The Gigawatt Race: Who Gets Paid When AI Runs Out of Power

On Monday, Meta told investors it may sell up to $95 billion of its own stock to pay for data centers. The first piece is about $35 billion, roughly two-thirds of it common stock and $12.5 billion of mandatory convertible preferred shares that turn into common stock on August 15, 2029. Up to $60 billion more would be sold into the market a little at a time, starting early next year. Nvidia, AMD and Broadcom are reported to want as much as $5 billion of the shares.¹

A company with Meta’s cash flow does not usually ask the public to help pay its bills. The reason is in what the money buys. Meta is building four AI superclusters, each larger than one gigawatt. The biggest, Hyperion in Louisiana, is planned at five gigawatts and comes with ten new power plants that Meta will commission to run it, in a joint venture to which Blue Owl Capital has committed $7 billion. A Texas supercluster is planned through a similar partnership with BlackRock.¹ That is on top of 2026 capital spending guidance that already ran to $125 billion to $145 billion as of April.²

Ten power plants for one campus is the detail to hold on to. For three years the story of artificial intelligence was told in chips: who designed them, who made them, who could get them. This report is about what happened when the chips arrived and the buildings that house them could not get enough electricity: the contracts that followed, the grid straining under them, the state where the race is being run, the policy pushing it along, and the kinds of companies that end up holding the leverage.

How the Chip Stopped Being the Bottleneck

Start with the scale of the spending, because it explains everything that follows. Bank of America estimates that global data center spending crossed $1 trillion in 2026 and will reach about $2.1 trillion by 2028. By its count, an AI-focused facility now costs about $57 million per megawatt to build, against about $49 million for a standard data center.³ Microsoft alone put $116 billion of cash into capital expenditures in its fiscal 2026, up from $23.9 billion four years earlier.⁴

Notice the unit in that Bank of America figure. The industry prices its buildings per megawatt, not per square foot or per server. A data center is, in accounting terms, a machine for turning electricity into computing, and the electricity is the part that cannot be shipped in a container.

A data center is, in accounting terms, a machine for turning electricity into computing, and the electricity is the part that cannot be shipped in a container.

Energy Secretary Chris Wright put it in one line in May: “What’s the most important source of energy for AI? Electricity.”⁵ Chips can be ordered. Buildings can be poured in a year. A new power plant, a transmission line or a reactor restart runs on a different clock, measured in years and permits. When the fast part of the system outruns the slow part, the slow part sets the price.

The largest buyers of computing have stopped treating electricity as a utility bill and started treating it as a strategic asset: locked up for decades, paid for in advance, and in some cases built from scratch on their own land.

The Contracts: Twenty Years of Power, Paid Up Front

On October 6, Google signed a power agreement with Constellation covering about 3.6 gigawatts. Of that, 890 megawatts is new nuclear capacity that Constellation will add by upgrading 11 existing reactors at six sites in Illinois, Pennsylvania and New Jersey, with the work due by 2032, under a 20-year deal. Constellation is spending more than $4.3 billion on the upgrades. A second agreement covers 2,700 megawatts for 15 years.⁶ Bloomberg reported that deliveries could begin as early as 2028.⁷

Ten days later, on October 16, Microsoft agreed to take roughly 1,100 megawatts from NiSource for a data center campus in Indiana, for 20 years running from 2028 to 2048. Microsoft will cover the cost of both the generation and the transmission needed to serve the site. NiSource has said it will give more detail on its earnings call on October 28.⁴

Read the Indiana terms twice. The customer is not just buying electricity at the going rate; it is paying to build the plants and the wires. A utility that signs a contract like that carries far less risk than one selling into a spot market.

The pattern is accelerating, not new. In January, Meta agreed to take 6.6 gigawatts of nuclear power from Vistra, TerraPower and Oklo for up to 20 years. In March it signed for 5.2 gigawatts of gas and batteries with Entergy Louisiana over 20 years. Microsoft signed for 2.67 gigawatts of gas-fired power this year, and Amazon for 690 megawatts of nuclear.⁷ In Iowa, NextEra is restarting the 615-megawatt Duane Arnold plant with a loan of up to $1.9 billion from the Energy Department, announced as closed on September 8, a 25-year power agreement with Google, and a target of early 2029. NextEra’s chief executive, John Ketchum, put it plainly: “Restarting Duane Arnold is about delivering new power to meet new demand while generating billions of dollars in economic value for Iowans.”⁸

A press release about a new model can be forgotten in a week. A 20-year power contract cannot. It tells you how long the buyers expect the demand to last, and how worried they are about getting enough of it.

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The Grid Cannot Keep Up

The federal government’s own forecast says the demand is real. In its October outlook, the Energy Information Administration projected that U.S. power use will reach 4,288 billion kilowatt-hours in 2026 and 4,356 billion in 2027, after a record 4,195 billion in 2025. Commercial demand, the category that includes data centers, is expected to hit 1,549 billion kilowatt-hours this year against last year’s record of 1,493 billion. Wholesale power is forecast at $52 per megawatt-hour, 11% above 2025.⁹

Texas, which runs its own grid, is setting records in months that used to be quiet. On September 12, ERCOT hit a September peak of 86,647 megawatts, 6,698 megawatts above the September 2025 peak. It also reports 9,456 megawatts of large loads approved to energize.¹⁰ The queue behind that is the more striking number. As of late May, ERCOT had about 438 gigawatts of large-load connection requests, up roughly 28 gigawatts since April, along with 17 new gas generation filings in 60 days.¹¹ Most of those requests will never be built. But even a fraction of 438 gigawatts would exceed the entire grid’s record peak several times over.

