Data Centers Can’t Get Power from the Grid. So They’re Building Their Own Power Plants.
Grid connection wait times in major US hubs now stretch 7 to 10 years. Data center developers can’t wait that long – so they’re building their own power plants instead. A Cleanview report published in early 2026 identified approximately 50 gigawatts of behind-the-meter data center power capacity announced in 2025 alone. For construction firms, this represents one of the largest and most concentrated capital deployment opportunities in a generation: not just data center shells, but co-located natural gas plants, battery storage systems, and eventually small modular nuclear reactors – all on the same campus, all needing to be built at pace.
The data center boom has been well-covered. Hundreds of billions in committed capital, hyperscalers racing to build GPU clusters, AI workloads demanding ever-larger facilities. What’s received less attention from the construction industry is what happens when those buildings can’t get power from the grid – which is now the case across large parts of the US.
Grid interconnection queues in Virginia, Texas, and the PJM region (covering 13 states from Illinois to New Jersey) have stretched to 7 to 10 years for new large-load connections. In the meantime, data centers need power in 18 to 24 months. That mismatch has a direct consequence: developers are simply building their own generation. Natural gas turbines are going up alongside server halls. Battery storage systems are being installed as core infrastructure, not backup. And the longer-horizon play – small modular nuclear reactors, or SMRs – is moving from concept to early construction contracts.
For construction executives, this is not an abstract trend to watch. It’s a category of work arriving at scale, right now, with a project profile unlike almost anything the industry has handled before: technically complex, schedule-compressed, multi-discipline, and capital-intensive at a level that makes standard commercial builds look modest by comparison.
Data centers are becoming integrated energy campuses – data hall, power generation, and storage all co-located and built simultaneously. For contractors with the right capabilities, this is a category-defining opportunity. For those without the right trade relationships, the schedule discipline, and the procurement infrastructure to operate at this pace, it’s a hard market to enter.
Why the Grid Can’t Keep Up
The structural mismatch between AI demand and US power infrastructure
The US hasn’t needed to rapidly expand electricity generation in a long time. Demand was flat or declining for years as industrial activity moved offshore and efficiency improvements offset growth elsewhere. The grid was designed around that assumption. Then AI infrastructure arrived, and the numbers shifted dramatically. Grid Strategies’ November 2025 report quantified data center demand at 90 gigawatts of new load over five years – a figure the public grid, as currently configured, cannot support. Five-year summer peak demand forecasts published by utilities went from 38 GW in 2023 to 128 GW in 2024, driven almost entirely by data center projections.
The queue problem is compounding. PJM, which manages the grid across 13 states covering roughly a third of US electricity consumption, is currently working through interconnection backlog from 2020. A developer who filed a new large-load interconnection request today wouldn’t see capacity auction eligibility until the early 2030s at best. For the hyperscalers committing billions to AI infrastructure today and needing facilities operational within two years, that timeline is functionally useless.
“Utilities just don’t necessarily have either the grid capacity or the generating capacity to be able to build it fast enough to accommodate these new large energy demand centers.”Ben Hertz-Shargel, analyst at Wood Mackenzie, via Fortune
The practical response has been rapid. Oracle is funding Stargate data center campuses powered by behind-the-meter natural gas, specifically to avoid grid dependency. xAI, Elon Musk’s AI company, drew attention in 2025 by trucking mobile generators into a Memphis facility to get it live before a grid connection was available. EdgeConneX has proposed a 430 MW natural gas plant to directly power its campus in New Albany, Ohio. What was briefly a controversial workaround has become a development strategy.
The Construction Opportunity: Three Project Types at Once
Data halls, power plants, and storage – on the same campus, on the same schedule
The critical thing for construction executives to understand about this shift is that the project scope has expanded materially. A data center campus in 2026 is no longer a single building type with specialist MEP requirements. It’s a multi-facility energy campus requiring civil, structural, mechanical, electrical, and in some cases nuclear-qualified contractors working in parallel, on compressed schedules, with a client base that is accustomed to tech company delivery speeds and will pay premiums to get them.
