# Utilities Crack Down on Phantom Data Centers as AI Strains Power Grid > Source: > Published: 2026-10-15 17:27:19+00:00 TL;DR — Key Takeaways - Phantom data centers are straining the power grid: Developers have requested more than 700 gigawatts of electricity, but many proposed facilities may never be built. - Utilities are demanding financial commitments: Companies are requiring deposits and collateral to distinguish legitimate data center projects from speculative requests. - Texas faces massive demand uncertainty: Grid connection requests have surpassed 474 gigawatts, while estimates suggest only a fraction will materialize by 2030. The rapid buildout of AI data centers is creating a major problem for U.S. electricity providers: developers are requesting enormous amounts of power for facilities that may never be built. These so-called phantom data centers are complicating grid planning, in some cases leading to new utility regulations and potentially boosting electricity bills for consumers. Across major sections of the U.S., large electricity customers, primarily data centers, have requested more than 700 gigawatts of power. That’s more than 10 times the estimated electricity currently consumed by U.S. data centers. Research firm Wood Mackenzie estimates that a mere 23% of disclosed data center electricity requests qualify as high-confidence projects. A major reason for the inflated demand is that developers often submit electricity requests to several utilities while evaluating potential construction sites. So a single planned data center can appear multiple times in regional electricity forecasts. This uncertainty creates big problems for utilities. Building power infrastructure for projects that are later canceled wastes investment and can raise customer bills. But failing to expand capacity quickly enough could leave legitimate AI data centers without enough electricity. ### **Requiring Financial Commitments** To handle the issue, utilities are imposing stricter financial requirements on developers. Exelon, which serves customers across the Midwest and Mid-Atlantic, initially reported 18 gigawatts of potential demand from large customers. After requiring financial commitments and collateral, its high-probability pipeline declined to 11 gigawatts. Developers have since committed approximately $1 billion in collateral to support those projects. Texas, a major center for data center construction, faces an even larger challenge. Requests to connect large electricity customers to its grid have climbed from approximately 48 gigawatts in 2023 to more than 474 gigawatts. Yet power producer Vistra estimates that only 12 to 15 gigawatts of new data center demand will connect to the Texas grid by 2030. Texas Governor Greg Abbott has temporarily halted new data center grid connections while regulators examine proposed projects. The state is requiring greater disclosure of project ownership, electricity generation plans and water consumption. Texas also requires deposits of $50,000 per megawatt for certain engineering studies, meaning that a typical data center project would need to commit millions of dollars before advancing through the process. Other states are adopting similar safeguards. In Ohio, AEP Ohio’s data center demand pipeline fell by more than half after regulators introduced requirements that include connection study fees reaching $100,000. Pennsylvania has strengthened permitting requirements for data center developers, requiring legally binding commitments and local approval. Of more than 100 proposed data centers in the state, only 20 had submitted permit applications as of August, according to the governor’s office. The financial issues here go beyond developers and utilities. Monitoring Analytics, which oversees the PJM electricity market covering 13 states, estimates that existing and projected data center demand contributed to a $29.4 billion increase in capacity costs over approximately four auctions. A shortage of skilled construction workers also adds challenges. An estimated 70% of planned data center projects are concentrated in regions containing only 30% of the qualified mechanical, electrical and plumbing workforce.