Energy Scarcity: How Companies Can Navigate and Manage an Uncertain Future

by Kiran Bhatraju, Founder & CEO of Arcadia

The only thing Donald Trump’s gotten right so far: we are in the early days of an energy crisis.

We’re not building enough new transmission. We can’t get enough transformers. AI is eating up all the new supply. Tariffs are upending global supply chains. And it’s been five years since FERC 2222, but distributed generation still can’t truly access wholesale markets.

All of these trends, at their core, represent a crisis of ever-rising demand and tighter supply. The outcome could be dire and lead to hyperinflation in energy prices. Last week MISO, one of the US's largest energy markets which covers 15 states, increased capacity prices for the upcoming summer season 20x from $30/MW-day last year to $666.50/MW-day. And just after Trump’s “Liberation Day,” Dominion Power asked regulators for a 15% rate base increase, the largest increase in 30 years.

The warning signs have been flashing red for years, but we are clearly entering a new era of energy scarcity, threatening our economic security, everyday affordability, and business resilience.

Recent Administration policies are compounding these challenges. New tariffs on energy equipment are driving costs higher across the board. In the Northeast, tariffs on Canadian electricity threaten to cut off access to affordable hydroelectric and nuclear power, leaving consumers in these regions particularly vulnerable to price spikes. The stop-work order against Empire Wind will only exacerbate the pressure on power in the northeast and put a chill on new development.

The consequences of these overlapping crises are already manifesting in the real economy.

One cold storage company we work with recently missed their financial projections by double-digit percentages due to unexpected energy costs — a cautionary tale for businesses in every sector that haven't yet prioritized energy procurement as a core strategic function. For business leaders and procurement teams, it’s time to adjust to this new reality — with data-driven, building-to-grid solutions that serve to protect energy prices and access.

The New Reality for Energy Procurement

For businesses navigating this turbulent landscape, one thing is clear: energy procurement can no longer be business as usual. Energy cost management is vital to managing the bottom line, and the shifting energy environment requires companies to rethink how they source, manage, hedge, and plan their power needs.

The path forward requires acknowledging several new truths:

1. Grid constraints will impact energy costs and availability for years to come. It took over a century to build the grid, and it will take time to rebalance our power markets. Capital expenditures across 47 major utilities are projected to hit $212 billion this year alone — a staggering 22% increase from 2024. Many utilities will, as a result, have no choice but to follow Dominion’s lead on rate hikes. Meanwhile, AI data centers are consuming capacity on the grid at unprecedented rates. These digital behemoths require massive amounts of electricity, creating bottlenecks in systems that were never designed for such concentrated demand. And the jury is still out if they’re willing to pay for those grid upgrades vs the rate base.

2. Distributed generation (DG) will be central to cost management and provide an untapped opportunity for resilience. Solar, batteries and new storage technologies will become crucial tools to hedge costs for the future and provide reliability. If you bought and owned a solar project in California in the early aughts, you likely only saw your investment return increase as utility rate increases outpaced inflation. The same dynamic will be on steroids in the coming decade. And with more and more dynamic time-of-use tariffs and access to wholesale markets, battery storage will increasingly become a hedge against massive price spikes and demand charges.

3. Energy procurement is no longer an afterthought — it's part of strategic enterprise resource management. Companies have enterprise resource planning (ERP) tools for finance, HR, supply chain, and sales — but not yet for building-to-grid energy management. A system built on core meter data that proactively manages their energy sourcing, optimizes costs through real-time market intelligence, and leverages new procurement models will gain a competitive edge. This has to be top of mind for the C-suite.

Companies that understand the market risks and plan proactively will have a strategic advantage as they grow.

Rethinking Procurement: A Strategic Playbook

So what can a business do to stave off wild price shifts in the market and better forecast costs?

• Get your data in order, and take a building-to-grid approach to energy procurement. To start, businesses need to get hold of their core utility and building data, and make it portable. Energy is wildly complex, and companies are often swimming between pen-and-paper consultants and vendors who lock up their data, making it unusable by other parts of the organization.

