Private equity underwrites data center power on contracted MW, not directory MW, because grid delivery can no longer be assumed. Median time from interconnection request to operation exceeded five years for projects built in 2025, and only 13% of 2000–2020 requests ever reached operation (LBNL, Queued Up: 2026 Edition, May 2026). Diligence starts with the utility agreement and the meter.
How long do interconnection queues actually take?
| Measure | Figure | Source |
|---|---|---|
| Median request-to-operation time | More than 5 years for projects built in 2025 | LBNL, Queued Up 2026, May 2026 |
| Completion rate | 13% of 2000–2020 requests reached operation; 75% withdrawn | LBNL, Queued Up 2026, May 2026 |
| Capacity waiting | More than 2.2 TW; about 5 years average wait in 2024 | RMI, Interconnection Reform, Mar 2026 |
| New large-load delivery | 4.4 years average | Cushman & Wakefield, Global Market Comparison, May 2026 |
| AI campus interconnection | 24, 36, and 48-plus months; 300 MW-plus within 36 months is the top site criterion | CBRE, 2026 US Outlook, Jan 2026 |
| Chicago (ComEd) | Delays to 2032 and beyond; 10-year letter of credit at 50 MW or more | CBRE, H2 2025 Chicago profile, Feb 2026 |
Demand keeps rising, from 31 GW in 2025 to a projected 66 GW in 2027 (Goldman Sachs Research, May 2026), and policy moves faster than queues: the August 3, 2026 Texas pause cut projected 2027 load growth from 14% to 6% (EIA, Short-Term Energy Outlook, Aug 2026). Any MW dependent on future utility action is probability-weighted.
Why do transformer lead times matter as much as the queue?
A utility approval is not energization. Transformer lead times averaged 50 weeks in 2021 and 120 weeks in 2024, 80–210 weeks for large units, with prices up 60–80% since January 2020 (Wood Mackenzie, Apr 2024). Gas turbines are sold out through 2030–2031 (StackedAI analysis, Tier-2 brownfield conversion underwriting framework, Aug 2026), with prices heading toward $600 per kW by end-2027, up 195% on 2019 (Wood Mackenzie via Bloomberg, Apr 2026).
A facility with installed transformers and rated switchgear is therefore underwritten differently from one with a utility letter alone: the gear is 120 weeks of schedule that need not be bought, the core of the gap in brownfield vs greenfield data center cost per MW.
How should a sponsor structure power diligence?
StackedAI’s framework runs in four layers (StackedAI analysis, power diligence framework, Aug 2026).
1. Contracted MW versus service capacity versus directory MW. Directory MW, the figure on a listing or broker sheet, is often the utility service capacity or a design nameplate; StackedAI’s working heuristic is that real metered load frequently runs 3–10 times below it (StackedAI analysis, power diligence framework, Aug 2026). The service agreement defines contracted MW, meter data defines real load, and the single-line diagram defines what the gear can carry.
2. Utility letters and their weight. A will-serve letter is evidence, not a contract. Only a signed service agreement for a stated MW supports a base-case timeline; a conditional commitment tied to upgrades, or an acknowledgement with a queue position, does not. Security terms such as ComEd’s 10-year letter of credit at 50 MW and above (CBRE, Feb 2026) are a cash cost.
3. Upgrade path. If the target density exceeds contracted MW, the sponsor needs the utility’s written timeline and equipment list; the 4.4-year average (Cushman & Wakefield, May 2026) is the default absent a written shorter commitment.
4. Physical and thermal headroom. Switchgear headroom and chilled-water capacity determine whether contracted MW can reach liquid-cooled racks; a target with both warrants a materially higher multiple (StackedAI analysis, Cooling Solutions retrofit note, Aug 2026). See liquid cooling retrofit cost for a legacy data center.
What bridge power options exist while the utility catches up?
Speed-to-power is where smaller operators beat hyperscalers (StackedAI analysis, Tier-2 brownfield conversion underwriting framework, Aug 2026).
- Behind-the-meter gas. With gas near $2.9–3.0 per MMBtu, fuel is about 2.2 cents per kWh and all-in cost about 3.5–5 cents per kWh at high utilization (StackedAI analysis, energy-first behind-the-meter cost derivation, Aug 2026). The turbine shortage favors recips; see gas turbine vs reciprocating engine data center power.
- Fuel cells. Supplier demand: second-quarter 2026 revenue of $1,065.4M, up 165.5% (Bloom Energy, Q2 2026 results, Jul 2026).
- Legacy interconnect reuse. A decommissioned hall with a live 15 MW agreement is a 15 MW power position, the core of the Tier-2 brownfield conversion thesis.
Bridge power is underwritten as a cost that buys lease-up time, not permanent supply; see behind-the-meter power cost for data centers and energy-first campus development.
How does power position change valuation?
Power availability has been the top investor challenge for three consecutive years (CBRE, 2026 North American Data Center Investor Intentions Survey, Apr 2026). The market prices power position along a ladder (StackedAI analysis, transaction-structures framework, Aug 2026): entitled powered land about $150–200K per MW, powered shell $3–5M per MW, turnkey $10–13M per MW.
Debt follows: spreads in the low 200 basis points and up to 85% loan-to-cost for top credit versus 200–300 basis points wider at 70–80% for non-credit tenants (JLL, North America Data Centers market dynamics, Aug 2026), or in StackedAI’s archetypes 60/40 at 7.5% anchored and 55/45 at 9% unanchored (StackedAI analysis, Tier-2 brownfield conversion underwriting framework, Aug 2026). A confirmed power position makes the anchor signable and the cheaper debt reachable.