The three main construction categories currently in play are distinct enough to warrant treating them separately:
- Natural gas generation facilities. The near-term default. Turbine lead times are stretching to 5 to 7 years in some cases, which means equipment is being ordered well ahead of construction start. The civil and structural work on a gas plant co-located with a data center is substantial, and contractors without prior power generation experience are finding the qualification requirements demanding. Crews working through the night on already-permitted projects is now reported as commonplace.
- Battery energy storage systems (BESS). Moving from backup accessory to core infrastructure. Data center operators are deploying BESS to smooth demand peaks, reduce reliance on gas backup, and provide resilience during grid events. Modular installation is standard, but the scale of deployment on hyperscale campuses is significant, and the interface coordination with the data hall MEP and the generation plant requires experienced construction management.
- Small modular nuclear reactors (SMRs). The long-game play. No US data center is yet powered by an operating SMR, but construction contracts are being placed and engineering teams are forming. Bechtel, Aecon, Kiewit, and Black & Veatch have all been named in early SMR engineering, procurement, and construction partnerships. These projects require nuclear-qualified contractors and civil/structural firms partnered with nuclear architect-engineers – a capability set that most general contractors do not currently have.
What It Takes to Win This Work
Speed, relationships, and a procurement model built for pace
Katie Coulson of Skanska Advanced Technology, who builds data centers and semiconductor fabrication facilities, described the core requirement clearly in her conversation with Bricks & Bytes: speed in this market is a function of culture and relationships, not just technical capability. The contractors winning data center work at pace are working with the same high-trust mechanical and electrical subcontractors across multiple states. They’re pre-qualifying vendors during the design phase. They’re compressing buyout from six to eight weeks down to days by standardizing components and building the procurement infrastructure before the project starts.
The energy campus model adds an extra layer of complexity to this. A contractor who can execute a data hall fast is not automatically equipped to coordinate a gas turbine installation running in parallel on the same site with a different set of specialist subcontractors and a different regulatory environment. Interface milestone coordination between the data center build and the power plant construction needs to be planned early and managed tightly. Cooling system decisions – wet, hybrid, or dry – have to be locked in during site selection, not retrofitted later. And if BESS is included, the integration with both the data hall MEP and the generation system requires a construction management layer that most firms are still building out.
“Speed requires crews who understand your culture and have executed similar work before. Trust matters more than cost when the schedule is compressed.”Bricks & Bytes analysis of data center construction practices, based on industry operator interviews
The site selection dynamic has also shifted in ways that affect construction planning. Developers are now actively seeking former power plant sites – locations with existing grid interconnection rights, water resources, and transmission infrastructure already in place. Co-locating at a retired plant site can shave years off the permitting and interconnection timeline. For contractors, this means working on brownfield sites with legacy infrastructure, decommissioning requirements, and environmental constraints alongside the new build scope. That’s a different risk profile than a greenfield campus, and it needs to be priced and resourced accordingly.
The Insurance and Risk Dimension
Why the risk profile of these projects is unlike standard commercial construction
A data center campus with co-located power generation is a fundamentally more complex insurance risk than a standard commercial build. The project value is higher, the technology is more specialized, the schedule is more compressed, and the consequences of failure – for a client whose AI infrastructure is offline or delayed – are commercially severe in ways that a standard commercial building project is not.
Shepherd, the AI-native commercial insurer that recently raised a $42 million Series B, counts the firms building AI infrastructure campuses among its primary clients. Their behavior-based pricing model – where contractors using Procore, Autodesk, and other field management tools to demonstrate safe, consistent site practices receive better rates and multi-year rate certainty – is directly relevant to contractors bidding data center energy work. Given that insurance cost is built into bids often years before the policy is actually purchased, and that the construction insurance market has been running hard for six years, contractors who can lock in rate certainty through demonstrated technology adoption have a meaningful commercial edge. For more on how that model works, the Bricks & Bytes episode on construction insurance covers it in detail.
