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Data centers seek alternative power as grid limits stretch timelines
JLL says Commonwealth Edison projects in Chicago can face four to five year delivery timelines and require letter of credit commitments of about $46,000 per megawatt annually for 10 years.
Developers building new data centers are increasingly running into power constraints, a challenge highlighted in JLL’s Midyear North America Data Center Report and discussed by JLL Vice President of Data Center Strategy Sean Farney in an interview with ConnectCRE.
The report points to a “power wall” that is stretching delivery schedules in established hubs, pushing developers to evaluate locations that once sat outside the industry’s core markets. Farney said developers are experimenting with alternative power approaches to work around grid limitations, including co-located generation and on-site battery storage.
Utilities are also directing some developers toward these solutions, while microgrids are another potential workaround, though they remain under regulatory scrutiny. Even with these efforts, Farney said long interconnection timelines continue to be a major barrier to starting new projects.
JLL noted that 77% of capacity under construction is in so-called “frontier markets,” which it describes as offering builder-friendly regulation, land for large campuses, lower operating costs, and room for long-term expansion. Farney cited examples including grid constraints in Columbus, Ohio pushing overflow development to Van Wert, Lima, and Canton, and increased attraction from Southern Virginia and the I-95 corridor pulling projects from Loudoun and Prince William counties.