Let’s get one thing straight: utilities aren’t ignoring data center developers; they’re inundated by them. Global data center demand is growing significantly[1] and developers see a lucrative opportunity: high-volume energy sales to a small number of customers. But power and its delivery aren’t commodities you can order. They’re a long-lead infrastructure investment shaped by regulatory timelines, community impacts, available expertise, and grid realities. Without credible forecasts and early engagement, utilities risk overbuilding for speculative loads or underpreparing for real ones. This article unpacks why energy planning isn’t optional, why utilities aren’t just slow, they’re deliberate, and how developers can shift from pressure to partnership.
Planning Isn’t Optional; It’s Infrastructure
Developers often treat energy like any other line item, something that can be expedited with enough money, like steel, fiber, or concrete. But utilities aren’t transactional vendors, and the grid isn’t a private asset. You can’t simply pay to jump the queue. Power planning must account for long-term system impacts, regulatory constraints, and the needs of every customer—not just the loudest or fastest-growing. Data centers aren’t built in a vacuum, and utilities can’t ignore the ripple effects of large loads on reliability, affordability, and equity across their service territory.
Utilities aren’t just being cautious. They’re safeguarding the grid for everyone. When they commit to serving a large load, they must ensure reliability not only for the new customer but for every school, hospital, and household already connected. That requires long planning cycles: multi-year infrastructure upgrades, regulatory approvals, and coordination across transmission and distribution systems. These timelines aren’t arbitrary; they’re designed to prevent cascading risks and ensure that one customer’s urgency doesn’t compromise another’s stability. Reliability isn’t negotiable, and it can’t be fast-tracked without consequences.
So, when data center developers show up with multi-gigawatt load requests and expect instant interconnection, they’re not just being unrealistic; they’re distorting the very data utilities need to plan responsibly. Without clear, committed forecasts, utilities risk overbuilding infrastructure that may never be used, leaving communities to foot the bill if the AI boom fizzles or demand projections fall short. This isn’t about reluctance. It’s about risk management, alignment of planning cycles, and treating energy like the critical resource it is.
If you come to them with a five-year roadmap, utilities can begin integrating your load into their resource and delivery planning. But even that may be cutting it close—FERC transmission planning now looks 10 to 20 years ahead. Show up late, demanding power like it’s a DoorDash order, and you’re going to be disappointed. And no, complaining to Congress won’t make electrons flow faster. Without accurate, location-specific load forecasts, utilities are left guessing. And when the guesses are wrong, the consequences reverberate through budgets, timelines, customers, and ratepayer bills.
It’s Not Just Power, It’s an Ecosystem
Let’s not pretend power is the only thing a data center needs. Cooling systems demand water, sometimes millions of gallons annually. You’ll need fiber connectivity, land use permits, emissions compliance, and a small army of specialized equipment: switchgear, transformers, DC buses, backup generators, and more. And none of it shows up overnight.
This isn’t a solo sprint; it’s a relay race across an ecosystem. The players?
Utilities: Responsible for managing grid capacity, reliability, and regulatory alignment, utilities must assess supply requirements to meet customer demand. This includes evaluating alternatives and defending the most cost-effective solution before regulators.
Regulators and Permitting Agencies: These entities shape what’s possible, and when. Their decisions affect rates, infrastructure siting (e.g., transmission lines or nuclear facilities), and community impact. Public engagement in rate cases is essential to ensure transparency and trust.
Data Center Developers: Driving demand, developers initiate permitting, set timelines, and coordinate buildouts. These efforts require extensive collaboration with agencies and municipalities to secure approvals and keep projects on track.
Electrical Equipment Manufacturers: Tasked with sourcing critical infrastructure components—such as DC buses, transformers, and switchgear—these manufacturers face long lead times and must align procurement with project schedules.
Construction and Engineering Firms: These teams translate plans into reality, mobilizing labor, securing materials, and establishing electrical connections. Their work ensures the data center delivers reliable power and effective cooling for high-performance computing.
