Utilities and regulators are pushing back on large load additions that stress ageing grid infrastructure and raise costs for existing ratepayers
Decision Lens
The scale of the behind-the-meter (BTM) pivot now visible in the US data centre pipeline represents a structural repositioning of how large operators are approaching power sourcing. According to Cleanview data, approximately 56GW of planned data centre capacity is now designed to source part or all of its electricity from on-site generation, up from less than 2GW in late 2024. That shift, compressed into roughly 18 months, reflects compounding pressure from interconnection queue delays, utility cost-pass-through risk, and regulatory friction across multiple jurisdictions.
For Global Heads of Data Center Energy, this matters at the portfolio level. If a meaningful share of your competitive set is moving to BTM configurations — renewables paired with battery energy storage systems (BESS), with grid connection retained for reliability and redundancy rather than as the primary supply path — your interconnection queue assumptions, PPA structures, and utility relationship calculus all require reassessment. The question is not whether BTM is right for every site, but whether your current pipeline adequately accounts for scenarios where grid access is delayed or cost-prohibitive.
90-Second Brief
As the week closes, about 56GW of planned US data centre capacity, nearly one-third of the total pipeline, is designed to source part or all of its electricity from on-site generation, compared to less than 2GW in late 2024. Grid Strategies projects data centre-driven load could reach 90GW by 2030, growing at roughly 5% per year, with data centres representing approximately one-third of total anticipated US demand growth. Gas turbine supply constraints are anticipated to persist in the near term, and new nuclear capacity continues to face development obstacles, positioning renewables paired with battery storage as the primary scalable option for near-term capacity additions. The federal Investment Tax Credit is expected to remain in place, though developers face a 4 July 2026 begun-construction deadline tied to Foreign Entities of Concern requirements that is already reshaping procurement and construction sequencing.
What’s Actually Happening
The behind-the-meter shift in the US data centre sector is being driven by a convergence of pressures, not a single catalyst. Utilities and regulators are pushing back on large load additions that stress ageing grid infrastructure and raise costs for existing ratepayers. In response, data centre developers are increasingly designing facilities to supply their own power — most commonly through on-site generation, with grid connection retained for redundancy and reliability rather than as the primary source.
Cleanview data quantifies the pace of this transition: from less than 2GW of on-site-powered planned capacity in late 2024 to approximately 56GW as of early 2026. This does not mean operators are pursuing fully islanded operations. The prevailing model retains some grid interconnection, but the dependency relationship is inverting for a significant share of the pipeline.
Natural gas dominates current BTM buildout. However, gas turbine supply constraints are anticipated to persist in the near term, which materially limits how far operators can scale that approach. Nuclear — whether conventional or small modular reactor (SMR) — continues to face long development timelines and regulatory complexity. That leaves renewables paired with BESS as the primary technology pathway that is both commercially available and deployable at speed.
Short-duration BESS can buffer demand spikes. Longer-duration systems support load stabilisation and interconnection reliability. The combination allows operators to manage demand variability internally — a capability that becomes more valuable as AI workloads drive higher and more variable power density requirements.
The policy environment adds a layer of execution complexity. The ITC is expected to remain intact, but Foreign Entities of Concern requirements are forcing developers to make early-stage sourcing and construction decisions to preserve eligibility. The 4 July 2026 begun-construction milestone is a near-term forcing function. Some developers are foregoing tax credits to avoid FEOC complexity; others are taking creative construction actions to lock in eligibility. Domestic battery manufacturing capacity is expanding, including conversions from EV production lines to grid-scale BESS, which may partially ease supply constraints over the medium term.
Interconnection bottlenecks remain a structural constraint regardless of the BTM trend. Overloaded queue processes, grid infrastructure upgrade costs, and limited grid operator capacity mean that even operators who want grid-primary configurations face multi-year delays in many regions.
Why It Matters for Global Heads of Data Center Energy?
Interconnection queue strategy: If 56GW of planned capacity is moving to partial or full BTM configurations, queue congestion in major markets may shift — but not disappear. Operators maintaining grid-primary strategies may face less queue competition in some corridors, or they may find queue positions increasingly held by BTM projects seeking redundancy connections rather than primary supply. Either way, queue strategy assumptions built on 2023 or 2024 market conditions require revisiting.