Stay ahead of the trends reshaping construction
2,500+ construction executives and ConTech founders read Bricks & Bytes for the signal, not the noise – every week.
Join 2500+ ReadersThe SMR Horizon: Long Lead Times, Early Preparation
What the nuclear construction pipeline means for AEC firms right now
Small modular reactors are not a near-term construction revenue story for most firms. The first SMR deployments in the US are targeting the late 2020s to early 2030s, and the qualification requirements to work on nuclear-adjacent civil and structural scopes are significant. But the preparation window is now, not in five years, and the firms that will win that work are the ones investing in nuclear-qualified partnerships and supply chain relationships today.
Amazon has committed to backing over 5 GW of SMR deployment through X-energy by 2039. Microsoft signed a 20-year agreement with Constellation to source power from the restarted Three Mile Island Unit 1. Google has a deal with Kairos Power for a series of advanced reactor plants co-located near its data centers, with the first targeted for 2030. Standard Power has contracted for 24 NuScale SMR modules across two sites in Ohio and Pennsylvania. These aren’t exploratory conversations anymore. Equipment orders are being placed. Construction contracts are being scoped.
The ASCE has been explicit about what the construction pipeline for SMRs requires: nuclear-capable design teams assembled early, dual schedules coordinating SMR construction and data center buildout in parallel, and cooling system optimization locked in at site selection rather than retrofitted. For a contractor currently focused on commercial data center work, the pathway into SMR-adjacent construction runs through civil and structural scopes on the associated power infrastructure – not the reactor itself, which requires specialist nuclear contractors. That’s a realistic entry point, and it’s worth mapping out before the market tightens.
| Construction Category | Timeline (Typical) | Key Contractor Requirements | Current Status | Primary Risk | Opportunity Level for GCs |
|---|---|---|---|---|---|
| Data center shell (standard) | 18-24 months | Fast-track MEP experience, trusted sub relationships, prefab capability | Active, high volume | Schedule compression; labor availability | High – established market |
| Co-located natural gas plant | 24-36 months (plus equipment lead time) | Power generation experience, turbine installation capability, dual-schedule management | Active and accelerating; 50 GW announced in 2025 | Turbine lead times (5-7 years); regulatory coordination | High for qualified firms; entry barrier significant |
| Battery energy storage (BESS) | 12-18 months | Electrical systems expertise, MEP integration, modular installation capability | Active; transitioning from backup to core infrastructure | Interface coordination with generation and data hall | High – growing rapidly |
| Former power plant repurposing | Variable – 18-48 months | Brownfield experience, decommissioning capability, environmental management | Emerging – site-selection trend accelerating in 2025/26 | Legacy infrastructure, environmental liabilities, permitting complexity | Medium – specialist skills required |
| Small modular reactor (SMR) | 5-10 years to first deployment | Nuclear qualification, specialist civil/structural, nuclear architect-engineer partnership | Equipment orders placed; construction starting late 2020s | Regulatory timeline, first-of-a-kind risk, qualification requirements | Medium-term; preparation required now |
Grid interconnection wait times in major US data center hubs now stretch 7 to 10 years. PJM, the grid operator covering 13 states, is currently processing backlog from 2020, meaning a new large-load connection request filed today would not receive capacity auction eligibility until the early 2030s at best. Data centers need power in 18 to 24 months. That gap has forced developers to pursue behind-the-meter generation – building natural gas plants, battery storage, and eventually SMRs directly on-site or adjacent to the data hall. A Cleanview report published in early 2026 identified around 50 GW of such capacity announced in 2025 alone. (Source: Cleanview/Distilled Earth)
The project scope on a self-powered data center campus has expanded significantly. Rather than a single building type with specialist MEP requirements, contractors are now being asked to manage co-located data halls, gas turbine facilities, and battery storage systems simultaneously – all on compressed schedules, with a client base that pays premiums for speed and has low tolerance for delays. Contractors with existing data center experience, fast-track MEP capabilities, and trusted subcontractor relationships in electrical and mechanical trades are best positioned. Firms without prior power generation experience face a meaningful entry barrier on the co-located generation side. (Source: Bricks & Bytes Data Center Construction Analysis)