Computer Equipment Manufacturers: Developers must coordinate with multiple vendors to procure servers, storage systems, and communication hardware, as each is essential to operational readiness.
Local Communities: Their support—or opposition—can determine a project’s success. Early engagement and transparent communication are vital to building trust and securing buy-in.
Each has its own clock. Remember the chip shortage during COVID? Developers had to pay up front, then wait 18–20 months for delivery. That wasn’t a delay; it was reality. And it’s no different now. If you want 2 GW of load, plus cooling, connectivity, and compliance, you’re not just building a facility; you’re constructing a multi-tiered ecosystem. From water rights to transformer delivery, it’s a layered network of dependencies, not a plug-and-play operation.
Start recognizing the complexities. Understand the players. Respect the timelines. And stop acting surprised when the grid doesn’t bend to your calendar.
The Reality Isn’t Transactional, It’s Relational
When a manufacturer, for example, plans to build a new factory, they don't just show up at the local utility with a load request. They partner early on with utilities, negotiate long-term energy supply agreements, and align their buildouts with local infrastructure planning.
If your data center load rivals or exceeds that of a large industrial load (hyperscale data centers can require 100 MW (1GW) or more to support tens of thousands of servers for intense AI workloads), it’s not a “flip-the-switch” situation. It’s a grid-altering event. You wouldn’t treat your supply chain partners this way. When chip shortages hit, you adapted. You ordered ahead. You diversified. It’s time to extend that same strategic mindset to your energy partner.
From Relationship to Reality Check
When developers treat utilities like vendors, speculative requests pile up. As competition intensifies, many cast wide nets, approaching multiple utilities to see who can interconnect the fastest. But most of these proposals never materialize. Utilities call them Phantom Data Centers.
The problem isn’t just phantom load, it’s phantom clarity. Utilities often lack reliable data on how much power is needed, by whom, and where. Developers sometimes submit multiple interconnection applications across different utilities and regions, hoping one will stick. But this scattershot approach muddies the waters, making it nearly impossible to forecast actual demand. What looks like a 10 GW surge might only be 2 GW of real need, duplicated five times over.
Planning for phantom load puts utilities in a bind. Overbuilding risks, stranded assets, wasted investment, and rate shock. If you want to be taken seriously, bring more than ambition. Bring commitment.
Closing the Loop: Planning Must Evolve
Utilities must also modernize their planning and analysis processes, not just to keep pace with demand, but to accelerate study cycles and improve efficiency across the board. Business-as-usual approaches, shaped by legacy timelines and siloed systems, are no longer sustainable or acceptable. This imperative extends beyond hyperscale data centers to include smaller interconnections, community energy projects, and emerging technologies. If the grid is to remain resilient and responsive, planning itself must become more agile, transparent, and data-driven.
Partner, Don’t Pressure
Utilities aren’t slow, they’re deliberate. They’re balancing reliability, resilience, and regulatory constraints. If you want to build fast, build smart. That means engaging early, aligning timelines, and treating utilities like the strategic partners they are, rather than obstacles to be bulldozed.
Remember, utilities are also managing risk. If the AI boom fizzles or demand projections prove inflated, excess infrastructure becomes a stranded cost. And guess who pays? Not the developers who walked away, but the communities left holding the bill.
This isn’t about finger-pointing. It’s about mutual understanding. Data center developers and utilities need a unified approach, one that includes manufacturers, regulators, and grid planners. Because the future of digital infrastructure depends on more than just ambition. It depends on alignment and partnership.
[1] Boston Consulting Group (BCG) projects that global data center power demand will grow at a 16% compound annual growth rate (CAGR) from 2023 to 2028, reaching approximately 130 GW. This acceleration, up from a 12% CAGR between 2020 and 2023, is driven primarily by the rise of generative artificial intelligence (AI).