• Take a multi-faceted approach, starting with market structure awareness. Consider whether direct wholesale market participation, retail providers, behind-the-meter solutions, dynamic time-of-use tariffs, or bilateral contracts best suit your needs, while evaluating pricing mechanisms like fixed, indexed, block-and-index, or hybrid structures.

• Choose third-party fiduciaries who have your interests in mind, not just trying to deploy as much capex as possible. One customer lamented that the wholesale market purchasing desk wouldn’t talk to the distributed energy team at the same energy services company because they would cannibalize each other. They might cannibalize their bonuses, but leave the customer wanting more and getting an unoptimized outcome.

• Incorporate renewable energy considerations and evaluate virtual and physical power purchase agreement options. Too many corporates spent the past decade just focused on financial hedges through Virtual power purchase agreements. While these agreements are valuable as part of a portfolio and for hitting sustainability goals, they are not delivering the actual electrons businesses need to grow. Enterprises need to develop a clear strategy for all renewables, including non-commodity products like renewable energy certificates, and consider how their energy investments might contribute to adding new renewable capacity to the grid.

• Operationally, you should assess your flexibility for demand response participation and explore behind-the-meter options. On-site generation, storage, or microgrids will only become more valuable in an energy scarce future. As volatility grows in power markets, system operators and utilities will have to provide even higher compensation for customers who can flex their demand, and lower the overall peak capacity on the wires. Find a procurement specialist who will take the time to think about your backup power needs, but also be able to assess all the value streams available from distributed generation across time-of-use rates, demand response, capacity market, and ancillary value.

At Arcadia, we’re diving headfirst into solutions to help companies with these complex problems. We’re taking a building-to-grid approach as a fiduciary for the customer, ensuring the most optimized outcomes across cost and carbon.

The energy crisis won't resolve itself through market forces alone. It demands coordinated policy responses, massive infrastructure investment, and a new approach to how we value and manage electricity as a resource. Until then, American businesses should prepare for higher bills, occasional reliability issues, and a power system under unprecedented stress.

The good news? The technologies and expertise to address these challenges for businesses exist, so act now before the consequences become truly dire.

---

🎙️ Inevitable Podcast

☀️ Jacob Sandry, CEO of Euclid Power, talks about the evolution of renewable energy, the founding of Euclid, and how AI is transforming project development and operations. We also dig into rising power demand, workflow automation, and what’s next for clean energy infrastructure. Listen to the episode here.

---

🍿 The Lean Back

See how Quilt is designing smart pumps that work for every room.

---

👩‍💻 Climate Jobs

Check out the Job Openings space in the MCJ Collective member hub or the MCJ Job Board.

• Senior Data Scientist at Arcadia (Remote)

• Lead Mechanical Engineer at Exowatt (Miami, FL)

• Head of Distribution at Floodbase (Brooklyn, NY)

• Senior Product Manager at Leap (Remote)

• Senior Associate, Structured Finance at Odyssey Energy (Remote)

• Channel Account Executive (HVAC Partner Manager) at Quilt (Remote)

• Head of Partnership Development at Sublime Systems (Remote)

• Director, Builder Sales (National Sales Manager) at SPAN (Remote)

• Sr. Accounts Payable Specialist at Twelve (Remote)

• Senior Quantitative Analyst at Verse (San Francisco, CA)

---

🗓️ Climate Events

MCJ Climate + Marketing Meetup: Monthly climate and marketing meetup to connect over marketing challenges in the climate space. ​​We're doing a lean coffee-style meetup where participants submit, vote, and discuss chosen topics. (May 15)

---

The MCJ Newsletter is a FREE weekly email curating news, jobs, Inevitable podcast episodes, and other noteworthy happenings in the MCJ Collective community.

💭 If you have feedback or items you’d like to include, feel free to reach out.

🤝 If you’d like to join the MCJ Collective, apply today.

💡 Have a climate-related event or content topic that you'd like to see in the MCJ newsletter? Email us at content@mcj.vc