US utilities demand collateral from data center developers to curb phantom power requests
Grid operators are requiring deposits and longer contracts to filter speculative AI facility applications that risk inflating shared infrastructure costs.
Key points
- Developers have requested 1,066GW of grid connections, a figure representing roughly 83% of US utility-scale capacity.
- Wood Mackenzie expects utilities to commit to only about 28% of these total power connection requests.
- Exelon reduced its high-probability load forecast from 18GW to 11GW after implementing stricter collateral requirements.
US electric utilities are now demanding collateral, extended contract terms, and substantial engineering study fees from data center developers. These new financial hurdles aim to eliminate speculative projects that do not intend to build, a phenomenon the industry refers to as phantom data centers.
The strict requirements address a shared-cost problem where grid infrastructure expenses are distributed across all network users. If utilities construct substations and transmission lines for projects that never materialize, remaining customers effectively subsidize those unused assets. Reporting from The Wall Street Journal outlines this financial risk as the primary driver for the policy shift.
Wood Mackenzie analysis, first reported by Bloomberg in August 2026, shows developers have requested 1,066GW of grid connections. This total equals approximately 83% of the country’s entire utility-scale generating capacity at the end of 2025. Such massive demand has created significant uncertainty regarding which projects will actually proceed to construction.
Context on speculative demand
Wood Mackenzie expects utilities to commit to serving only about 28% of the requested capacity. This estimate includes roughly 12% with firm service commitments and a further 17% deemed likely to proceed. A separate Wood Mackenzie measure cited by the Wall Street Journal places just 23% of disclosed requests in the high-confidence category.
Much of the discrepancy stems from duplication, as developers often file the same project with multiple utilities to secure the fastest available power. Other applicants appear to be speculators, including private equity funds and shell companies, who claim queue positions without site control or signed customers, betting that land with grid access will find a buyer.
Industry impact and precedents
The issue is not entirely new, with Utility Dive reporting on phantom data centers in 2025 and TR noting in July that 67% of electricity executives surveyed by Capgemini observed speculative applications. The current shift involves utilities actively pricing this risk, leading to significant reductions in forecasted load.
Exelon provides a clear example of this trend, reducing its high-probability load forecast from 18GW to 11GW after insisting on collateral. This adjustment highlights how stricter financial requirements can rapidly shrink the apparent demand for power, forcing a more realistic assessment of actual infrastructure needs.
What should you do?
Security and technology professionals should monitor these developments as they affect data center availability and power grid stability. Understanding the financial barriers to entry can help predict which facilities will come online and which may stall.
What to do and how to stay safe: data centers
- Review current data center power contracts to understand how grid connection fees and collateral requirements might impact project timelines.
- Monitor utility announcements regarding capacity commitments, as a significant portion of requested power may not be delivered.
- Assess supply chain risks for AI infrastructure, recognizing that speculative demand could delay actual construction and deployment.
- Watch for changes in engineering study fees, which may increase costs for legitimate developers seeking grid connections.
Step-by-step guide: Prompt Injection Warning Signs: How to Spot AI Manipulation
General security guidance from the Threat Times newsroom. It is not confirmed advice from the organisations named in this story.
Frequently asked questions
Why are utilities demanding collateral from data center developers?
Utilities require collateral to ensure that developers are serious about building, preventing shared grid costs from being borne by other customers for projects that never materialize.
How much power have developers requested compared to actual capacity?
Developers have requested 1,066GW of connections, which is roughly 83% of the country’s utility-scale generating capacity at the end of 2025.
What percentage of requested connections are utilities likely to commit to?
Wood Mackenzie expects utilities to commit to serving only about 28% of the total requested capacity.
