Data centers

A data center without committed power is a very expensive place to discuss artificial intelligence.

Servers need electricity, cooling, fiber, security, and redundant systems that work when a component quits at 2:13 a.m. The land can be perfect. The rendering can glow blue. Neither one energizes a rack.

In plain English, this class is a reliability business built around a huge electrical load. It has the appetite of a hummingbird at warehouse scale: constant fuel, constant heat removal, and no interest in the owner’s need for a quiet weekend.

Begin where the electrons become contractual

Demand is real. The Department of Energy’s 2024 U.S. Data Center Energy Usage Report estimated that data centers used about 176 terawatt-hours in 2023, or 4.4% of U.S. electricity, and could reach 325 to 580 terawatt-hours by 2028. That makes power diligence more important. It does not bless every proposed campus with a utility logo in the pitch.

Keep four megawatt numbers separate:

• Requested megawatts: what the developer asked the utility to provide.
• Planned megawatts: what appears in studies, drawings, or future phases.
• Committed megawatts: what a binding utility agreement says will be delivered, under stated conditions.
• Energized megawatts: what the site can actually draw now.

“The utility knows about the project” belongs in conversation, not in a fifth row.

Read the executed service agreement, utility capacity letter, interconnection or facilities study, substation scope, construction milestones, deposits, curtailment rights, and responsibility for network upgrades. Match every obligation to the development schedule and customer commencement terms. A 2028 power date cannot support 2027 rent. Megawatts do not arrive early because the model used bold type.

The class-specific failure mode starts here: the project contracts customer demand against power that is only requested or planned. Utility delivery slips, customer rent does not commence, equipment and interest carry keep consuming capital, and the owner reaches completion without a functioning revenue engine.

Cooling gets its own electricity bill

Power usage effectiveness, or PUE, is total facility energy divided by IT equipment energy. The DOE’s 2024 data-center design guide explains the metric and the electrical, cooling, monitoring, and airflow systems behind it.

Suppose a facility supports a constant 12-megawatt IT load. At a PUE of 1.35, total facility demand is 16.2 megawatts. At 1.50, it is 18.0 megawatts. At an assumed electricity cost of $0.07 per kilowatt-hour, that 1.8-megawatt gap costs about $1.10 million per year:

1,800 kW x 8,760 hours x $0.07 = $1,103,760

That is the annual feeding cost of a small efficiency miss. It is not an ornamental sustainability figure.

For an operating facility, inspect 12 months of utility bills, interval-meter data, actual IT load, peak demand charges, PUE logs, generator fuel tests, and maintenance records. For development, inspect design PUE, engineering assumptions, commissioning criteria, and which customer contract bears changes in power price or operating efficiency.

Water needs the same suspicion. DOE’s cooling-water guidance defines water usage effectiveness and explains why evaporative systems can consume substantial water. Read the water-service letter, cooling design, drought restrictions, discharge permits, water budget, and backup plan. A cooling system can be efficient in a slide and thirsty at the meter.

Uptime lives in both machinery and paper

Tenants buy usable capacity and reliability. The lease, master services agreement, or colocation agreement should define both, along with the cost of a miss.

Read the service-level agreement for uptime definitions, maintenance exclusions, service credits, termination rights, power-density commitments, cross-connect duties, security standards, access rules, casualty provisions, and customer-equipment responsibilities. Compare those promises with the one-line electrical diagram, redundancy design, commissioning report, generator and UPS test logs, incident history, and operations staffing plan.

The industry’s favorite shortcut is a redundancy label without a boundary. “N+1” means little until you know which component has the additional unit, whether the distribution path is redundant, and how maintenance changes the topology. One spare chiller is not a permission slip for every other system to fail.

Ownership must operate the agreement and the plant together. That means maintenance windows, alarms, drills, spare parts, vendor response, security, customer communication, and incident review. A warehouse manager can lock a door after hours. A data-center operator has customers measuring seconds.

Logos are not contracted load

A customer logo may represent an executed lease, a nonbinding letter, a reseller relationship, or a sales conversation that survived long enough to reach PowerPoint. Ask for the signed agreement, commencement conditions, deposit or guaranty, contracted power, ramp schedule, renewal options, termination rights, and customer credit.

Then reconcile customer megawatts to the utility ledger. Selling 20 megawatts against 8 committed megawatts is the failure mode wearing a sales award.

Concentration matters in both directions. One customer can control the revenue. One utility can control delivery. Either party can wound the plan with a decision the landlord does not own.

Capital follows the critical path

The building shell is only the container. The budget may also carry substations, switchgear, transformers, generators, UPS systems, batteries, chillers, cooling towers, controls, security, and fiber. Long-lead equipment can move completion while construction interest remains wonderfully punctual.

Inspect the detailed sources-and-uses schedule, guaranteed maximum price contract, contingency, procurement log, vendor deposits, delivery dates, commissioning budget, change-order history, interest reserve, and remaining-cost report. Match major equipment deliveries with customer commencement and debt maturity.

Ask the questions that a skyline rendering cannot answer:

• How many megawatts are energized, committed, requested, contracted to customers, and currently billed?
• Which utility promises are binding, and what can delay or curtail service?
• What happens to rent, service credits, and termination rights after an outage?
• Who pays when PUE, water use, or power price misses underwriting?
• Which component has the longest replacement lead time, and is a spare available?
• How much capital remains after deposits, escalation, commissioning, and interest carry?
• Which customer or utility concentration can break the plan with one decision?

Build the power ledger

Make one table with five columns: phase, utility megawatts, delivery date, evidence, and customer megawatts. Populate it only from executed documents. Add a second line showing total facility load at the underwritten PUE.

If the phases, dates, and megawatts fail to reconcile, stop debating demand growth. The broader market can be ravenous while this hummingbird sits beside an empty feeder.