PJM Cut 4 GW. A Lease Doesn’t Deliver Power

4 GW was the gap between PJM’s old and revised forecasts for summer 2027 peak electricity demand. In January 2026, the grid operator moved its estimate from roughly 164 GW to roughly 160 GW because proposed projects, including some data centers, lacked firm power-service or construction commitments.

AI is changing what a data-center operator must deliver. Leased space and signed capacity remain valuable, but the scarce asset is capacity that can receive power, shed heat and begin earning customer revenue on schedule. Operators increasingly have to coordinate utilities, engineers, builders, lenders and tenants to produce it.

PJM removed projects from a forecast, not demand from the economy

Dominion Energy said Virginia data-center power demand nearly doubled in the second half of 2024, reaching 40.2 GW in December. PJM then reduced its summer 2027 peak forecast by roughly 4 GW. The two measures cannot be subtracted from each other: Dominion described data-center demand in Virginia; PJM revised a peak-load forecast across its much larger service territory. Neither figure, on its own, measures operating AI capacity.

PJM still expects electricity demand to grow by an average of 4.8% annually over the next decade, driven by AI. Its revision instead distinguishes a proposed load from one backed by firmer commitments. Days after the forecast cut, PJM proposed requiring large data centers to bring generation or curtail consumption to help prevent outages. An operator seeking grid service must therefore consider not only how much power a customer wants, but what conditions the grid can place on its use. The power-delivery problem starts before a rack is installed.

Digital Realty buys different stages of readiness

Digital Realty’s transactions trace several ways to acquire or develop capacity. In 2022, it agreed to buy a majority stake in Teraco, Africa’s largest data-center operator, at an approximately $3.5 billion valuation. In 2023, Digital Realty and Blackstone formed a $7 billion development venture for 10 data centers across campuses in Frankfurt, Paris and Northern Virginia. Digital Connexion, its venture with Reliance and Brookfield, later announced a plan to invest $11 billion by 2030 in a 1 GW facility in India.

Those are not interchangeable purchases. An operating-company stake, a development commitment and a planned gigawatt each expose investors to different construction, power and utilization questions. Digital Realty’s June 2026 plan to acquire a majority stake in three fully leased Northern Virginia facilities from Blackstone-managed funds, in a transaction valuing the assets at $7.8 billion, adds a different fact: the buildings already have contracted occupants. Occupancy and tenant cash flow remain central to their value.

The reported terms do not establish a price per delivered megawatt. They give no asset-level MW capacity, energization dates, firm-service rights or allocation of power-delay risk. Nor does the reporting identify the three properties as assets from the 2023 development venture. The deals show Digital Realty working across stages of maturity; they do not document a transfer of those particular campuses from construction to stabilized ownership.

Blackstone finances the interval that leases cannot erase

Blackstone’s QTS platform was described in 2024 as a $25 billion US data-center business whose completed buildout was estimated to require about 6 GW of electricity. “When complete” matters. A buildout estimate is neither power currently drawn nor revenue currently earned. Blackstone also filed for an acquisition vehicle targeting newly built data centers valued between $250 million and $1.5 billion. That vehicle would pursue assets at a different stage from the Digital Realty development venture.

Equinix and Canada Pension Plan Investment Board offer another capital arrangement: they agreed in 2026 to acquire Nordic operator atNorth at a $4 billion valuation including debt. Across these transactions, private capital can fund development, buy an operator or acquire buildings after construction. The distinction matters because someone must carry spending through construction and commissioning before a tenant’s contracted occupancy becomes operating cash flow. The project-finance question is which party bears a missed completion date, a delayed grid connection or a customer that cannot use the capacity when promised. The reported Digital Realty and Blackstone deal values do not answer those contract-level questions.

A powered building can still fail to deliver compute

Intel and SGI tested dielectric coolant in a 2014 proof of concept. In 2021, reporting described Microsoft and startups testing nonconducting liquids when cooling could consume almost half a data center’s power. By 2023, chips including Nvidia’s GH200 had pushed past 1 kW, and manufacturers were adopting direct liquid cooling. Cooling did not suddenly become necessary in the AI era. Higher-density chips made its design harder to separate from the capacity being sold.

A data center operates as a system: power distribution, cooling, networking and operational practice jointly determine whether its compute stays available. CyrusOne supplied a costly demonstration in November 2025. A cooling failure at its facility disrupted CME Group and global futures markets.

Permission determines which sites reach construction

Digital Realty, QTS and NTT Data acknowledged growing local opposition as more than 24 US data-center projects were blocked in January 2026. QTS later abandoned its portion of a proposed 2,100-acre Virginia campus after years of opposition and legal challenges. Residents also challenged Equinix’s proposed $5 billion Potters Bar project near London. Land and financing had not settled either community’s objections.

Operators can seek on-site generation when grids cannot connect projects promptly, but those plants bring their own permitting and equipment-supply problems. Grid costs create another constituency: Monitoring Analytics estimated that a PJM electricity auction would add $6.3 billion to customers’ bills across 13 states and Washington, DC through 2029 because of data-center demand. A developer’s timetable can thus depend on decisions made by utilities, regulators and residents who are not parties to its customer lease.

PJM’s 4 GW cut was not a finding that AI customers no longer need electricity. It was the amount by which one forecast changed when PJM declined to count certain proposals as firm load. For an investor comparing a leased building with a planned campus, that distinction is worth more than another announced gigawatt.