Exelon's reduction of its high-probability data center pipeline to 11 gigawatts from 18 gigawatts and its total projected capacity for 2027 to 25 gigawatts from 43 gigawatts occurs against a backdrop of increasing public resistance to data center developments and investor doubts regarding the massive spending on AI, alongside regional objections and concerns that utility bills will rise.
Exelon categorizes projects as high-probability if they have reached advanced design stages or are backed by transmission security agreements that have gained Federal Energy Regulatory Commission approval. Both those agreements and Exelon's cluster study process serve to filter out data center projects that are not likely to materialize or that fail to meet the necessary collateral requirements.
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Stephen D'Ambrisi, an analyst at RBC Capital Markets, attributes the declines to local pushback against new data centers and worries among consumers about higher electricity costs. "Making the bar much higher in order to connect to the grid is part and parcel of all of these ways in which utilities are trying to protect regular rate payers," D'Ambrisi said in an interview. "You're seeing pushback to data center development across the US, and so there are some level of projects that were probably high probability that may be falling out of the queue as well."
An Exelon representative refused to explain why certain projects might be impractical, but stated in an email: "if a project chooses not to proceed because of those customer protections, this is evidence the framework is working as intended."
In contrast to Exelon, California's PG&E Corp. boosted its outlook in its second-quarter report. PG&E's list of prospective data center initiatives grew by more than 100% between March and June, indicating that the surge in data-center construction is expanding beyond the Mid-Atlantic region and Texas, which have been the primary hubs for AI facilities.
At the same time, the Electric Reliability Council of Texas (ERCOT), which manages the state's power grid, has started processing interconnection requests in groups to expedite the connection of viable projects. These batch evaluations are scheduled to occur every six months. Initially, ERCOT has designated the most progressed proposals as 'Batch Zero,' representing roughly 220 gigawatts of capacity seeking grid connection.
This pullback reflects a broader industry trend where utilities are tightening interconnection requirements to shield regular customers from cost shifts. Regulators and grid operators increasingly demand financial security deposits and proof of project viability before allowing new data centers to connect, slowing the pace of AI infrastructure expansion. Similar scrutiny is emerging in other states as local communities raise concerns about water usage, noise, and the impact on residential electricity bills, prompting utility companies to demand larger deposits and more rigorous proof of financial backing before committing to grid connections.
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