The most sobering document of the autumn came out of Pennsylvania. In mid-September, a study prepared for the state’s Public Utility Commission by Synapse Energy Economics, Mondre Energy and Aspen Technologies looked at PJM, the multistate grid that includes Pennsylvania. It found that by 2030 the risk of a power shortfall could be six to 100 times PJM’s own planning standard. The only scenario that met the standard was one with no new data centers at all. “As in the Reference scenario, these reliability issues are largely due to surging data center additions,” the study said. PJM, in an email to Utility Dive, agreed that demand is growing faster than generation, “potentially compromising reliability of the system over the next five years.” The commission’s chairman, Steve DeFrank, said “electricity demand and supply are moving out of balance” and that “the status quo is not sustainable.”¹²

Wall Street is doing the same arithmetic. On Monday, Morgan Stanley raised its estimate of the U.S. data center power shortfall for 2026 through 2028 to 38 gigawatts from 33, and put data center capital spending at about $1.5 trillion in 2027 and $1.6 trillion in 2028.¹³ For scale, 38 gigawatts is more than seven times the size of Meta’s Hyperion campus.

A shortfall is a price signal. Every megawatt that can be delivered on time becomes worth more, and whoever controls it gets to set more of the terms.

Texas, the Test Site

If you want to see the race in one place, look at Texas. It has its own grid outside federal jurisdiction, its own natural gas, open land and a political climate that welcomes new plants of every kind.

OpenAI’s Stargate campus in Abilene is the best known. As of April it had about 0.3 gigawatts online and was projected to reach 1.2 gigawatts by the fourth quarter of 2026, running on on-site natural gas plus grid power. OpenAI dropped a plan to grow the site to 2.1 gigawatts. Two more Texas Stargate campuses are planned: 2 gigawatts in Shackelford County on an on-site gas microgrid, where the first of ten buildings is due in late 2026, and 1.2 gigawatts in Milam County, where SoftBank’s SB Energy plans to fund new generation and storage to supply most of the campus. Across seven U.S. sites, Stargate plans more than 9 gigawatts.¹⁴

Then there is the Panhandle. Near Amarillo, on land at Texas Tech University, Fermi America is building a campus it calls Project Matador, designed for up to 11 gigawatts. When it filed to go public in September 2025, it described natural gas as the primary source in the short term and nuclear as the long-term supplier, with solar and wind alongside, and plans for four Westinghouse AP1000 reactors on site. The company was co-founded by former Energy Secretary Rick Perry.¹⁵ On August 10 it signed a 15-year lease with TensorWave worth about $6.5 billion for 222 megawatts, with rights to expand to more than 650 megawatts, to run tens of thousands of AMD Instinct processors. “A lease of this size and this term is a tremendous vote of confidence in Fermi,” said its chairman, Marius Haas.¹⁶

Notice what Texas offers that the shared grid cannot: speed. A campus that brings its own gas turbines, and later its own reactors, does not have to wait years in a connection queue. The grid is slow, so the biggest buyers are building around it.

Washington Picks a Side

On June 18, the Federal Energy Regulatory Commission ordered the six regional grid operators it oversees to improve and speed up the way they connect large energy users such as data centers.¹⁷ The operators were given 60 days to justify their existing rules or propose fixes, with a goal the commission calls “speed-to-power” and a parallel aim of keeping data center costs off residential bills. Texas, which runs its own grid, is outside the commission’s reach and was not covered.¹⁸

On August 27, the White House declared a national emergency over foreign-made equipment on the power grid, giving the Energy Department broad authority to block transactions involving gear from countries it considers security threats, and 120 days to write the rules. The White House tied the move directly to rising electricity demand from AI and data centers.⁵ That clock runs out in late December.

Then, last Wednesday, October 21, President Trump went further on Truth Social. “New and large, in some cases gigantic, Data Centers are mandated by me to make their own electricity,” he wrote, adding that they should “give or sell any excess back to the local community, or grid,” and closing with “MAKE DEALS, and get them built!!!” The post is not an executive order, and it is not clear whether any formal action will follow.¹⁹

The message to the industry is consistent. The regulator wants large loads connected faster and paid for by the companies that need them. The White House wants the grid’s hardware secured. The President wants data centers to bring their own power. Every one of those pushes the builders toward the same answer: dedicated supply, signed and paid for, on sites that can host it.

Where the Money Lands

When everyone needs the same scarce input, the leverage moves to whoever controls it. In the chip era that was a handful of designers and one or two foundries. In the power era it is spread across more hands, and some of them are small.