Small modular reactors are factory-built nuclear reactors typically ranging from 50 MW to 350 MW in output – smaller, more modular, and faster to deploy than conventional large-scale nuclear plants. They’re attractive for data center operators because they can provide 24/7 carbon-free baseload power, scale modularly as demand grows, and fit on smaller sites than traditional reactors. Amazon has committed to backing 5 GW of SMR deployment by 2039. Google has contracted with Kairos Power for advanced reactor plants near its data centers. No US data center is yet powered by an operating SMR, but construction partnerships with firms including Bechtel, Aecon, and Kiewit are being formed now for projects targeting the late 2020s and early 2030s. (Source: ASCE)
Former power plant sites have become a primary target for self-powered data center development. These locations offer existing grid interconnection rights, transmission infrastructure, water resources, and often large land parcels – all of which can shave years off the development timeline compared to a greenfield site. Alberta and Ontario both established new regulatory frameworks in late 2025 specifically to attract data center investment by providing clearer rules for grid connection and power procurement. The shift toward brownfield repurposing adds decommissioning, environmental management, and legacy infrastructure complexity to the construction scope, which needs to be built into project pricing and risk assessment from the outset. (Source: Enkiai)
Turbine lead times are the most acute near-term risk – equipment for natural gas generation facilities is now running 5 to 7 years from order to delivery in some cases, which means procurement decisions need to be made well before construction starts. Interface coordination between the data hall build and the generation facility is also a significant risk, since delays on one affect power availability for the other. On brownfield sites, legacy infrastructure and environmental liabilities add further complexity. Cooling system selection – wet, hybrid, or dry – needs to be locked in at site selection stage, as retrofitting is expensive and disruptive. For BESS installations, integration with both the generation system and the data hall MEP requires experienced construction management to avoid costly rework at commissioning. (Source: Bricks & Bytes Data Center Construction Analysis)
A data center with co-located power generation is a materially more complex insurance risk than a standard commercial build. Project values are higher, schedules are compressed, and the consequences of delay for a client with committed AI capacity are commercially severe. Contractors whose bids embed insurance cost assumptions years before they actually buy the policy are exposed to significant rate drift in a market that has been hard for six years. Insurers like Shepherd are introducing behavior-based pricing, where consistent use of field technology tools (Procore, Autodesk, OpenSpace) generates premium credits and multi-year rate certainty – giving contractors who invest in that technology stack a direct commercial advantage when bidding complex, multi-year energy campus projects. (Source: Bricks & Bytes Insurance Episode)
The near-term pipeline is real and well-funded – Amazon, Google, Microsoft, Meta, and Oracle have all made multi-year capital commitments running into the hundreds of billions. Pipeline slowdowns reported in Q4 2025 (Wood Mackenzie noted pipeline additions halved quarter-on-quarter) reflect the power availability constraint rather than a collapse in demand. Developers are still committed; they’re just constrained by how fast generation can be built and commissioned. The “phantom project” phenomenon – developers filing multiple requests for the same facility to gauge timelines – means some announced capacity will not materialize. But analysts who have reviewed projects already under construction, with permits in hand and equipment on order, believe a large proportion of announced 2025 capacity is genuinely likely to come online. The construction revenue window is long – natural gas plants, BESS, and SMR construction will be running simultaneously for at least the next decade. (Source: Cleanview/Distilled Earth)
Related Articles
How Fast Can You Really Build a Data Center? The Operational Framework Behind Extreme Compression
The Insurance Game Is Changing and You Should Be Aware
Cleanview / Distilled Earth – Bypassing the Grid: How Data Centers Are Building Their Own Power Plants (Feb 2026)
American Public Power Association – Study Details How Data Centers Are Building Their Own Power Plants
ASCE – Demand for Data Centers Soars: Could SMRs Meet the Need?
Morgan Lewis – Data Center 2026 Outlook: Energy, Infrastructure, and Connectivity
