Power Is Not a Line Item: Why Data Centers and Energy Are Becoming One Industry

By Bill Kleyman

For most of the past 20 to 30 years in the data center industry, power was important, but it was not the center of the strategy conversation. We prioritized designing buildings and buying servers. We stressed over redundancy, cooling, cabling, utilization, virtualization, and uptime.

Power mattered, of course. But for most projects, it was something we modeled, requested, and procured.

That world is gone.

Power is no longer a line item. It’s now a relationship.

In a kilowatt- and megawatt-market, you could treat power like procurement. You wrote down a number, went back and forth, and, eventually, you got the electricity resource. In a gigawatt market, that approach is broken.

The smartest operators are now sitting with utilities, regulators, generation partners, developers, and communities years before energization. Price per kilowatt still matters. But it’s no longer the only question, and in many cases it’s not even the first question.

The harder questions are now the strategic ones:

• Can I get the power?
• When can I get it?
• How firm is it?
• What happens during a grid event like a power outage?
• Can I build enough trust with the utility, regulator, and community to build this data center, and to still be welcome here in five years?

That last question is becoming just as important as the engineering model. Community engagement is now the third leg of the stool, alongside capital and technical expertise. And there’s no way you’re building community trust without addressing how a data center will affect local electricity rates.

The Numbers Are Getting Hard to Ignore

The convergence of the data center and power industries is becoming urgent because the numbers are becoming enormous.

In the 2026 AFCOM State of the Data Center report, average rack density climbed to 27 kW per rack, up from 16 kW last year. That is a 69% year-over-year increase and nearly four times what respondents reported five years ago.

NVIDIA has been talking about 800 VDC architectures to support 1 MW IT racks and beyond. The emerging NVL576 class of systems has been discussed in the context of hundreds of kilowatts per rack, making megawatt-class racks no longer sound like science fiction. A few years ago, 40 MW was a big campus. Today, 40MW is a single building in a multi-hundred-megawatt or gigawatt campus.

Here’s why the rack density trend is so important: It is increasing faster than many of our design, utility, permitting, supply chain, and community engagement models were built to handle.

The U.S. Department of Energy and Lawrence Berkeley National Laboratory found that data centers consumed about 4.4% of total U.S. electricity in 2023 and could reach 6.7% to 12% by 2028. EPRI has projected that data centers could consume roughly 9% to 17% of U.S. electricity by 2030 in some scenarios. Globally, the International Energy Agency expects data center electricity consumption to roughly double by 2030, reaching around 945 to 950 TWh and representing just under 3% of global electricity consumption.

These are system-level changes. And they are landing at the same time as broader electrification, aging grid infrastructure, electric vehicles, manufacturing expansion, domestic reshoring, and a very real push to modernize power generation and transmission.

Put differently, the data center industry did not walk into a quiet power market. It walked into an already crowded room, plugged in a GPU cluster, and asked if anyone had another few hundred megawatts lying around.

What Data Center Power Convergence Looks Like

Over the past few years, the Venn diagram between data centers and power has been closing at a pace I have never seen before. We’re seeing this convergence show up in recent transactions and new data center and power provider relationships.

UGI Energy Services and Prime Data Centers announced a partnership in which UGI will build dedicated natural gas pipelines and infrastructure to support one of Pennsylvania’s largest AI and high-performance computing facilities. Vantage Data Centers and Liberty Energy announced a partnership to develop and operate up to 1 GW of power solutions for next-generation data centers, including a 400 MW reservation for generation capacity expected in 2027. J.P. Morgan highlighted its role in a $5 billion financing package for VoltaGrid to accelerate advanced behind-the-meter power solutions.

This is not just about who can buy electrons. It is about who can create, reserve, deliver, balance, finance, and defend an energy strategy.

Behind-the-meter power is becoming a major part of that conversation. In a BTM configuration, power is generated and consumed on the same site, with the utility serving as a supplemental, backup, or ideally interconnection partner. The goal is not to create permanent islands of power. That is an important distinction. The goal is to move capacity forward despite grid congestion while designing toward long-term integration with the grid.

The AFCOM State of the Data Center report shows that 25% of respondents are generating power on-site today, up from 19% last year. Another 23% plan to implement on-site generation within the next 12 months, and 17% are exploring options. Battery energy storage systems (BESS) are also moving quickly, with BESS tied with solar as the most-used non-fossil energy technology in the survey at 44%.

Batteries, on-site generation, natural gas, renewables, nuclear interest, fuel cells, and grid services are no longer side conversations. They are becoming core data center architecture.

Challenges and Opportunities

Let’s be honest. This convergence of data center and power industries is exciting, but it isn’t clean or simple. It comes with real growing pains.

The significant challenges include:

• Scale: We’re trying to plan multi-hundred-megawatt and gigawatt campuses in a grid environment that was not built for this pace.
• Supply chain: AFCOM found that 66% of respondents continue to experience supply chain challenges, and 15% reported outages directly tied to supply chain delays. That makes procurement a reliability issue, not just a scheduling issue.
• Financing: We are financing into an unknown market curve. Demand is huge, but timelines, policy, interconnection queues, equipment lead times, and customer requirements are still shifting.
• Communities: In my AFCOM article on data centers needing to pass the good neighbor test, I wrote that if we answer an infrastructure concern with an AI innovation talking point, we lose trust. That applies directly here. Communities are worried about electricity rates, water, land, noise, emissions, and whether these projects are being built with them or around them.

But the opportunity is just as big as the challenges.

If we get this right, data center growth can help strengthen the grid rather than simply strain it. New deals can fund substations, transmission upgrades, generation, storage, and resilience projects that benefit more than just the data center campus. In some locations, developers and hyperscalers are also structuring projects to protect ratepayers and, in the best cases, create conditions where new infrastructure lowers long-term costs or improves reliability for the broader community.

That is the path we should be pushing toward. Not extraction. Partnership.

Navigating the New Landscape

So what should data center leaders do now? The first step is accepting that the landscape has changed. Land, fiber, and tax incentives no longer define the whole site selection equation. Power is the strategy, including as a cornerstone for community trust.

A few practical moves matter:

• Bring utilities, generation partners, and regulators into the conversation earlier than feels comfortable. If you are waiting until late-stage development, you’re already late.
• Model power, cooling, and supply chain together. A rack density roadmap without a power and thermal capacity roadmap is just a very expensive wish list.
• Design behind-the-meter strategies as bridges, not islands. Long-term value comes from integration with the grid, not permanent separation from it.
• Treat community engagement as infrastructure. It needs investment, governance, timelines, milestones, and accountability.

The broader takeaway is clear: The convergence of the data center industry and the power industry is well underway.

We are moving from racks that could be cooled with a box fan and optimism to racks that require sophisticated liquid cooling, new power distribution architectures, 800 VDC infrastructure, and eventually megawatt-class design assumptions. We’re moving from facilities measured in a few megawatts to campuses measured in hundreds of megawatts and portfolios measured in gigawatts. We are moving from power procurement to power partnership.

That is unprecedented. But it is also manageable if we are honest about the scale, disciplined about the engineering, transparent with communities, and serious about the relationships required to make this work.

The next generation of data center leadership won’t be defined only by who can dream up and design the biggest campus. It will be defined by who can bring power, cooling, capital, community, and execution together responsibly to actually build and run it.

Because in the gigawatt era, power is not just what keeps the lights on.

Power is the relationship that determines whether we get to build the future at all.

Bill Kleyman will be among the speakers addressing these challenges and more at the Data Center World Power Conference & Expo, Sept. 21-23, in Dallas, Texas. See details at dcwpower.com.