Information middle growth is slowing down, in accordance with a brand new report from power analytics agency Wooden Mackenzie. In This autumn 2025, builders solely added 25 gigawatts of electrical energy capability to their venture pipeline, half of what was added the earlier quarter.
The slowdown is an indication that countless information middle progress projections to energy AI know-how could not materialize. As fuel and energy firms grapple with the economics of constructing new energy vegetation or increasing their grids, progress stays restricted to how a lot energy is at present out there.
“Utilities just don’t necessarily have either the grid capacity or the generating capacity to be able to build it fast enough to accommodate these new large energy demand centers,” Wooden Mackenzie analyst Ben Hertz-Shargel instructed Fortune. The U.S. has not wanted to quickly develop electrical energy era in a very long time, which makes it tough to match the tempo of tech firms’ ambition, he defined.
That is shifting how firms method their plans for information facilities.
“It’s a bend in the trajectory that we’re now seeing companies realizing that they need to focus on projects at hand, rather than just endlessly adding new ones,” Hertz-Shargel mentioned. On the finish of 2025, information facilities requiring 241 gigawatts of electrical energy have been within the pipeline, a rise of 159% from the start of the 12 months. Nonetheless, solely a 3rd of initiatives within the information middle pipeline are underneath lively growth, and lots of the relaxation won’t ever get constructed, he mentioned.
Bottleneck might have an effect on investments
One other key threat is the income potential of knowledge facilities and whether or not it’ll justify firms’ push to develop, Hertz-Shargel mentioned.
Alphabet, Amazon, Meta, Microsoft, and Oracle—the 5 main hyperscalers—are in a race to construct out their AI merchandise and create the information middle infrastructure to help them. Collectively, the businesses have dedicated $969 billion, with greater than two-thirds ($662 billion) deliberate for information center-related leases but to start out, in accordance with a Moody’s evaluation printed final month. Working money flows are paying for a lot of the buildout, however firms have began issuing bonds to cowl the shortfall between capital expenditures and free money circulate.
Regardless of guarantees from Large Tech firms like Meta and Google to double their capital expenditures (capex) in 2026, Hertz-Shargel and his crew discovered that capex progress from the biggest information middle builders will decelerate for the primary time since 2023 and solely match 58% of final 12 months’s progress. This deceleration is partly pushed by Google and Meta selecting to energy their facilities by the grid moderately than unbiased energy vegetation, he mentioned.
One notable exception is cloud infrastructure large Oracle, which has taken on debt to fund its Stargate information middle campuses, powered by behind-the-meter pure fuel, or on-site, pure fuel. This fashion, the corporate can get new information facilities on-line with out counting on grid connection and keep away from driving up power costs for surrounding communities.
“There’s been a big push for the data center companies that pay their own way,” Hertz-Shargel mentioned. “They’re helping to finance new power plants, for instance, so that can be one of the ways that gets resolved. But we’re just not seeing it across the US at a scale that would allow utilities to move quickly.”
