Original article Financial Times
New article Globest
By Erik Sherman
It’s becoming harder for America’s power grid to separate real demand from hype. Across the country, data center developers are racing to lock up future electrical supply—often for projects that may never be built. The result, according to the Financial Times, is a tangle of misleading forecasts that are disrupting how utilities plan, spend, and price power.
Utility capital spending was already on a steep climb. Investment bank Jefferies projects U.S. utilities will pour $212.1 billion into infrastructure in 2025, up 22.3 percent from the prior year and 129 percent higher than in 2015. Much of that pressure stems from the rapid growth of data centers. Pew Research reports that in 2024 these facilities consumed more than four percent of all U.S. electricity, a figure expected to rise by 133 percent by 2030. Communities near big clusters of data centers have already seen power prices surge.
The Financial Times likens developers’ tactics to double-booking restaurant tables. To secure the best rates, some companies are reserving massive amounts of electricity with multiple utility providers, using what insiders call “placeholder” or “phantom” data centers. Because new power plants and transmission lines can take years to complete, utilities often treat these placeholders as real projects in their planning models.
That approach creates double-counting and distorts forecasts, assuming every proposed data center will operate at full capacity even as doubts mount over future artificial intelligence demand. If those phantom projects never come to life, utilities could be left with stranded assets—and may try to shift the cost of those unused investments onto consumers.
“Even the folks who benefit the most from sky-high projections are realizing, ‘What happens if the pendulum swings back the other way and rates get unaffordable?’” said Josh Price, director of energy and utilities at research firm Capstone, in comments to the Financial Times.
Some utilities have already begun to scale back. AEP Ohio, a unit of American Electric Power, cut its pending data center pipeline by nearly 30 percent in October, eliminating projects from developers it deemed too weak financially to deliver. In California, PG&E dropped about 25 proposed centers from its queue.
“There’s an ongoing trend of whittling down,” said Julien Dumoulin-Smith, Jefferies’ power, utilities and clean energy analyst, in the same report.
“How many projects are real at this point? That’s what I want to know.”
New article Globest
By Erik Sherman
It’s becoming harder for America’s power grid to separate real demand from hype. Across the country, data center developers are racing to lock up future electrical supply—often for projects that may never be built. The result, according to the Financial Times, is a tangle of misleading forecasts that are disrupting how utilities plan, spend, and price power.
Utility capital spending was already on a steep climb. Investment bank Jefferies projects U.S. utilities will pour $212.1 billion into infrastructure in 2025, up 22.3 percent from the prior year and 129 percent higher than in 2015. Much of that pressure stems from the rapid growth of data centers. Pew Research reports that in 2024 these facilities consumed more than four percent of all U.S. electricity, a figure expected to rise by 133 percent by 2030. Communities near big clusters of data centers have already seen power prices surge.
The Financial Times likens developers’ tactics to double-booking restaurant tables. To secure the best rates, some companies are reserving massive amounts of electricity with multiple utility providers, using what insiders call “placeholder” or “phantom” data centers. Because new power plants and transmission lines can take years to complete, utilities often treat these placeholders as real projects in their planning models.
That approach creates double-counting and distorts forecasts, assuming every proposed data center will operate at full capacity even as doubts mount over future artificial intelligence demand. If those phantom projects never come to life, utilities could be left with stranded assets—and may try to shift the cost of those unused investments onto consumers.
“Even the folks who benefit the most from sky-high projections are realizing, ‘What happens if the pendulum swings back the other way and rates get unaffordable?’” said Josh Price, director of energy and utilities at research firm Capstone, in comments to the Financial Times.
Some utilities have already begun to scale back. AEP Ohio, a unit of American Electric Power, cut its pending data center pipeline by nearly 30 percent in October, eliminating projects from developers it deemed too weak financially to deliver. In California, PG&E dropped about 25 proposed centers from its queue.
“There’s an ongoing trend of whittling down,” said Julien Dumoulin-Smith, Jefferies’ power, utilities and clean energy analyst, in the same report.
“How many projects are real at this point? That’s what I want to know.”
Last edited:
