Emerging Datacenter Hubs

The datacenter industry is undergoing a dramatic geographic shift as power constraints in traditional markets (Northern Virginia, Silicon Valley, Dallas) force hyperscalers and developers to seek new locations. States like Pennsylvania, Texas, and Utah are emerging as major hubs, collectively planning over 37 GW of new capacity - equivalent to powering 30 million homes.

Why New Hubs Are Emerging

Traditional datacenter markets face critical constraints:

1. Power Scarcity: Northern Virginia’s Dominion Energy warned of inadequate generation capacity
2. Grid Limitations: Multi-year waits for utility interconnections (3-7 years typical)
3. Land Costs: Premium sites in established markets command prohibitive prices
4. Regulatory Pressure: Increasing scrutiny on water usage and environmental impacts

What Makes an Emerging Hub Attractive:

• Available Power: Access to 500+ MW substations or on-site generation
• Natural Gas Infrastructure: Proximity to major pipelines (Marcellus, Permian)
• Nuclear Potential: Existing or restartable nuclear facilities
• State Incentives: Tax abatements and streamlined permitting
• Low Operating Costs: Cheap electricity ($0.03-0.05/kWh vs$0.08+ in traditional markets)
• Climate Advantages: Cool/dry climates reducing cooling costs

Growth Rate Comparison

Emerging hubs are growing 15x faster than established markets, driven entirely by power availability.

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Pennsylvania: Natural Gas Powerhouse (16.9 GW)

Pennsylvania has rapidly emerged as the nation’s largest emerging datacenter hub, with 16.9 GW planned across 12 major projects representing $125 billion in investment. The state’s advantages center on the Marcellus Shale natural gas formation and strategic location in the PJM interconnection.

Key Advantages

1. Marcellus Shale Natural Gas: Abundant, low-cost natural gas ($2-3/MMBtu)
2. PJM Grid Access: Connection to nation’s largest wholesale power market
3. Strategic Location: Between New York and Washington DC (low latency)
4. Brownfield Sites: Converting former coal and manufacturing sites
5. Nuclear Opportunities: Multiple restartable nuclear facilities

Major Projects

Power Sourcing Breakdown

Pennsylvania’s datacenter power comes from diverse sources:

• Natural Gas: 11.0 GW (65%) - Marcellus Shale advantage
• Grid/Mixed: 3.0 GW (18%) - PJM interconnection
• Nuclear: 1.8 GW (11%) - Three Mile Island, Susquehanna
• Renewable: 1.1 GW (6%) - Hydropower (Holtwood, Safe Harbor)

Homer City: The Largest Natural Gas Project

The Homer City Energy Campus represents the single largest natural gas-powered datacenter project in the United States:

• Location: 3,200-acre former coal plant site in Indiana County
• Power: 4.5 GW from seven GE Vernova 7HA.02 hydrogen-enabled turbines
• Investment: $10 billion
• Timeline: First turbine deliveries 2026, operational 2027
• Gas Supply: EQT Corporation (largest Marcellus producer)
• Infrastructure: Existing transmission lines to PJM and NYISO grids
• Brownfield Advantage: Critical infrastructure already in place

Nuclear Renaissance

Pennsylvania is leading the nation in nuclear-powered datacenters:

Microsoft Three Mile Island Deal:

• Plant: Unit 1 reactor (835 MW), unrelated to 1979 accident
• Agreement: 20-year power purchase agreement
• Investment: $1.6 billion to restart
• Timeline: NRC approval by 2027, operational 2028
• Impact: 100% carbon-free power for Microsoft data centers in four states

Amazon Susquehanna Campus:

• Location: 1,200-acre site co-located with Susquehanna nuclear plant
• Power: 960 MW nuclear capacity
• Scale: 15 planned data centers
• Deal: Talen Energy sold site to Amazon for $650 million
• Challenge: FERC rejected capacity increase request (regulatory hurdle)

PJM Market Dynamics

The PJM Interconnection (13-state grid) advantages:

