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Exelon’s high-probability demand estimate fell sharply after it required binding agreements. Utilities face a costly choice: prepare for genuine growth without leaving other customers to fund projects that never arrive.
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Utilities are trying to make data-center developers bear more of the cost of reserving grid capacity, rather than letting speculative requests trigger investments ultimately paid for by other customers. Wood Mackenzie counted 1,066 GW of requested US connections, but expects utilities to commit to serving only about 28%; duplicate applications across utilities inflate the queue. Exelon's binding transmission agreements have narrowed its prospective demand pipeline, while the company says its $41 billion capital plan through 2029 is unchanged—showing utilities are screening projects without yet backing away from infrastructure buildout.
Exelon said its transmission security agreements had secured more than $1 billion in customer protections as of its August 4 announcement.
Average minimum contract terms for large customers have risen to about 10.8 years, from 4.6 years before 2024, according to filings aggregated by Halcyon.
Utilities still face a timing trade-off: transformers can take years to arrive, so screening uncertain demand does not eliminate the risk of preparing too little capacity.
US utilities are demanding stronger financial commitments before connecting data centers, trying to avoid building power infrastructure for customers that never arrive. Higher rates, collateral, longer contracts and engineering study fees are screening out speculative requests. At Exelon, expected data-center demand fell sharply after developers were required to take on binding obligations.
Developers have requested 1,066 gigawatts of US data-center grid connections, according to a Wood Mackenzie analysis cited in TechRadar’s October 21 report. The firm expects utilities to commit to serving only about 28% of that requested capacity.
Some of the gap reflects developers shopping for power rather than separate facilities waiting to be built. Developers submit the same project to several utilities, keeping options open until they know which can supply electricity fastest. Counting each request separately therefore overstates the demand utilities may ultimately serve.
Grid costs are shared. If a utility builds substations and transmission lines for a customer that never materializes, other customers can end up helping pay for those investments.
Exelon’s response is a transmission security agreement: a contract requiring large new electricity users to commit to payments for transmission service before significant planning and investment. In its August 4 announcement, the company said these agreements had secured more than $1 billion in customer protections.
The agreements bind customers to credit obligations, revenue contributions and payments to cover shortfalls. After Exelon required them, its high-probability demand estimate and wider pipeline both contracted. Those figures measure prospective demand, not operating facilities shutting down.
Utilities are also asking accepted customers to stay committed longer. Average minimum contract lengths for large customers have risen to about 10.8 years, compared with 4.6 years before 2024, according to filings aggregated by Halcyon and cited by The Wall Street Journal.
A smaller queue has not yet translated into a smaller Exelon investment plan. The company told analysts its $41 billion capital plan through 2029 remained unchanged. Building too little carries its own risk: transformers can take years to arrive, leaving utilities to prepare for growth while screening out uncertain demand.
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