Data Centres Go Off-Grid as States Push Back on Power Bills
Hyperscalers are building their own gas plants to sidestep grid costs, but a projected 19-GW shortfall by 2035 suggests private generation cannot close the gap alone.
Federal energy regulators opened a sweeping investigation on Thursday (2026-06-18) into how power grids and utilities allocate the cost of serving data centres, a probe covering regional grid operators that serve nearly the entire country.3 The five-member Federal Energy Regulatory Commission is examining who pays for transmission upgrades and generation capacity that hyperscalers require. The timing was not accidental. State regulators and governors had already started asking the same question, and the politics had turned hostile fast.
The cost-allocation fight is now driving where data-centre power comes from. If utilities can pass the bill to ratepayers, hyperscalers have little reason to build their own plants. If regulators block that transfer, bypassing the grid entirely with on-site generation becomes the cheapest path for a developer.2 The Trump administration has openly encouraged that second route, arguing it shields households from rising power prices as data centres expand.2
The private-build model is already spreading. Tech companies are constructing power plants alongside new data-centre campuses, a shift the White House has presented as protecting ratepayers from the cost of serving the sector.2 On paper that solves the political problem: a captive plant serves one customer, and no household sees a transmission charge for it. But the same logic that makes it attractive to developers makes it impossible to replicate fast enough.
The demand numbers make that clear. Business Insider reported in June (2026-06-11) that if every data centre permitted through 2025 comes online, they will consume between 224.3 and 358.8 terawatt-hours annually, a 50% increase over the prior year across the sector.2 BloombergNEF projects US data centres will draw 20% of national power by 2035, up from 5.9% as of its July (2026-07-24) analysis.4 These are not marginal load additions. They amount to a second grid's worth of demand arriving inside a decade.
Off-grid gas alone does not close that gap. BloombergNEF's analysis projects the sector faces a 19-GW shortfall by 2035 even under a favourable scenario where the grid accommodates 7 GW of new data-centre demand a year — the all-time record — and many hyperscalers install their own turbines.4 For scale, a standard large nuclear plant produces about 1 GW, and building ten of them is already the Trump administration's stated ambition.4 BloombergNEF's revised shortfall figure is nearly double its December estimate, and it exceeds what the firm's own analysts expect the grid to absorb.4
Gas turbine supply is the binding constraint. The equipment queue has become one of the tighter bottlenecks in the sector. An on-site plant still needs a turbine, a permit, and a gas connection.5 Building behind the meter does not sidestep the supply chain. It shifts the choke point from the interconnection queue to the turbine order book, and that distinction rarely appears in political summaries of the private-generation push.
State politics is adding a second layer of friction. Texas governor Greg Abbott called for a clampdown on data-centre development; while his letter does little to change state law directly, it reflects a broader mood shift.1 As University of Texas research scientist Josh Rhodes put it, the industry's pitch — that it will create jobs even as the technology displaces them — is not landing with voters.1 Both parties have converged on data centres as a convenient target, and hyperscalers are now developing in a political environment where the default assumption runs against them.5
Private equity has noticed the changed geometry. Buyout firms are circling utilities as AI reshapes the grid, positioning for a buildout where regulated returns and infrastructure demand intersect.5 Yet the political pressure that pushed hyperscalers off-grid also complicates utility ownership. If regulators force more cost onto data-centre customers, utilities lose revenue certainty. Force it onto ratepayers, and legislators intervene. Either way, the asset base is contested.
The 19-GW shortfall is the number that does not resolve easily. If self-generation and grid additions together still leave that hole by 2035, the deficit lands on the same ratepayers the policy was designed to protect, via higher capacity prices and emergency procurement. What FERC's investigation ultimately decides on cost allocation will set the incentive structure for the next round of siting decisions. Until that ruling lands, hyperscalers will keep ordering turbines, governors will keep writing letters, and the gap between political promise and delivered megawatts will stay open.3,4