1. Market Size: 65 million people, $1.2 trillion GDP
2. Wholesale Market: Competitive electricity pricing
3. Interconnection Queue: 186 GW of datacenter projects seeking connection
4. Grid Reliability: N-1 contingency planning ensures uptime
5. Cross-Border Sales: Pennsylvania can export power to neighboring states

Challenges

• Local Opposition: Gouldsboro project facing zoning challenges
• Grid Constraints: PJM interconnection queues extending to 2030+
• Natural Gas Pipeline Capacity: Potential bottlenecks in extreme scenarios
• FERC Regulations: Amazon’s co-location deal rejection signals scrutiny

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Texas: ERCOT Market Leader (11.0 GW)

Texas offers 11.0 GW across 27 projects with $78.2 billion investment, driven by the deregulated ERCOT market and abundant natural gas from the Permian Basin.

Key Advantages

1. Deregulated Market: ERCOT allows direct power purchase agreements
2. Massive Interconnection Queue: Oncor reports 186 GW in datacenter requests
3. Natural Gas Infrastructure: Permian Basin and multiple major pipelines
4. No State Income Tax: Business-friendly environment
5. Land Availability: Large tracts in West Texas available at low cost

Major Projects

Stargate Project Deep Dive

The Stargate Project represents a $500 billion, multi-year AI infrastructure initiative:

Abilene Campus (Operational):

• Operators: Oracle (leaseholder), Crusoe Energy (developer)
• Tenant: OpenAI (exclusive)
• Phase 1: 2 buildings, 200+ MW (opened September 2025)
• Phase 2: 6 additional buildings, 1,000 MW (completion June 2026)
• Total Capacity: 1.2 GW, 4 million sq ft, 8 buildings
• Investment: $40 billion (Oracle committed to Nvidia GPUs)
• Cooling: Zero-water evaporation system
• Design: 100,000 GPUs on single network fabric

Texas Expansion:

• Additional Sites: Milam County, Shackelford County (separate from Vantage)
• Total Texas Plans: 20 Stargate sites across the state
• Timeline: Rolling deployments through 2028

Data City Texas: The 5 GW Vision

Data City Texas near Laredo represents the world’s most ambitious single datacenter project:

• Size: 50,000 acres (78 square miles)
• Power: 5 GW capacity
• Square Footage: 15 million sq ft at completion
• Investment: Multi-billion (undisclosed)
• Energy Strategy:
  • Phase 1: Natural gas (100% on-site generation)
  • Phase 2: Green hydrogen transition
  • Storage: Underground hydrogen salt dome facility
  • Goal: 24/7 green energy
• Location: Strategic position near Mexico border
• Timeline: First 1M sq ft by 2026, full buildout by 2029

ERCOT Market Dynamics

The Electric Reliability Council of Texas (ERCOT) manages 90% of Texas’s power load:

Interconnection Queue Crisis:

• Total Datacenter Requests: 186 GW (per Oncor, largest ERCOT utility)
• Comparison: More than entire current ERCOT capacity (85 GW)
• Timeline: 3-5 year waits for interconnection studies
• Behind-the-Meter Trend: Projects developing on-site generation to bypass queue

Market Advantages:

• Direct PPAs: Datacenters can contract directly with generators
• Real-Time Pricing: Access to wholesale market pricing
• No State Regulation: ERCOT operates independently
• Flexibility: Can build generation and load simultaneously

Permian Basin Strategy

West Texas projects leverage oil/gas infrastructure:

• Natural Gas: $2/MMBtu or lower in Permian Basin
• Flared Gas Capture: Some projects capturing otherwise-wasted gas
• Helium: Byproduct helium extraction (Texas Critical DC)
• Water: Limited water availability drives air-cooling designs

Challenges

• Grid Reliability: ERCOT winter 2021 crisis raised concerns
• Interconnection Delays: 186 GW queue vs 85 GW total capacity
• Water Scarcity: West Texas has limited water for cooling
• Extreme Weather: Summer heat and winter freezes stress grid

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Utah: High Desert Mega-Campuses (9.7 GW)

Utah has emerged as a dark horse candidate with 9.7 GW planned across 12 projects ($13.2 billion investment), driven by two competing 4 GW mega-campuses in Millard County.

Key Advantages

1. Cheap Land: High desert land at $5,000-10,000/acre
2. Cool, Dry Climate: Enables efficient air cooling (low humidity)
3. Low Power Costs: Rocky Mountain Power rates among nation’s lowest
4. Business-Friendly: Utah offers significant tax incentives
5. Tech Ecosystem: “Silicon Slopes” provides workforce

Major Projects

The Millard County Mega-Campus Battle

Two competing projects are vying to build the world’s largest datacenter campus in rural Millard County (population 12,975):

Delta Gigasite / MercuryDelta (4 GW)

• Location: 1,200 acres southeast of Delta, Utah
• Power: 4 GW planned capacity
• Size: 20 million square feet
• Sponsors: Fibernet MercuryDelta LLC, Creekstone Energy, BluSky AI
• Status: Rezoning approved June 2025
• Power Sources:
  • Intermountain Power Project (IPP) connection
  • Kern River Pipeline natural gas
  • On-site solar panels
  • Exploring geothermal, wind, nuclear
• Infrastructure: Would surpass Hohhot, China (10M sq ft) as world’s largest
• Nickname: “Golden Spike of the Internet”
• Leadership: Co-founded by Lane Livingstone (Fibernet CEO) and Ray Conley (Creekstone)

Joule Capital Partners Millard County (4 GW)

• Location: 4,000 acres at Triple C Farms, 25 minutes northwest of Fillmore
• Power: 4 GW from Caterpillar generator sets
• Investment: Multi-billion dollars
• Status: Rezoning approved August 2025
• Timeline: Launch 2026
• Power Strategy:
  • Caterpillar G3520K generator sets
  • Integrated CCHP (combined cooling, heating, power) solutions
  • 1.1 GWh grid-forming battery storage
  • Wheeler Machinery Co. as equipment provider
• Approach: Behind-the-meter generation avoiding grid interconnection delays

Key Differences:

• MercuryDelta: Grid-connected with renewable mix
• Joule: On-site generation (natural gas) with battery backup
• Timeline: Joule targeting 2026, MercuryDelta timeline TBD
• Strategy: Joule bypassing interconnection queues

Meta Eagle Mountain: The Anchor Tenant

Meta’s Eagle Mountain Data Center established Utah as a serious datacenter market:

• Size: 4.5 million sq ft across 7 buildings
• Power: 504 MW capacity
• Investment: $1.5 billion over 6 years
• Timeline: Operational 2021, expanded 2022-2024
• Power Source: 673 MW Faraday Solar Farm (starting 2025)
• Water Efficiency: 80% more efficient than industry average
• Services: Supports Facebook, Instagram, WhatsApp
• Impact: Validated Utah as hyperscale-ready market

High Desert Advantages

Utah’s climate and geography provide unique benefits:

Climate:

• Low Humidity: 20-30% average enables efficient evaporative cooling
• Cool Temperatures: Average 52°F enables ambient cooling
• Solar Resources: 300+ sunny days/year
• Water Conservation: Dry air reduces water cooling needs

Infrastructure:

• IPP Project: 2 GW Intermountain Power Project (transitioning to hydrogen)
• Kern River Pipeline: Major natural gas pipeline through Millard County
• Low Seismic Risk: Stable geology compared to California
• Federal Land Access: BLM land available for solar/wind

Salt Lake Metro Hub

Beyond Millard County, the Salt Lake metro area hosts established operations:

• Novva West Jordan: Fully leased to major tech company, $2B expansion
• Aligned Data Centers: Multiple facilities with proprietary Delta³ cooling
• DataBank Bluffdale: 88,250 sq ft, expanding
• Google Cloud Region: Operational since 2020
• NSA Utah Data Center: 1.5M sq ft, 65 MW (government)

