Data Center Boom Meets Reality: Grids, Backlogs and Backlash

Data centers will account for up to 17% of U.S. electricity demand in 2030 and as much as 20% in 2035, according to the Electric Power Research Institute — even as projects across the country face cancellations, fines, work stoppages and organized public opposition.

Goldman Sachs said in May that only 50%-60% of planned data center capacity will come online as expected over the next two years amid delays and cancellations. Developers added 36 GW of capacity to the U.S. pipeline in the first quarter of 2026, but that figure is down 19% from the last quarter of 2025, according to Wood Mackenzie, as developers "continue to shift their focus to existing … pipelines in the face of an increasingly challenging development and regulatory environment," senior analyst Caitlin Connelly said in a July note.

The contradictions are now visible at the project level. Near Grand Rapids, Michigan, a Microsoft data center touted by Consumers Energy faces an uncertain future amid local permitting delays. In Vineland, New Jersey, a Microsoft-backed data center received a $1 million fine for running dozens of gas-powered generators without permits and was ordered to obtain them within 45 days or shut down. A proposed Google data center interconnecting in Xcel Energy's Minnesota territory is under a court-ordered work stoppage to allow environmental review. Last week, Oracle invoked force majeure to shield itself from delay or cancellation of Project Jupiter, a 2.5-GW campus planned for Doña Ana County, New Mexico, after state regulators blocked a gas pipeline intended to serve it.

Data center opposition "has reached a pitch I have never seen before in my 20-plus years in development," Blake Nixon, president and CEO of Geronimo Power, told Utility Dive. This spring, officials in Nobles County, Minnesota, rejected Geronimo's proposal for a 400 MW "data park" despite the company's community outreach efforts. Nixon said his team is now considering alternative sites in nearby communities.

"[Data centers] are running into physical problems that are manifesting as market problems, political problems, regulatory problems and ultimately problems down on the ground," Nixon said.

Political backlash spreads

Public sentiment has shifted sharply. Seventy-one percent of Americans would oppose a data center built near them, according to a Heatmap News poll fielded in May — up nearly 30 percentage points from September. Local opposition killed at least 20 proposed projects in the first quarter of 2026, the most of any quarter on Heatmap's record.

The backlash has reached states once considered welcoming. In PJM Interconnection territory, the independent market monitor said in July that data centers were responsible for 38% of charges at the most recent capacity auction. The Democratic governors of Pennsylvania, Virginia and New Jersey have pushed regulators to require data centers to bring more generation and transmission capacity online.

Texas Gov. Greg Abbott, a Republican, directed state regulators in June to ensure data centers "fully fund the costs of electric infrastructure needed to serve their operations, preventing those costs from being passed on to residential ratepayers." Weeks later, he effectively halted new data center interconnections until an audit of the state's queue — a pause BloombergNEF said threatens up to 20% of the total U.S. development pipeline. Utah Gov. Spencer Cox, also a Republican, raised the bar for data centers in May. Box Elder County, Utah, subsequently enacted a six-month moratorium on data center builds, and the celebrity investor behind a controversial 9-GW project there cut his proposal in half.

In Secaucus, New Jersey, thousands of gallons of diesel fuel spilled from a nearby AI data center into Anderson Creek, a tributary of the Hackensack River, on Sept. 15, 2026, adding to public anger.

Bringing their own power

Developers and utilities are responding with "bring your own capacity" arrangements that colocate computing facilities with new generation. OpenAI agreed earlier this month to take 8 GW from a planned 10 GW generation project in Ohio, including 9.2 GW of gas assets, pursued by Japan's SoftBank Group and the U.S. Department of Energy. If built, it would be the country's largest generation source — edging out Amazon's proposed 7.7-GW gas-fired plant in West Texas, itself larger than the current titleholder, the 6.8-GW Grand Coulee hydroelectric dam in Washington state. Google has signed a "first-of-its-kind" deal with Voltus for 100 MW of virtual power plant capacity in PJM.

Cleanview, a grid data platform, counted more than 90 GW of behind-the-meter capacity across 59 large-scale projects earlier this year, with as much as 13 GW possible by the end of 2027.

But off-grid does not mean immune to supply chains. Andrew Maxson, an EPRI program manager, said these projects remain at the mercy of stretched supply chains for power and electrical equipment. Customers now wait two to three years for standard power transformers and generator step-up units, according to Fluxco, an electrical equipment marketplace, and the situation is unlikely to improve before 2027, when significant new U.S. manufacturing capacity is expected online. GE Vernova, the top U.S.-based gas turbine manufacturer, is quoting delivery dates in the early 2030s for a backlog exceeding 100 GW. Backlogs at Mitsubishi Heavy Industries and Siemens Energy are shorter but still measured in years.

Labor as a binding constraint

The Associated Builders and Contractors said in 2024 — before the AI-fueled boom began in earnest — that the U.S. was short about 500,000 construction workers. Data centers now compete for electricians and pipefitters with semiconductor factories, battery plants and power generation projects, often "in the same regions and during the same construction windows," Maxson said.

"Skilled labor shortages have … emerged as a binding constraint on data center development and the energy infrastructure that serves it, rivaling land availability, permitting and energy supply as a top concern," he said.

Customers are responding with "[gigawatt]-scale procurement announcements for technologies such as fuel cells and engines, once considered unwieldy for large-scale deployment," Maxson said. Caterpillar's share price has doubled since last July; Bloom Energy's has risen tenfold. BloombergNEF counts 74 GW of announced on-site gas capacity at U.S. data centers, enough to serve about 48 GW of facility load after redundancy, said Mark Daly, the firm's head of technology and innovation. "Whether it is actually built on that timeline is a different question," Daly said.

With opposition, equipment backlogs and labor shortages all colliding, the central question for utilities is no longer whether demand will grow — EPRI's forecasts say it will — but how much of the announced pipeline will actually draw power when planners need it to.