USA – WASHINGTON Trends and Developments Contributed by: John Pierce and Patrick Njeim, Kilpatrick Townsend & Stockton
Electric grid saturation The West Coast energy grids are already oper- ating under considerable strain. AI data centres require stable, continuous and high-volume elec- tricity, often 50 to 100 MW per site, and some- times much more. California, in particular, faces transmission congestion, limited interconnection capacity and frequent power reliability issues, especially during heatwaves; it also faces limited capacity to expand renewable or firm genera- tion, while long-term utility financial constraints limit the pace of grid upgrades. Cost and scarcity of energy resources In California, retail electricity rates are among the highest in the USA, exacerbated by wildfire lia- bility costs, transmission build-outs and climate resiliency fees. As firms seek low-cost, scalable electricity, these high-cost regions are becoming less attractive. Why Nevada, Texas and Other Interior States States such as Nevada and Texas offer vast tracts of undeveloped or industrial land suit- able for data centre campuses. Land costs are significantly lower than in urban California or the Puget Sound area, and local governments often offer tax incentives or zoning fast-tracks to attract investment. This enables hyperscal- ers and colocation firms to build massive data centre footprints quickly. Are Attracting AI Infrastructure Abundant land and lower costs Favourable energy markets and grid flexibility Texas, with its independently operated grid (ERCOT), has become a magnet for energy- intensive industries, including crypto mining, semiconductor fabrication, and now AI. While ERCOT has its own vulnerabilities (notably dur- ing winter storms), it features competitive whole- sale energy pricing, a deregulated retail market
and rapid interconnection timelines. Texas also leads the nation in installed wind power capacity and is rapidly scaling solar generation, allowing firms to access renewable energy at scale. AI data centres often require a blend of renewable and dispatchable power, something that Texas offers with its diverse generation mix (wind, solar, battery storage and natural gas). Nevada, while smaller in grid capacity, benefits from ample solar resources, access to regional transmission through NV Energy, and proximity to California markets, without the same permit- ting restrictions. Nevada has also become a logistics and tech hub, with proximity to Reno and Las Vegas offering both workforce and con- States such as Texas and Nevada generally have fewer permitting layers, more predictable time- lines and more business-friendly environments. For companies needing to deploy data infra- structure within 12 to 24 months, these states offer a competitive edge. Moreover, right-to- build zoning, utility co-operation and state-level co-ordination offices (such as the Texas Eco- nomic Development Council) help streamline project delivery. Strategic proximity and connectivity Many of these new sites are strategically located near major fibre backbones, highways and air- ports, ensuring high-speed data transfer and operational logistics. Locations such as Austin, Dallas-Fort Worth, Phoenix and Las Vegas are quickly developing into Tier-1 data centre mar- kets, rivalling more established regions in con- nectivity and infrastructure support. nectivity advantages. Faster build timelines
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