Challenges

• Power Availability: Rocky Mountain Power needs transmission upgrades
• Water Rights: Millard County groundwater allocation concerns
• Rural Opposition: Local residents worried about impacts
• Workforce: Need to import skilled labor to rural areas
• Interconnection: Even Utah facing 2028 timelines for grid connections

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Other Emerging Hubs

Wisconsin (5.8 GW)

Cloverleaf Infrastructure - Pleasant Prairie:

• Power: 3.5 GW campus
• Location: Kenosha County (near Chicago)
• Advantages: Access to We Energies substation, Great Lakes cooling
• Status: Planned mega-campus

West Virginia (7.5 GW)

Adams Fork Energy Projects:

• Multiple Campuses: Three 2.4 GW projects in development
• Power: On-site natural gas generation
• Advantages: Marcellus Shale access, low land costs
• Challenge: Limited fiber infrastructure

Wyoming (4.8 GW)

Cryptocurrency Mining Conversions:

• Strategy: Converting Bitcoin mining operations to AI datacenters
• Power: Abundant coal and wind resources
• Advantage: Existing electrical infrastructure from mining
• Location: Cheyenne and Rock Springs areas

Nevada (5.8 GW)

Switch Leadership:

• Las Vegas Campuses: Multiple gigawatt-scale facilities
• Tier IV Certification: Industry-leading reliability
• Renewable Energy: 100% renewable power commitment
• Advantage: Established fiber connectivity (carrier hotel)

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Comparative Analysis

State-by-State Comparison

Success Factor Analysis

Critical Success Factors (Ranked by Importance)

1. Power Availability (40%)

   • Requirement: 500+ MW available within 18-24 months
   • Winners: PA (natural gas), TX (ERCOT), UT (rural substations)
   • Metric: Interconnection queue position and timeline

2. Power Pricing (25%)

   • Requirement: Less than $0.05/kWh all-in cost
   • Winners: PA ($0.03-0.04), UT ($0.035), WV ($0.04)
   • Impact: 40-50% of operating costs

3. Fiber Connectivity (15%)

   • Requirement: Multiple diverse fiber paths, less than 20ms to major metros
   • Winners: PA (NY-DC corridor), NV (established hub)
   • Challenge: WV, WY need investment

4. State Incentives (10%)

   • Tax Abatements: 10-20 year property tax abatements common
   • Sales Tax Exemptions: Equipment purchases often exempt
   • Permitting: Fast-track zoning and environmental reviews
   • Winners: TX (no income tax), UT (competitive incentives)

5. Climate/Cooling (5%)

   • Dry Climate Advantage: UT, NV enable efficient cooling
   • Moderate Temperature: PA, WI benefit from cooler weather
   • Water Access: Great Lakes (WI) advantage over arid West

6. Regulatory Environment (5%)

   • Permitting Speed: 6-12 months vs 24+ months in coastal states
   • Grid Connection: State utility commission cooperation
   • Environmental Review: Streamlined NEPA/state equivalents

Investment Momentum

2024-2025 Announcements by Quarter:

Key Insight: Pennsylvania momentum accelerated dramatically in Q2 2025 with major announcements at Pennsylvania Energy and Innovation Summit (July 15, 2025).

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Power Sourcing Strategies

Natural Gas: The Dominant Solution (62%)

Total Natural Gas Capacity: 23 GW across emerging hubs

Pennsylvania Strategy:

• Homer City: 7 GE Vernova 7HA.02 turbines (4.5 GW)
• TECfusions: On-site microgrid generation (3 GW)
• Shippingport: 900 MW new generation + existing infrastructure (2.7 GW)

Texas Strategy:

• Data City: Behind-the-meter generation (5 GW)
• PowerHouse Grand Prairie: 1.8 GW on-site switchyard

Utah Strategy:

• Joule Capital: Caterpillar generator sets (4 GW)

Advantages:

• Fast deployment (18-24 months vs 5-7 years for grid)
• No interconnection queue
• Marcellus/Permian gas at $2-3/MMBtu
• Hydrogen-ready turbines (GE Vernova)

Nuclear: The Carbon-Free Bet (2.6 GW)

