Breaking the speed limit: Wood Mackenzie warns AI data centre power race threatens projects and consumers

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Technical and regulatory hurdles make collocation unscalable for most developers

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LONDON/HOUSTON/SINGAPORE, May 21, 2026 (GLOBE NEWSWIRE) —                                                                                                                                                  PRESS RELEASE                                       

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Breaking the speed limit: Wood Mackenzie warns AI data centre power race threatens projects and consumers

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INSIGHT FOR IMMEDIATE RELEASE 

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LONDON / HOUSTON / SINGAPORE – 21 May 2026 – The race to power artificial intelligence is pushing US data centre development to break the speed limit of grid development – creating significant risk for projects, markets and consumers, according to a new Wood Mackenzie report.

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With grid transmission build-outs 5-10 years away and competitive pressure mounting, data centre operators are pursuing collocated generation and flexible interconnection models. Wood Mackenzie’s latest Horizons report “Breaking the speed limit: Can US data centre development outpace grid development?” warns that these projects face far greater technical, regulatory and economic hurdles than the industry understands.

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“The power sector is fixated on data centre flexibility, but that is not the end-game for grid operators or data centre operators,” said Ben Hertz-Shargel, Global Head of Grid Transformation and Large Loads, Wood Mackenzie. “Firm grid service is the goal, backed by new transmission superhighways. But there is a lack of awareness throughout the power sector about the technical and regulatory risk confronting colocation projects, and the business risk of conditional interconnections.”

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The challenge is existential for deregulated markets. PJM, the Mid-Atlantic grid operator, has 78 gigawatts of committed data centre load against only 36 gigawatts of accredited generation capacity in its pipeline. In Texas, current market prices of $30-40 per megawatt-hour fall far below the $78-$100 needed to attract new gas generation. Wood Mackenzie’s Accelerated case for data centre load growth entails 16.4 GW of gas capacity additions per year through 2035 to meet projected demand, despite only 4 GW per year from 2023 to 2025.

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“Load growth and affordability are in direct opposition in the deregulated markets,” said Chris Seiple, Vice Chairman, Energy Transition and Power and Renewables, Wood Mackenzie. “If prices rise to the level necessary to incentivise new generation, it will raise prices for all customers, prompting a political outcry.”

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To confront this, PJM is bifurcating its generation market – creating one elevated price tier for new resources contracted by large loads, and a lower tier for existing resources. The unintended consequence: existing gas and coal plants receiving lower capacity prices may retire, threatening reliability even as PJM struggles to bring new supply online. Texas, meanwhile, has no comparable plan to incentivise new grid-connected generation, and is trusting that competitive power markets will deliver the new supply.  That typically happens by prices rising to levels that attract new investment.