Power · Scenario analysis ·
The cost of waiting for power.
Our analytical view: the timing and contractual quality of a power connection can matter as much as announced capacity. Underwriting should connect each project milestone to a billable month and to the party bearing the cost of delay.
Start with the project, then the demand forecast
The Berkeley Lab report published in December 2024 models historical US data-centre electricity use and a scenario range through 2028. The DOE’s accompanying summary reports 176 TWh for 2023 and a 325–580 TWh range for 2028. These are dated national scenarios, not site-level delivery commitments.
For equity analysis, the relevant bridge is narrower: committed power, commissioned equipment, a paying customer, and cash left after operating and financing costs. A supplier can report a strong order book while its customer’s project still faces a long interval before billing begins. The investor must identify where that timing risk sits.
A simple sensitivity to the first billable month
Consider a hypothetical 100 MW project. Assume 70% of capacity is billable and each billable MW contributes USD 0.1 million per month after variable costs, before fixed costs, financing and capital expenditure. Capacity and contribution per MW are held constant in each scenario; there is no ramp during the billable months. These are illustrative assumptions, not observed market terms or fund results.
| Scenario | Billable months | Billable share | Contribution |
|---|---|---|---|
| On-time connection | 12 | 70% | 84 |
| Six-month delay | 6 | 70% | 42 |
| Lower billed capacity | 12 | 50% | 60 |
Calculation: 100 MW × billable share × USD 0.1m per MW per month × billable months. A six-month delay halves the contribution in this simplified first year; the model does not estimate project value, total cash flow or investment returns. Fixed costs and interest may continue during a delay, while capital spending may move to a different period.
Contract terms can overturn the simple model
The counterargument is important. A customer paying a fixed reservation charge may support receipts before full utilisation; a supplier receiving non-refundable milestone payments may carry less delay risk than the site owner. Conversely, cancellation rights, penalties or equipment obsolescence can make an apparently protected backlog less valuable. The billing contract, rather than physical utilisation alone, determines which scenario is relevant.
Service quality also matters. PJM’s Large Load page describes proposed arrangements for connecting large loads and labels the registry and Interim Resource Adequacy Service as pending FERC approval at the time reviewed. An announced framework should therefore be checked against the current approval status and the project’s actual service terms.
Evidence that would change the investment case
- Connection: a binding service commitment, completed network work and a documented commissioning date.
- Customer: the first contractual billing date, reservation payments and cancellation provisions.
- Supplier: cash collected against orders, the remaining delivery obligations and exposure to refunds.
- Balance sheet: committed funding and the cost of carrying an unproductive asset.
Our framework favours comparing companies on the cash and obligations attached to each milestone. A long case strengthens when connection commitments and customer payments are firmer than valuation assumptions imply. A short case needs evidence that the price assumes a schedule or cash conversion the contracts do not support. Either case should be revisited when those documents change.
Research commentary and hypothetical scenario analysis, prepared 22 October 2026. Public sources are linked above. This note does not identify portfolio holdings or represent fund performance; it is not a recommendation to buy or sell a security.