Plug, Play, or Pivot: The Changing Data Center Development Playbook

Originally published for customers April 10, 2026.

What’s the issue?

Data center development requires developers to align power, land, engineering and construction, and regulatory approvals at the same time. Recent opposition is forcing shifts in tactics.

Why does it matter?

Data centers are driving a growing share of power demand, but rising uncertainty in project execution could distort demand signals.

What’s our view?

Power availability is the main issue, with community opposition as a persistent obstacle. Growth remains strong, but the playbook is changing.

To site and build a hyperscale data center, developers once found a strong market, locked up land and permits, and built. That sequence no longer holds. Two constraints now decide which projects move: securing power and winning local approval, and both come earlier in the process than before. This post breaks down the data center development playbook step by step, then looks at the two blockers reshaping it and what recent project cancellations reveal.

How Data Center Development Actually Works

Developers line up power, land control, fiber connectivity, cooling strategy, and local approvals in a rough sequence. Power comes first, and for good reason. The general playbook looks like this:

1. Define the workload and business model. Start with the use case: enterprise, colocation, hyperscale cloud, edge, or AI/HPC. These drive scale, power, cooling, and siting needs. Enterprise facilities are often smaller and less power-intensive; colocation facilities serve multiple customers; hyperscale facilities are usually very large, single-user campuses; and AI-oriented facilities push much higher rack densities and cooling requirements.
2. Screen markets before you screen parcels. Developers increasingly start with “speed-to-power,” asking whether the market can deliver power on the required timeline. Further profiling considers fiber and carrier density, water availability for cooling, tax incentives, and permitting.
3. Secure site control and run diligence. After market screening, developers lock land and run title, geotechnical, floodplain, wetlands, access, and utility diligence. Larger campuses must also account for substation siting, transmission access, and phased expansion. Many jurisdictions now steer development toward sites with existing high-voltage infrastructure and compatible land use.
4. Establish the power path early. This is where projects increasingly fail. Utility service requests, load studies, substation design, transmission upgrades, and tariff or rate structures now determine viability. Delays at this stage are pushing developers away from the grid and toward co-located generation and behind-the-meter structures. Pairing with on-site natural gas generation is rising to control timelines.
5. Obtain entitlements and local approvals. This typically includes zoning, conditional or special use permits, site-plan approval, and public hearings. Jurisdictions are increasingly treating data centers as a distinct use rather than forcing them into office or warehouse categories that create predictable conflicts.
6. Permit the project and finalize design. Permitting varies by location but generally includes grading, stormwater, building permits, fire review, access, and utility approvals. Cooling systems and backup generation choices shape noise, emissions, water use, and fire requirements, and are becoming more visible in local review.
7. Procure long-lead equipment and build. The construction sequence is fairly standard, but availability of switchgear, transformers, generators, and cooling systems can drive schedules. Delays at this stage can push timelines even after sites are approved.
8. Commission, energize, and phase occupancy. Developers of large campuses often energize and deliver in phases, because utility timing, customer demand, and equipment procurement rarely line up perfectly.

The Two Blockers Reordering Data Center Development

Securing power supply is the top barrier to data center development, especially for hyperscalers that require significant power. Grid interconnection is a slow process, and transmission is a constrained resource. At the American Enterprise Institute’s “Powering Prosperity and the New Electricity Economy” event in January 2026, Marsden Hanna, Global Head of Sustainability and Climate Policy at Google, stated “Transmission barriers are really the number one challenge we’re seeing on the grid.” Hanna also demanded that the country address permitting delays for new transmission projects.

Power Availability Comes First

To work around this barrier, data centers are turning to colocation or on-site generation. As discussed in Feeding the Machines — Early Pipeline Models for Data Center Power, Project Jupiter in Doña Ana County, New Mexico and the Monarch Compute Campus in Mason County, West Virginia will operate as part of microgrids, using on-site generation.

The regulation of these co-located large loads, especially their economic regulation, has moved quickly. FERC opened the question in the October 2025 “Interconnection of Large Loads to the Interstate Transmission System” advance notice of proposed rulemaking (Docket No. RM26-4-000), and on June 18, 2026 it issued six show cause orders under Section 206 of the Federal Power Act directing every RTO and ISO to justify or reform its large-load interconnection tariffs. We break down that shift in Large-Load Interconnection and NEPA Shifts: FERC’s June Commission Meeting, and the underlying co-location questions in The PJM Power Surge: FERC’s Co-Located Generation Query.

Community Opposition and the Wisconsin Test Case

The other blocker to which hyperscalers are vulnerable is community opposition: local residents, or coalitions of them, publicly opposing data center proposals, most often in public hearings before municipal officials. This opposition most frequently cites costs to utility ratepayers, resource and environmental impacts, and a lack of transparency in project planning.

It also most frequently comes from communities with little prior experience with data centers, according to analysts Hongcen Wei, Dean Struyven, and Samantha Dart from Goldman Sachs. Wisconsin is an example of an area with such communities. Local opposition there is strong: of nine recently proposed hyperscale data centers, just three have reached construction. Developers canceled two and paused one, and the remaining three are pending local approvals amid community pushback. The three canceled or paused projects are:

• Project Nova (Microsoft) in Caledonia, Wisconsin — canceled when rezoning approval seemed unlikely.
• QTS Wisconsin (QTS) in DeForest/Vienna — canceled after the annexation and rezoning application was denied.
• An unnamed project in Menomonie/Red Cedar, Wisconsin — halted after the city mayor ordered a stop to further cooperation with the developer.

Opposition like this prompts data centers to relocate their projects or, over the longer term, to improve their relations with the public. For a closer look at how these dynamics vary by state and grid, see Data Center Geography, Power Grids, and Permitting Risk.

The New Playbook: Power and Public Acceptance First

The underlying constraints are clear: resource availability for power, land, and water. Those won’t change. The old playbook must. Hyperscalers can no longer just find a good market, get the land and permits, and build. The game now starts with resource availability and public acceptance. Developers who can secure power, comply with local land-use rules, and build community trust around water, environmental, and grid concerns are far more likely to get projects built.

Frequently Asked Questions

What is the biggest barrier to data center development?

Securing power supply. Grid interconnection is a slow process and transmission is a constrained resource, which hits hyperscale projects requiring significant power hardest.

Why are data center developers turning to on-site generation?

Interconnection delays are pushing developers toward co-located and behind-the-meter power, often paired with on-site natural gas generation, to control project timelines.

Why do communities oppose data center projects?

Opposition most frequently cites costs to utility ratepayers, resource and environmental impacts, and a lack of transparency in project planning.

How often does opposition stop a data center?

It can be decisive. In Wisconsin, of nine recently proposed hyperscale data centers, developers canceled two and paused one, while three remained pending amid local pushback and only three reached construction.

If you would like a state-level analysis of data center opposition, please contact us.