Active Nuclear Projects:

• Microsoft Three Mile Island: 835 MW restart (2028)
• Amazon Susquehanna: 960 MW co-location (2025-2028)
• Utah IPP: 2 GW (converting to hydrogen by 2045)

Nuclear Advantages:

• 100% capacity factor (vs 35% solar, 45% wind)
• Zero carbon emissions
• 24/7 reliable baseload power
• 20+ year power purchase agreements

Challenges:

• NRC approval required (18-24 months)
• FERC co-location scrutiny (Amazon deal rejected)
• High restart costs ($1.6-2B)
• Public perception challenges

Renewable Integration (12%)

Major Renewable Commitments:

• Meta Eagle Mountain: 673 MW Faraday Solar Farm
• Google Pennsylvania: 670 MW hydropower modernization
• Data City Texas: Transitioning to green hydrogen

Hybrid Approaches:

• Solar + Battery: Daytime load shifting
• Wind + Gas: Firming intermittent generation
• Hydropower + Grid: Renewable baseload

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Future Outlook

2025-2028 Buildout Trajectory

Projected Capacity Online:

• 2025: 2.5 GW (mostly Texas Stargate, PA initial phases)
• 2026: 6.8 GW (Utah Joule, PA Homer City, TX projects)
• 2027: 12.3 GW (PA nuclear restarts, major campuses)
• 2028: 20.1 GW (Full Utah mega-campuses)

Market Maturation

Emerging Hub Lifecycle:

1. Pioneer Phase (Current: UT, PA, TX)

   • First-movers securing power and land
   • State governments offering maximum incentives
   • High risk, high reward

2. Rapid Growth Phase (2026-2028)

   • Multiple hyperscalers entering market
   • Fiber infrastructure buildout
   • Utility infrastructure upgrades
   • Workforce development

3. Mature Market Phase (2028+)

   • Limited available power capacity
   • Increased land costs
   • Reduced state incentives
   • Next wave seeks newer emerging markets

Next Wave Candidates

Potential Future Hubs:

• Montana: Colstrip coal plant conversion potential
• North Dakota: Abundant wind, low costs, cold climate
• Arkansas: Nuclear and natural gas availability
• Oklahoma: Natural gas hub, tornado-resistant designs

Risks and Uncertainties

1. Grid Interconnection Delays: Even emerging hubs facing 2028+ timelines
2. Natural Gas Price Volatility: $2/MMBtu could spike to$6+ in cold winters
3. Regulatory Backlash: FERC rejection of Amazon deal signals scrutiny
4. Local Opposition: Rural communities increasingly resisting projects
5. Climate Change: Water scarcity and extreme weather risks
6. Overcapacity: 37 GW planned vs uncertain AI demand

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Key Takeaways

1. Pennsylvania Leads: 16.9 GW makes PA the dominant emerging hub, leveraging Marcellus Shale
2. Power is Everything: All successful hubs solve the power problem first (generation or grid)
3. Behind-the-Meter Trend: On-site generation bypassing interconnection queues
4. Nuclear Renaissance: Microsoft and Amazon betting billions on nuclear restarts
5. Rural Mega-Campuses: Utah’s 4 GW projects would be world’s largest
6. Natural Gas Dominance: 62% of emerging hub power from natural gas
7. Speed Advantage: Emerging hubs delivering power 3-5 years faster than traditional markets
8. State Competition: Aggressive incentive packages attracting hyperscalers

The Bottom Line: The datacenter industry’s geographic center of gravity is shifting inland, driven entirely by power availability. States that solve the power puzzle fastest will capture the next wave of digital infrastructure investment.

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Data Sources

• Pennsylvania projects: 12 projects analyzed from state datacenter database
• Texas projects: 27 projects analyzed from state datacenter database
• Utah projects: 12 projects analyzed from state datacenter database
• Industry reports: Data Center Dynamics, Data Center Frontier, Data Center Knowledge
• Utility data: PJM interconnection queue, ERCOT market reports, Rocky Mountain Power filings
• Last updated: October 16, 2025