Commodities
US Data Center Pipeline Growth Slows as Developers Focus on Existing Projects, Wood Mackenzie Says
US data center developers slowed new project additions and shifted focus to advancing existing pipelines as development and regulatory challenges intensified, Wood Mackenzie said in a Thursday note.Developers added 36 gigawatts of new US data center capacity in Q1 2026, down 19% from Q4 2025. Wood Mackenzie said the slowdown marks the third straight quarter of weaker pipeline growth.Total disclosed US data center capacity reached 331 GW, with about 40% already under active development.Established data center developers are prioritizing existing project pipelines as development and regulatory challenges become more complex, said Caitlin Connelly, senior analyst, Wood Mackenzie."New entrants focused on gas supply and land access are targeting states such as Texas and Utah, but only a small fraction of those projects are under active development," Connelly added.Quarterly additions peaked at more than 60 GW in Q3 2025 before slowing in Q4 2025 and easing further during Q1 2026, the note added.Texas remained the largest planned market with nearly 100 GW of capacity, while Ohio ranked second. Utah, New Mexico and West Virginia also attracted large proposals because of land availability, although relatively few projects have entered active development.About 53% of projects have cleared permitting, but those developments account for only 32% of total planned capacity. Wood Mackenzie said projects entering construction this year are generally less energy intensive than earlier developments.Signed utility commitments reached 195 GW, equal to 26% of 2025 US peak demand, while advanced utility discussions rose to 107 GW from 37 GW in Q4 2025 as uncommitted capacity increased, mainly in the Electric Reliability Council of Texas, Wood Mackenzie said.Wires-only utilities account for 51% of high-confidence utility commitments. Wood Mackenzie said more than one-third of committed projects in PJM have reached high-confidence status, while 86% of commitments in the ERCOT remain speculative or in early study phases.Disclosed capital spending surpassed $1 trillion in Q1 2026, although Wood Mackenzie said investment remains highly concentrated, with just 6% of projects representing 42% of total capital expenditure.The report said construction costs per megawatt and per square foot declined during Q1 2026. Developers are also building larger facilities even as overall campus footprints continue to shrink.More developers are also adopting around-the-meter power strategies, particularly in Texas, where abundant natural gas, faster permitting and renewable generation support new projects.Gas-fired generation accounts for 40% of disclosed around-the-meter projects and 48% of total site capacity, while renewables and energy storage represent 41% of deployments and 38% of capacity, according to Wood Mackenzie."The regulatory environment for data center development is increasingly complex and regionally diverse. Interruptible service options are being deployed, forcing companies to choose between speed-to-power and firm power," Connelly said.She added that new fast-track grid connection policies aim to bring power generation online more quickly, but it remains unclear whether those changes will accelerate data center growth as policymakers balance affordability with faster access to electricity.