Data-center site selection is being rewritten in real time. What used to look like “find land, secure incentives, then solve utilities” is colliding with a new reality: AI-driven demand is scaling so quickly that power, water and entitlement risk can make or break a site’s development schedule and bankability. The U.S. Department of Energy has cited estimates that data centers consumed about 4.4% of total U.S. electricity in 2023 and could reach approximately 6.7% to 12% by 2028, underscoring why “time-to-power” now sits at the center of the decision tree (The Department of Energy's Energy.gov).
It’s tempting to conclude that this “energy gate” is fading because hyperscalers and their partners increasingly bring power solutions—colocation, dedicated generation, storage and more creative contracting—to the table. In practice, the energy gate hasn’t disappeared; it has moved upstream and expanded. The new gating question is no longer: “Does the utility have capacity?” It’s: “Can we deliver a bankable, permittable, interconnectable power plan on the hyperscaler schedule—and can the host community support it?”
Across core markets, power constraints remain a primary inhibitor of data center growth, pushing leasing and development into new “hotspots” and extending timelines in constrained hubs (CBRE). That’s true even as “bring-your-own-power” (BYOP) grows because BYOP introduces new complexity: interconnectivity rules, transmission service design, reliability safeguards and cost allocation. If anything, BYOP turns “energy availability” into a multidimensional execution risk rather than a simple utility confirmation.
You’ll likely have to deal with retail transmission organizations and their tariffs if the behind-the-meter facility interconnects to the grid; conversations in this space have represented a shifting landscape. In December 2025, the Federal Energy Regulatory Commission ordered PJM to establish clear tariff rules for data center co location at power plants, finding the existing framework “unjust and unreasonable” [introl.com]. Couple this with a rash of states changing their laws to keep up with shrinking power capacity and making it easier to BYOP. These states include Ohio, which passed legislation in 2025 that created a new legal framework for large electric customer self-generation, shared industrial microgrids, cut property taxes for new generation and reduced permitting time. Other states making BYOP possible at varying levels include Utah, West Virginia, Maryland, Oklahoma, Texas and Virginia; over a dozen states have pending legislation.
Site selection teams need to treat myriad competing interests and evolving frameworks as part of the diligence package. Working through the practical applications of all these changes and the nuances embedded in each aspect of them has added to the complexity and timeline of data-center projects. Site selectors should give added attention to assessing controllable power as a key location factor, segregating states into tiers by power optionality and focusing on phasing strategies when it comes to meeting power needs.
