From gridlock to greenlight: How strong utility partnerships accelerate data center development

Across the US, data center developers are facing a sobering reality: power availability, not land, capital, or construction, is the defining bottleneck. In states like Maryland, high‑profile projects have seen months or even years of delay after utilities struggled to secure timely grid capacity. Limited early coordination, slow regulatory processes, and rising load forecasts have all combined to create high‑stakes setbacks.

As demand for large‑scale computing power accelerates, the message is clear: successful data center development requires early, strategic, and collaborative utility partnerships, supported by smart site selection and regulatory environments that enable fast, predictable interconnections.

1. Choose data center‑friendly regulatory environments

The regulatory environment is now one of the most important early decisions in data center site selection and due diligence. States that offer predictable, transparent, and incentive‑driven processes consistently support more efficient utility-developer collaboration. Key factors to evaluate include:

• Dedicated large load tariffs
• Streamlined environmental and land‑use permitting
• Predictable PUC approval processes
• Targeted tax incentives
• Utility planning structures that can support large loads.

Virginia, home to Dominion Energy, has been the industry’s gold standard. And developers responded aggressively: Loudoun County’s ‘Data Center Alley’ now hosts more than 250 data centers and carries up to 70 percent of global internet traffic at peak. Other utilities, including Georgia Power in Georgia and NV Energy in Nevada, have emerged as strong partners by offering similarly enabling business conditions.

2. Prioritize smart site selection to reduce interconnection risk

Even the most robust regulatory environment cannot overcome poor siting decisions. Power availability is tight across the country, and most substations simply lack the headroom to support 150–200+ MW data centers without costly upgrades.

Effective data center site selection should prioritize locations with:

• Substations with available capacity or near‑term upgrade pathways
• Strong transmission corridors with existing headroom
• Proximity to idle or underutilized power plants
• Surrounding grid infrastructure that can support large, flexible loads.

Partnering early with utilities helps developers confirm feasibility and avoid the costly “hidden tail risk” of multi‑year interconnection delays.

3. Align processes early to accelerate interconnection timelines

With grid congestion and long interconnection queues becoming widespread, transparent, early process alignment between utilities and developers is essential.

Success requires:

• Clear, early communication about load size, ramp‑up plans, and demand flexibility
• Fair, timely compensation for utility studies and planning work
• Commitment to a single site, avoiding speculative “site shopping” that strains planning models
• Joint understanding of system impacts, including regional load changes and needed upgrades.

Several states have already begun reforming processes to curb speculative applications. Texas’s SB6, for example, aims to reduce unnecessary queue congestion and promote more realistic, long-term load commitments.

Utility partnerships will determine the next era of data center growth

The industry is entering a period where power supply scarcity, grid congestion, and rapid load growth are colliding. The data center developers that succeed will be those who engage utilities early, choose power markets strategically, and align processes from the start.

Strong utility-data center partnerships are the cornerstone of turning development ambitions into operational reality, even as grid pressures intensify.

Our data center due diligence team partners with generation owners/developers, utilities, hyperscalers, and capital providers to evaluate power availability, assess regulatory risk, validate site readiness, and navigate the interconnection process from start to finish to reduce development uncertainty and accelerate time to power.