In mid-July, New York became the first state to impose a .
More restrictions are proposed, both at the state and at the federal level. According to now oppose data center construction in their area, according to a survey by Embold Research, up from just 42% last summer.
The main reason? As with the New York state moratorium, energy costs are the top issue.
Data centers are projected to increase average electricity costs by 6% to 29% by 2030, according to research from . “Now there’s an expansion of those facilities, reaching 100 megawatts. And some builds are as big as 2 gigawatts of power. There’s one in Louisiana that’s planned to consume 5 gigawatts of power.”
Just how much is 5 gigawatts? Enough to power 4 million homes—nearly all the homes in Michigan or more than the total number of households in New York City— according to the , there are now over 4,500 data centers in the U.S., which is more than in the next 16 countries combined. And it’s not enough. The overall vacancy rate in North American data centers is now 0.9%, states a , CEO at Flexential, a colocation provider with 42 data centers in 18 U.S. markets and four more under development. “We’re in the process of acquiring a number of additional properties,” Mallory adds. “You have to be planning for the future.”
But the demand for space is even higher than the pace of construction. “Most capacity out to 2027 is completely sold, not just for Flexential, but for any data center out there,” Mallory says.
Flexential has an easier time finding locations than other data center companies because its facilities are typically in the 22 to 36 megawatt range, which is a reasonable size to connect to a power company. “Generally, they either have the infrastructure ready to go, or we can work with them to have power available in the near term,” Mallory says. “We’re not coming in asking for 500 megawatts on day one or 1 gigawatt in twelve months.”
And if the local utility can’t supply enough power and needs to build more generation or transmission capacity? “We would pay our fair share of whatever that augment would be,” Mallory says. “We would not expect any other use to pay for what we would take.”
In addition, Flexential also has 100% generator backup in its data centers in case there’s an issue with the grid. Power concerns are the No. 1 factor when Flexential is deciding where to locate its next data center, Mallory says.
This constraint on data centers is affecting AI rollouts. According to . And demand from AI-focused data centers, in particular, grew by 50%. The largest tech companies spent more than $400 billion on capital expenditures in 2025, and that number is expected to increase by 75% in 2026. And AI factory capacity more than tripled in the last 18 months, according to the agency.
Real estate advisory firm Newmark noted that , $58 billion was spent on data center construction so far this year, more than four times the amount at the same time last year. We’re now seeing an average $10 billion worth of data center starts—meaning that ground is broken and construction has begun—per month. That’s 300% higher than a year ago, the report says. And, prior to 2024, monthly starts were well under $1 billion. The growth curve in the report is exponential.
Part of the dollar amount growth is because data centers are becoming much more expensive. Many projects have per-square-foot costs of more than $1,000.
ConstructConnect is also tracking nearly 100 data center projects expected to begin construction before the end of the year, totaling more than $101 billion in planned spending—and that’s not including Google’s $100 billion Kestrel data center project.
However, power infrastructure project starts rose just 2.7% during the first five months of 2026 compared to the same period in 2025. That’s expected to grow, though. ConstructConnect expects a 30.8% increase in new power projects for all of 2026 compared to 2025.
SemiAnalysis confirms the record-high growth in new data center construction and predicts that total capacity will grow by 21 gigawatts in 2026 to 84 gigawatts in 2030.
Facing the power challenge
According to , a senior research analyst at Uptime Intelligence. “But you’re asking the community around you to accept a major source of emissions causing global warming and also local issues like particulates and noise and heat,” he says.
Fuel cells are more efficient, he says, and don’t emit particulates, but they’re more expensive and less reliable than generators and have other operational issues.
One company that recently decided to go with fuel cells is , chief marketing and communications officer at Bloom Energy, which makes the fuel cells that Oracle plans to deploy. And companies aren’t about to scale back on their AI ambitions or reduce their demands for data centers, she says.
But when the data center is going to draw more power than the entire local community, the focus is going to shift to on-site power generation, says released in mid-June, 61% of data center developers plan to deploy on-site power if the local grid can’t meet their needs. “They know they’ve got a constraint, and they have to act on it,” Cottuli says.
And the survey numbers might actually be on the low side, says , released in early July, called transmission limitations a “critical bottleneck” to connecting new power generation facilities to the grid. Much of the existing infrastructure is old and needs to be replaced, even as “the load growth from data centers has become a particular focus in the industry that is driving upward trends in demand.”
“The backlog is growing for the right level of transmission infrastructure to keep up with demand for AI workloads in particular,” says moved to speed up electric grid connections for data centers and instructed six regional grid operators to either justify or update their connection rules to make that happen.
Data centers are now getting large enough that their presence on the power grid affects other users, says Uptime Institute’s Judge. “So, like it or not, they will be regulated more stringently by grid authorities everywhere.”
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