PPA and offtake structure: The BTM model does not eliminate PPAs — it changes their function. PPAs in a BTM context are more likely to be structured around on-site delivery, capacity firming, or virtual PPA arrangements rather than grid-delivered offtake. If your current PPA portfolio is grid-delivery-dependent, assess how basis risk and curtailment exposure shift under partial BTM scenarios.
BESS procurement and lead times: The same supply chain pressures that affect transformer procurement are beginning to apply to grid-scale BESS at the scale hyperscalers require. Domestic manufacturing is expanding, but procurement lead times for large BESS systems warrant scrutiny in current project plans.
ITC eligibility and FEOC compliance: The 4 July 2026 begun-construction requirement is a near-term decision point for any project currently in development. If your energy infrastructure team has not mapped ITC eligibility and FEOC exposure across active projects, that gap carries real financial risk given the value of tax credits at portfolio scale.
Carbon accounting implications: BTM renewable generation with BESS raises questions for Scope 2 accounting and 24/7 carbon-free energy matching. On-site generation simplifies some matching claims but introduces additionality questions and reporting methodology choices that sustainability and finance teams need to align on ahead of reporting cycles.
The Forward View
The 56GW BTM figure is a snapshot, not a ceiling. If interconnection timelines remain at 3–7 years in key markets and utility pushback on large load additions intensifies, the share of the pipeline designed for on-site generation is likely to grow further. The structural drivers — grid constraint, ratepayer protection politics, AI load growth — are not resolving in the near term.
Gas turbine supply constraints through the 2030s effectively set a ceiling on how far BTM buildout can rely on dispatchable fossil generation. That constraint, combined with the near-term commercial availability of renewables and BESS, positions the renewable-plus-storage combination as the dominant BTM technology pathway over the next several years — even if it is not the administration’s preferred direction.
The policy risk is not elimination of the ITC, but implementation friction — FEOC requirements, begun-construction deadlines, and potential clarifications that affect project economics mid-development. Operators with active development pipelines should model scenarios where ITC value is partially or fully unavailable for specific projects due to FEOC non-compliance.
Data centre-driven load reaching 90GW by 2030 would represent a significant share of US generation capacity additions. That growth trajectory — concentrated, fast-moving, and capital-intensive — will continue to attract regulatory attention at both state and federal level. How that attention translates into permitting, siting, and interconnection policy will be a primary determinant of whether the BTM buildout can execute at the pace the pipeline implies.
What We’re Uncertain About?
The 56GW figure’s conversion rate: Pipeline figures routinely overstate what gets built. How much of the 56GW BTM planned capacity translates into operating facilities — and on what timeline — is not established by current data. The shift from less than 2GW to 56GW in 18 months reflects planning intentions, not permitted or financed projects.
FEOC implementation specifics: The source characterises ITC continuation as expected and FEOC clarification as forthcoming, but precise implementation rules remain unsettled as of publication. Project-level tax credit eligibility is therefore uncertain for some portion of the pipeline.
BESS supply chain scaling: Domestic manufacturing expansion is noted, including EV facility conversions, but whether production capacity scales fast enough to meet simultaneous demand from data centres, grid operators, and other industrial buyers is not quantified in the source material.
Regulatory response to BTM growth: As the BTM model scales, utility commissions and grid operators may impose new requirements on BTM facilities — standby charges, interconnection conditions, or grid service obligations — that alter the economics. The direction of regulatory response is not yet clear across jurisdictions.
Gas turbine supply resolution timeline: Gas turbine supply constraints are anticipated to persist in the near term, but the precise duration is not established by a primary equipment manufacturer or independent analysis in this article.
One Question to Bring to Your Team
For each active site in your development pipeline where grid interconnection is the primary power strategy, what is the fallback if interconnection is delayed by two or more years — and have you modelled the BTM alternative with current BESS pricing and ITC assumptions?
Sources
- Energy-storage — US renewables and battery storage are poised for sustained growth as data centre demand accelerates (Link)
