times and energy costs.

This is the first industry survey to measure how the U.S. food & beverage and consumer packaged goods industries are adapting to the unfolding energy crunch. The results convey just how much these industries are facing energy disruption — and the ways they're finding creative solutions.

"This survey data points to the reality of systemic energy risk," said Juan Macias, CEO of AlphaStruxure, a provider of on-site power generation solutions. "The issues food processors are facing – delays, outages, and sudden rate increases — are now increasingly common.

“For instance, we know of food processors that have already broken ground on new facilities, only to discover they can't get power to the site by the time their facility opens. That's why we're seeing the industry turning toward alternative energy solutions."

"America's aging grid and surging demand are creating new risks for energy-intensive industries," said David Cooper, director of CPG-North America at Schneider Electric. "We're seeing more frequent outages and higher costs, especially in regions like California. Our research shows that nearly half of processors have seen energy costs spike by more than 25% in five years."

The report also highlights sustainability priorities: fleet and facility electrification and Scope 1 emissions reduction rank highest, even as confidence in achieving these goals varies.

The full report is available at this link.