Data Center Bytes

The rapid expansion of AI infrastructure, cloud computing, and hyperscale data center development is increasing pressure on data center operators to secure reliable electricity while advancing sustainability objectives. Against this backdrop, renewable energy credits (RECs) have emerged as an advantageous instrument, among other renewable energy strategies.

As investment in nuclear energy continues to grow, driven in part by rising electricity demand from data centers, AI infrastructure, and other large-load users, project developers and investors are navigating increasingly sophisticated commercial and regulatory structures.

The North American Electric Reliability Corporation (NERC) has issued a Level 3 Alert calling for immediate attention from NERC registered entities regarding the reliability risks associated with large computational loads, including data centers, artificial intelligence training facilities, cryptocurrency mining operations, and similar facilities.

The continued expansion of data centers—driven by cloud adoption, artificial intelligence (AI), and high-performance computing—is reshaping how investors evaluate infrastructure risk and opportunity. Among the most critical, and often underestimated, components of this ecosystem are heating, ventilation, and air conditioning (HVAC) and related thermal-management infrastructure.

Explosive growth in cloud computing, AI workloads, edge deployments, and enterprise digitization continues to drive unprecedented demand for capacity, leading the data center sector to become one of the most closely watched segments of the digital infrastructure market. While investor attention often gravitates toward hyperscalers, colocation platforms, and real estate assets, commercial facility services are emerging as a compelling—and frequently underappreciated—source of value for investors and operators in the data center sector.

California lawmakers have recently focused renewed attention on the rapid growth of data centers, driven in large part by cloud computing and artificial intelligence capacity demands. Concerns about grid reliability, electricity costs, and environmental impacts prompted a flurry of legislative proposals in the 2024–2025 session. The result, however, is a more incremental regulatory approach than many industry participants initially expected. This post highlights what has passed, what stalled, and what data center developers and operators should be monitoring going forward.

The Federal Energy Regulatory Commission (FERC) issued its long-awaited order on December 18, 2025 (the Order), directing PJM Interconnection, LLC to reform its Open Access Transmission Tariff (Tariff) rules for generators co-located with large loads, most notably data centers, after finding the current Tariff lacks sufficient clarity and consistency regarding applicable rates, terms, and conditions of service.

The proliferation of artificial intelligence (AI) data centers and other high-demand facilities is imposing significant new energy and infrastructure demands on the electric grid. This rapid pace of development is testing the limits of legacy regulatory rules, forcing policymakers and industry participants to consider a patchwork of solutions, ranging from new tariff designs to special contracts. There is also growing concern in some corners of the industry over rate hikes, resource adequacy, and reliability.

In a major move to bolster US digital infrastructure, the White House issued an executive order on July 23, 2025 aimed at accelerating the federal permitting process for data centers and related infrastructure. The order is part of a broader strategy to support rapid deployment of artificial intelligence (AI) technologies and meet growing power demands.

The US administration released its Artificial Intelligence (AI) Action Plan (Plan) on July 23, 2025. This Plan seeks to encourage innovation in AI along with an aggressive buildout of AI data centers, as well as the energy infrastructure needed to power them.