The biggest issue to watch over the next 12 to 24 months is access to power and the infrastructure that delivers it.
The conversation extends well beyond generation capacity. Transmission infrastructure, interconnection queues, and the regulatory frameworks that determine how power is allocated are becoming increasingly important as demand continues to grow. U.S. data center power demand is projected to increase from approximately 31 GW in 2025 to as much as 66 GW by 2027, creating intense competition among data centers, manufacturers, utilities, and other large industrial users. Decisions about who receives power, where projects are located, and how quickly infrastructure can be built are becoming both business and public policy issues.
Three trends are likely to shape the market over the next two years.
First, the geographic distribution of data centers will continue to evolve. Texas is expected to exceed 40 GW of capacity by 2028 and could account for nearly 30 percent of U.S. demand. At the same time, traditional markets such as Northern Virginia, California, Oregon, and Iowa are facing increasing pressure from limited power availability, longer permitting timelines, and rising development costs. Developers are becoming more willing to prioritize locations where large blocks of power can be secured quickly, even if that requires moving outside established markets.
Second, onsite generation will continue to mature from a supplemental solution into a core component of data center design. More than one-third of new facilities could rely entirely on onsite power by 2030, and developers have already announced nearly 50 GW of behind-the-meter generation. New power architectures, including higher-voltage systems and direct current distribution, are also beginning to emerge to support the next generation of AI infrastructure. These technologies will fundamentally change how many facilities are designed and operated.
Third, community engagement and regulatory risk will become increasingly important. Environmental organizations have already demonstrated a willingness to use citizen suits under the Clean Air Act to challenge certain projects. At the same time, local governments and community groups are seeking stronger commitments related to water use, emissions, utility rates, and community benefits before supporting new developments. Projects that address these concerns early are likely to move more efficiently than those that do not.
Over the next several years, success will depend on more than access to capital. Developers that can secure reliable power, navigate an increasingly complex regulatory environment, and build strong relationships with utilities and local communities will be in the best position to bring projects online. Those three factors are becoming just as important as financing or site selection in determining which projects move forward.