The explosion of AI, high-performance computing (HPC), and always-on digital services is reshaping the U.S. energy and infrastructure landscape. Data centers serve as the industrial backbone of this transformation; yet, their growth is being hindered not by capital, demand, or bandwidth, but by a constraint that most real estate and tech developers have historically overlooked: power availability.
At Avisen Legal, we advise clients on the intersection of infrastructure, energy markets, and real estate development. In today’s environment, it is clear that energy-first site selection is no longer optional—it is mission-critical. This shift carries significant implications for site acquisition, permitting, interconnection, land use, and power purchase agreements (PPAs).
Understanding Energy-First Site Selection
Traditionally, data center site selection prioritized:
- Latency and proximity to urban markets or network exchange points;
- Access to fiber routes and economic development zones;
- Real estate cost and zoning flexibility.
However, given the scale of modern data centers and the projected doubling of power demand from U.S. data centers by 2030, those priorities have shifted. Now, developers must consider:
Where can we obtain scalable, stable, and timely access to electricity, at a known cost structure—for the next 20 or more years?
This is the essence of energy-first development: selecting and securing sites based on access to power and alignment with utility or transmission planning before finalizing real estate or network decisions.
Power Demand and the New Development Reality
1. Scale and Complexity of Load
Hyperscale data centers frequently require massive amounts of megawatts of capacity. For example, Meta’s Gallatin, TN site is projected to exceed several hundred megawatts of power at full buildout.
Generative AI workloads add another layer of intensity. NVIDIA’s DGX H100 systems can draw up to 10 kW per server rack, requiring new cooling systems, redundancy planning, and energy infrastructure. Google Cloud and Amazon Web Services (AWS) both acknowledged in 2023 earnings calls that AI growth is significantly increasing their power procurement needs.
2. Transmission Constraints and Grid Interconnection Delays
According to the Lawrence Berkeley National Laboratory, over 2,600 GW of energy projects are stalled in U.S. interconnection queues—more than double the existing U.S. generation fleet (LBNL, April 2023). These delays are now affecting extensive load interconnections as well. Data center developers in MISO, PJM, and ERCOT increasingly face multi-year delays merely to study and approve load connections, even for non-generation projects.
3. Regulatory Complexity and Permitting Risk
Data centers face not only grid and transmission constraints but also challenges with permitting at the state and local levels.
- Permits for backup generation (diesel or natural gas) are under environmental scrutiny in California and Oregon.
- On-site battery energy storage systems (BESS) require fire safety and local code compliance;
- Land use changes or rezoning can trigger environmental impact reviews, mainly where load growth affects regional air quality or transmission upgrades.
Energy-first site selection addresses these hurdles at the feasibility stage, rather than post-acquisition.
Trends in Energy-First Development
A. Repurposing Retired Power Plant Sites
Former coal, gas, and nuclear plants are uniquely positioned for data center redevelopment:
- Transmission and substation infrastructure already exists;
- Interconnection queue positions may still be active or transferable.
- Environmental remediation has often already occurred or is understood.
Three Mile Island (PA) is a potential data center site, boasting over 1 GW of viable interconnection capacity. Similarly, Wyoming’s Jim Bridger Plant is being explored for AI hosting due to its access to legacy transmission and rail infrastructure.
B. Strategic Utility Partnerships
Utilities like Dominion Energy (VA), Georgia Power, and NV Energy are establishing load forecasting agreements and partnering on development projects with data center companies.
For example, NV Energy’s Greenlink Transmission initiative was catalyzed mainly by data center load growth and associated economic development. Dominion revised its resource plan in Virginia after hyperscale loads significantly exceeded forecasts.
These partnerships are not just regulatory; they’re contractual, often incorporating:
- Joint financing of substations or transmission extensions;
- Peak shaving and flexible load arrangements;
- Custom tariffs tied to long-term energy supply.
C. Microgrids, Storage, and Behind-the-Meter Renewables
Energy-first developers increasingly view onsite generation as core infrastructure:
- Google’s Henderson, Nevada data center integrates behind-the-meter solar and demand response.
- Microsoft has announced plans to explore small modular nuclear reactors (SMRs) and invest in firm PPAs to support AI growth.
Battery storage is emerging as a vital risk management tool, allowing operators to mitigate curtailment risk, capture demand response value, or shape load to avoid high wholesale market exposure.
Legal and Contractual Considerations
At Avisen Legal, we help clients navigate the unique legal complexities that energy-first data center projects present:
1. Land Use Agreements and Easements
- Sites must accommodate energy infrastructure: substations, lines, generation pads, or battery storage units.
- Developers must negotiate utility easements and access rights at the LOI or purchase agreement stage, not post-closing.
2. Power Purchase Agreements (PPAs) and Tariff Risk
- Developers must ensure long-term rate certainty, whether sourcing directly from an IPP or through a utility.
- Regulatory counsel should assess tariff escalation clauses, curtailment rights, and the potential for rate case exposure, particularly in vertically integrated states.
3. Interconnection Agreements and Queue Position Transfers
- Queue position valuation and assignment rights should be negotiated in land or asset purchases.
- Developers should understand FERC jurisdictional triggers if transmission lines or behind-the-meter generation is exported across state lines.
What This Means for Developers, Investors, and Policymakers
For Developers:
- Begin with substation and transmission maps, not real estate listings.
- Engage energy counsel, permitting experts, and utility partners before executing site control.
- Explore joint venture or infrastructure-sharing models with power producers or other large load users
For Investors:
- Underwrite entitlement risk based on energy, not zoning.
- Sites with legacy infrastructure (retired plants, substations) should receive a higher value.
- Look for deals with firm power supply, not just “greenfield potential.”
For Policymakers:
- Accelerate transmission planning and interconnection reform.
- Align tax incentives or fast-track approvals for load siting near existing infrastructure.
- Support emerging dispatchable and low-carbon power sources (SMRs, geothermal, biogas) as grid-compatible solutions for hyperscale loads.
Final Thoughts
The next decade of digital infrastructure growth will be shaped by energy, not by fiber or real estate. Developers who adopt an energy-first mindset—and legal advisors who understand commercial agreements and how to navigate utility partnerships, interconnection policy, and regulatory frameworks—will be best positioned to capitalize on this transformation.
Avisen Legal collaborates with clients in the energy, technology, and infrastructure sectors to address these challenges. Whether negotiating energy infrastructure agreements, evaluating site feasibility, or structuring power contracts, we provide extensive experience in utility regulation, energy law, and complex project development.