Key terms
- Interconnection queue: the utility or grid operator’s ordered list of requests to connect new load or generation.
- Will-serve letter: a utility statement that it can or intends to serve a stated load; evidentiary, not contractual.
- Utility service agreement: the executed contract defining the MW the utility must deliver, the rate schedule, and any deposit or minimum-take terms.
- Directory MW: the capacity figure in listings or broker materials, frequently service capacity or nameplate rather than contracted load.
How StackedAI applies this
StackedAI runs the four-layer diligence above before any engineering or cooling spend on a candidate site, and reports contracted MW, metered load, and installed-gear capacity as three separate numbers. Where they diverge, the model uses the lowest supportable figure and treats the gap as an upgrade. Andre van Zijl’s operating experience in colocation informs which utility documents carry weight. StackedAI benchmarks figures per engagement.
Frequently asked questions
How long does it take to get grid power for a new data center?
LBNL reports a median of more than five years from interconnection request to operation for projects built in 2025, and only 13% of 2000–2020 requests ever reached operation. Cushman & Wakefield puts new large-load requests at 4.4 years, CBRE reports 24, 36, and 48-plus months for AI campuses, and ComEd in Chicago has delays to 2032 and beyond.
What is the difference between directory MW and contracted MW?
Directory MW is the figure on a listing or broker sheet, often the utility service capacity or a design nameplate. Contracted MW is what the executed utility service agreement obligates the utility to deliver. StackedAI’s heuristic is that real metered load frequently runs 3–10 times below the directory figure, so underwriting starts from the agreement and the meter.
What documents does power diligence require?
The executed utility service agreement, any will-serve or capacity confirmation letter, 12–24 months of interval meter data, the single-line diagram with transformer and switchgear ratings, pending upgrade applications with queue position, and the utility’s written timeline plus deposit or letter-of-credit terms, such as ComEd’s 10-year letter of credit.
What bridge power options exist while waiting on the utility?
Behind-the-meter gas, fuel cells, and reciprocating engines with batteries. StackedAI’s illustrative behind-the-meter gas cost is about 3.5–5 cents per kWh all-in at high utilization on gas near $2.9–3.0 per MMBtu. Gas turbines are sold out through 2030–2031 and heading toward $600 per kW by end-2027 (Wood Mackenzie), so recips and fuel cells bridge.
How does power position change what a data center is worth?
Power availability has been the top investor challenge for three consecutive years (CBRE). Entitled powered land trades at roughly $150–200K per MW, a powered shell at $3–5M per MW, and turnkey at $10–13M per MW (StackedAI analysis). A site with a chilled-water plant and electrical headroom warrants a materially higher multiple than a queue position.
Sources
- LBNL, Queued Up: 2026 Edition, May 2026, https://emp.lbl.gov/publications/queued-2026-edition-characteristics
- RMI, Interconnection Reform for AI Data Centers and Generator Queues, Mar 2026, https://rmi.org/resources/interconnection-reform-ai-data-centers-generator-queues/
- Cushman & Wakefield, 2026 Global Data Center Market Comparison, May 2026, https://ir.cushmanwakefield.com/news/press-release-details/2026/Dallas-Texas-Ranked-No–1-Primary-Data-Market-in-the-World-as-AI-Demand-Power-Constraints-and-Regulation-Reshape-CRE-Strategy/default.aspx
- JLL, North America Data Centers market dynamics, Aug 2026, https://www.jll.com/en-us/insights/market-dynamics/north-america-data-centers
- CBRE, 2026 US Real Estate Market Outlook: Data Centers, Jan 2026, https://www.cbre.com/insights/books/us-real-estate-market-outlook-2026/data-centers
- CBRE, North America Data Center Trends H2 2025, Chicago profile, Feb 2026, https://www.cbre.com/insights/books/north-america-data-center-trends-h2-2025/chicago-data-center-market
- CBRE, 2026 North American Data Center Investor Intentions Survey, Apr 2026, https://www.cbre.com/insights/briefs/2026-north-american-data-center-investor-intentions-survey
- Wood Mackenzie, Supply Shortages and an Inflexible Market Give Rise to High Power Transformer Lead Times, Apr 2024, https://www.woodmac.com/news/opinion/supply-shortages-and-an-inflexible-market-give-rise-to-high-power-transformer-lead-times/
- Wood Mackenzie via Bloomberg, Gas Turbine Prices Surge, Crimping Efforts to Power Data Centers, Apr 2026, https://www.bloomberg.com/news/articles/2026-04-01/gas-turbine-prices-surge-crimping-efforts-to-power-data-centers
- Bloom Energy, Record Second Quarter 2026 Financial Results, Jul 2026, https://investor.bloomenergy.com/press-releases/press-release-details/2026/Bloom-Energy-Reports-Record-Second-Quarter-2026-Financial-Results-and-Raises-Full-Year-2026-Guidance/default.aspx
- Goldman Sachs Research, US Data Center Power Demand Projected to Double by 2027, May 2026, https://www.goldmansachs.com/insights/articles/us-data-center-power-demand-projected-to-double-by-2027
- EIA, Short-Term Energy Outlook, Aug 2026, https://www.eia.gov/outlooks/steo/
- StackedAI analysis, Tier-2 brownfield conversion underwriting framework, Aug 2026
- StackedAI analysis, power diligence framework, Aug 2026
- StackedAI analysis, energy-first behind-the-meter cost derivation, Aug 2026
- StackedAI analysis, transaction-structures framework, Aug 2026
- StackedAI analysis, Cooling Solutions retrofit note, Aug 2026