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Follow the money through one campus. A technology company raises capital, through stock in Meta’s case, and commits it to a site. The site owner has to deliver land with water, gas and a grid connection, or the permits to build generation on the spot. Someone supplies the turbines or the reactors, someone supplies the fuel, someone builds the substations and the lines. The hyperscaler’s capital spending shows up as revenue on every one of those ledgers, and the long contracts turn that revenue into something a lender will finance.

The first category of winner is the generation owner with a signed contract. Constellation’s $4.3 billion reactor upgrade program is backed by a 20-year Google agreement.⁶ NiSource is building plants and lines in Indiana that Microsoft has agreed to pay for.⁴ NextEra is restarting a shuttered reactor in Iowa against a 25-year Google contract and a federal loan.⁸ These are large companies, and the market has had time to notice them.

The second category is the site holder: whoever controls the land, the water, the gas supply and the interconnection where a gigawatt campus can actually be built. In the Texas Panhandle that is a company whose campus was first announced in June 2025 and which in August signed a $6.5 billion lease.^15, 16

The third is the enabling technology: the reactor designs, the turbines, the cooling systems and the transmission equipment that let a campus come online faster than the queue allows. An emergency order aimed at foreign-made grid equipment is also a signal about where that equipment is expected to come from.⁵

The fourth is capacity that already exists, valuable precisely because new capacity is slow. In May, Anthropic agreed to take all of SpaceX’s Colossus One facility, more than 300 megawatts and more than 220,000 Nvidia processors.²⁰ SpaceX’s own filing to go public describes the customer agreeing to pay $1.25 billion a month through May 2029, with either side able to end the deal on 90 days’ notice.²¹ If a well-funded AI company will pay that much for capacity that already exists, it tells you what a new gigawatt is worth.

Here is the part that matters for an individual investor. The first category is mostly megacaps that everyone already owns. The second and third include much smaller companies whose names never come up when Meta announces a raise. For a company doing a few hundred million dollars of business, one contract with a hyperscaler can be larger than everything it did the year before, and the share price has to reprice all at once. That is the kind of mispricing a big buildout creates, and the kind of risk.

The Risks, and What to Watch

The risks are real, and the clearest example sits on the same Texas campus. On December 12, 2025, Fermi America’s shares fell as much as 43% in a single day after a tenant walked away from a $150 million construction-funding agreement that had never been drawn on.²² Eight months later the same company signed a $6.5 billion lease.¹⁶ Small companies in a big buildout win or lose on one signature, in both directions.

Local opposition is now a line item. On October 20, Amazon walked away from a planned data center on a roughly 122-acre site in Ashburn, Virginia, that it had bought for about $427.3 million in March, after neighbors and county supervisors objected. It will rezone the land mostly for housing and donate about 25 acres.²³ In the first quarter of 2026 alone, Heatmap counted at least 20 data center projects cancelled after local pushback, worth more than $41.7 billion and at least 3.5 gigawatts, and roughly 100 new local fights, a record.²⁴

Nuclear timelines slip. At Palisades in Michigan, a fuel assembly tipped about 30 degrees shortly after fuel loading began in late August. Holtec announced last Wednesday that workers had retrieved it and that loading can resume. The plant was originally meant to be generating power around this time last year; there is still no restart date, only a contractual commitment to be selling power by March 1, 2027.²⁵ Even the Colossus lease is contested on its own terms: Elon Musk wrote on X that “This is a 180 day lease with 90 day notice mutual cancellation thereafter,” while SpaceX’s filing describes a monthly fee through May 2029.²¹

And the whole structure rests on AI spending continuing. If the buyers pull back, the contracts already signed will hold, but the ones not yet signed will not happen, and the small companies waiting on them will feel it first. A report like this is a map of where the leverage sits, not a promise about when it pays.

What to watch, with dates. On Wednesday, October 28, NiSource holds the earnings call where it has promised more detail on the Microsoft deal.⁴ The same day Microsoft and Alphabet report quarterly results and the Federal Reserve announces its rate decision; Amazon reports on Thursday, October 29.²⁶ By the fourth quarter of this year, Stargate’s Abilene site is meant to reach 1.2 gigawatts and Shackelford County’s first building is due.¹⁴ In late December the Energy Department’s 120-day clock on grid equipment rules runs out.⁵ Early next year, Meta’s $60 billion at-the-market program is due to begin.¹ By March 1, 2027, Palisades is contractually committed to be selling power.²⁵ Google’s Constellation deliveries could begin as early as 2028,⁷ Microsoft’s Indiana supply starts the same year,⁴ and Duane Arnold is targeted for early 2029.⁸

Step back and the shape is clear. In the space of six weeks, Google and Microsoft signed decades of power, the operator of the PJM grid agreed its reliability is at risk, Texas set a record on top of a 438-gigawatt queue, the President told data centers to bring their own electricity, and Meta asked the public for $95 billion to build campuses with their own power plants. The scarce input has changed. The leverage has moved with it, to whoever holds the sites, the fuel, the permits and the technology.

Some of those holders are the biggest companies in the world. Others are small enough that one contract changes everything, and finding out which of them actually hold the rights to something the giants need is the work that matters now. The place to start is where the campuses are being built.