Data Center Building Squeeze
Cordell Ratzlaff@cordell
The idea
I think local pushback against new data center construction, like moratoriums and grid cost rules, will make already-built and already-powered sites scarcer and more valuable over the next few years. To play that, I own established landlords and power producers sitting on connected sites, alongside the on-site power makers and gas suppliers that new projects will lean on instead of waiting for grid capacity. It's spread across both sides of that trade with established names only and a modest cash cushion for the long haul.
What it owns
- These companies own data center space that is already approved and connected to power, which becomes scarcer when new building faces restrictions. · Digital Realty TrustIt leases large blocks of powered, approved data center space to cloud and AI companies, benefiting when building limits keep demand ahead of supply., EquinixIt owns a vast network of built, approved data centers with existing power connections, so existing space rents for more when new construction slows., Iron MountainIt is expanding a data center business on land and power it already controls, gaining value as approved capacity becomes scarcer., American TowerIt owns CoreSite, a network of already-connected data centers, which gains value as new builds face delays and approvals.31%
- Power producers can host data centers adjacent to their plants, bypassing grid bottlenecks and lengthy approval processes. · Constellation EnergyIt operates the largest US nuclear fleet, and tech companies prefer power from established plants over waiting in crowded grid queues., VistraIt owns gas and nuclear plants with land and grid connections data centers need, which matters more when new sites face restrictions., Talen EnergyIt hosts a major data center campus next to one of its power plants, showing how existing infrastructure can replace new site development., NRG EnergyIt owns power plants and surrounding land that can host data centers or supply them directly, bypassing crowded grid connections.26%
- When data centers must bring their own electricity, these companies supply the fuel cells and turbines that make it. · Bloom EnergyIt makes fuel cells that power data centers on site, letting projects skip line waits for crowded local grids., GE VernovaIt makes gas turbines that power utility plants and the on-site systems data centers build when grids cannot serve them., CaterpillarIt sells large engines, generators and turbines that data centers use for backup and on-site power as projects move away from grid dependence.21%
- On-site power systems need backup generators and steady fuel supply, which these companies provide. · Williams CompaniesIt operates major natural gas pipelines that feed the gas-fired power plants data centers increasingly build on their own sites., CumminsIt makes large generators that every data center needs for backup and some use for on-site power as grid alternatives grow., GeneracIt is expanding into larger generators that data centers buy as new sites are required to supply their own backup and primary power.12%
- Cash10%