Ep. 043 - The Midterms and the 2028 Datacenter Buildout (Datacenters) | Jeremie Eliahou Ontiveros, Jordan Nanos, Maya Barkin, Wayne Ma

Midterms leave 2027 datacenters safe and 2028 exposed

The midterms will not stop the 2027 US datacenter buildout, since most of that capacity is already under construction. The 2028 pipeline is where the election bites, with about 62 gigawatts of additions mostly still needing permits and Texas holding close to 30% of them. Backlash over water, power and taxes cuts across both parties, so the fight has moved to state and county permitting. Developers can afford to concede on cost, water and transparency, and are starting to.

Takeaways

• 2027 datacenter pipeline is locked in. Roughly three quarters of the capacity due online in 2027 across the top 20 states is already under construction, so the midterm results cannot stop it. The 2028 pipeline is different, with about 62 gigawatts modelled and most of it still needing permits.
• Pro-moratorium wins would expose 30.3 gigawatts. In SemiAnalysis's scenario where pause-backing candidates take the toss-up states, 30.3 gigawatts of planned 2028 US capacity is at risk. If only conditions-favouring candidates win, exposure falls to 5.7 gigawatts, the polls-based base case.
• Texas holds the largest share of 2028 risk. Texas is close to 30% of 2028 US additions and stopped issuing TCEQ permits at the end of September, on top of an ERCOT interconnection audit. Greg Abbott is favoured and his directives expire on their own, so permitting could restart in December.
• The backlash cuts across both parties. Wayne Ma expected a party split but found states pulling back incentives regardless of party, driven by anxiety about AI and jobs and misinformation about water and taxes. Ohio's incentives, forecast at $136m a year, grew to $555m and then $1.6bn.
• A pause stops work, conditions do not. Maya Barkin defines a pause as a moratorium halting permit processing at any level, from building permits to zoning. Conditions raise a project's cost but leave a path to approval, so a pause is fatal only to projects without all permits in hand.
• Grid strain is already showing up. Jeremie Eliahou Ontiveros cites a voltage dip in Virginia that nearly tripped every datacenter's UPS at once, dropping 1.5 gigawatts of load. He argues developers can pay much more locally, since a one gigawatt datacenter is a $50bn project.

What developers are already conceding

• Older datacenters used open-loop cooling, which was energy efficient but water inefficient. With several projects drawing on the same supply, Jeremie Eliahou Ontiveros says developers are now cutting water use.
• Fire stations and schools win more goodwill than paying residents $10,000 each, and household bill credits are already on the table.