Happy Halloween. The scariest thing I read this week wasn't a ghost story. It was a force majeure notice. Contract law does have its own horror genre. Welcome to The Data Center Daily. It's Saturday, October 31st, and this is a weekend edition. Digital Realty and Equinix both post record leasing quarters. Oracle says it's not too worried about Project Jupiter, even as the gas supply for its New Mexico campus slips. Exelon shows how 37 gigawatts of requests become about 6 gigawatts of forecast demand. And a federal court refuses to toss the Clean Air Act case against xAI's Southaven turbines. Tap follow so the next episode finds you.
Digital Realty CEO Andy Power, on Thursday's earnings call, from The Motley Fool's transcript:
While AI is driving unprecedented levels of demand, delivering that capacity has become increasingly challenging. Customers today increasingly recognize the value of experienced partners with the technological and engineering capabilities, development expertise and financial position required to deliver and operate critical infrastructure at scale.
Behind that: Digital Realty signed new leases worth a record 855 million dollars of annualized rent at 100 percent share, covering 267.2 megawatts, with Asia Pacific the largest region. The backlog of signed-but-not-commenced leases hit a record 2.5 billion, averaging 17 months from signature to rent start. The renewals are the line I'd circle. Existing tenants re-signed at 11.8 percent higher cash rent. That tells you exactly who holds the leverage. It also spent 742 million on land in the quarter: a site near Indianapolis for more than a gigawatt of IT capacity, up to 600 megawatts around Charlotte, and 360 megawatts across two Chicago parcels. Indianapolis is the interesting one. Per RealtyWire, the city has finalized a data center moratorium through 2027, and Digital Realty only says near the metro area. No jurisdiction, no build date. That gigawatt is dirt, not a permit. Equinix reported a day earlier. CRE Daily, citing Commercial Observer, has record annualized gross bookings of 533 million dollars, up 35 percent, with new-deal pricing up 12 percent and guidance raised for a third straight quarter. And CEO Adaire Fox-Martin says Equinix may let lower-paying, low-interconnection customers roll off and re-let that space at higher rents. The hyperscalers burn cash to build. The landlords reprice the tenants they already have.
Ayush Mukherjee, writing for News18, on Oracle's biggest Stargate site:
The notice reportedly preserves Oracle’s contractual right to delay rental payments by up to three years if power-related problems prevent the facility from becoming operational on schedule in 2028.
That's the force majeure notice Oracle sent last month to a Blue Owl Capital subsidiary that owns STACK Infrastructure, developer of Project Jupiter near Santa Teresa, New Mexico, a 165 billion dollar campus for OpenAI. On Tuesday at Oracle AI World, OCI president Mahesh Thiagarajan said Oracle is actually not too worried, calling Jupiter one of 30 to 40 data center projects it has in development each quarter. Not too worried. Meanwhile the roughly 18 billion dollar construction loan trades at stressed levels and the stock is down more than 30 percent this year. Somebody's worried. Just not the person on stage. Power is the crux. Jupiter is designed to draw up to 2.45 gigawatts through a private microgrid of Bloom Energy fuel cells on natural gas. The air permit hearing is set for December 7th in Sunland Park, after the New Mexico Supreme Court paused permitting in August and lifted that pause in September. And the fuel has to physically arrive. The Green Chile pipeline still needs federal authorization, its start has slid to February 2027, and the State Land Office cancelled rights-of-way on sections of the route. A behind-the-meter campus without a gas line is a very expensive warehouse. Oracle says Jupiter is on schedule and calls force majeure notices standard on big projects. But under the lease, Oracle has to secure the electricity and carry the debt costs, on top of about 125 billion dollars it has already borrowed for the buildout. The risk lives on Oracle's balance sheet.
Mara Voss, in an analysis of Exelon's PJM filings:
Exelon’s September 29 presentation to PJM gives the data-centre boom a useful set of labels. Its total request list is about 37 GW of capacity. Roughly 12 GW, including load already in service, meets Exelon’s high-probability screen; about 25 GW of requests sits outside the forecast.
Then the conversion. Exelon forecasts about 6 gigawatts of data center demand in 2031 and 8.7 in 2040, with 7.5 of that in ComEd territory and 1.2 in PECO. And the high-probability starting point dropped from 19 gigawatts in last year's submission to 12. Thirty-seven gigawatts of asks, six gigawatts of load by 2031. Roughly one in six. The rest is somebody's option on a substation. The method is what makes this useful. A project with a signed Transmission Security Agreement must post a letter of credit, and Exelon models about a four-year ramp at 80 percent utilization. Without one, the default is about eight years at 70 percent. So collateral is the filter. Exelon's October 30th earnings deck says about 45 percent of ComEd's high-probability load has TSAs backed by roughly 1.2 billion dollars. That's the number I actually trust. That deck calls about 11 gigawatts high probability, against 12 in the PJM filing, and Voss notes Exelon publishes no project-by-project crosswalk between the two. For scale, ComEd's in-service data center load is about 800 megawatts. That gap isn't academic. Friday we covered PJM's refiled backstop, which splits charges by zone on firm large-load growth. If the firm number moves depending on which slide you read, so does a zone's bill. PJM reviews these submissions in November and December and publishes its 2027 long-term forecast in January. That's when we see what survives the screen.
The Southern Environmental Law Center, which represents the NAACP alongside Earthjustice, in a Friday press release:
The Court held that “because the Plant is not a ‘mobile source’ according to the federal regulations…the Plant was not (and is not) exempted from permitting requirements under the Clean Air Act.”
On Friday, the federal court for northern Mississippi denied xAI's own motion to dismiss the NAACP's Clean Air Act suit over the Southaven gas plant powering Colossus 2. When we covered this on October 26th, it had already rejected a similar Justice Department bid. Per SELC, it also rejected xAI's argument that citizen suits are unconstitutional. Those were the two escape hatches: temporary turbines need no permit, and only the government gets to sue. Both shut. Anyone running so-called temporary on-site gas should have lawyers reading this order. Some care here. The case isn't decided, and the preliminary injunction motion is still pending. The emissions SELC cites, more than 5,000 tons a year of nitrogen oxides, are the plaintiffs' estimate of potential output, not measurements. Then there's the neighborhood. The Guardian, as relayed by the Times of India and Firstpost, reports realtors working for xAI have been knocking on doors in Colonial Hills in Southaven. One told a resident the target is 418 homes, with 18 owners agreeing to sell. The catch: sellers can't join the noise lawsuit three residents filed in June. The company hasn't confirmed those figures, but DeSoto County records show five homes bought by xAI subsidiary MZX since October 9th. Southaven's mayor, Darren Musselwhite, says the buyout is not intended to be a company city at this point. At this point. Buying out your would-be plaintiffs one deed at a time is a strategy. It is not a noise solution. xAI denies the noise allegations and says it has adjusted power output and built sound-dampening walls.
If you want the model side of what all these megawatts end up running, our sibling show AI Daily Briefing covers the top AI news for engineers, founders and investors every weekday, separating real capabilities from demo hype, quickly. We tell you where the power comes from. They tell you whether the thing burning it actually works.
Next week I'm watching the Texas PUC's November 5th open meeting on the Batch Zero complaints, and whether Oracle's investor day says anything new about Jupiter's power. The Data Center Daily is part of the Lantern Podcasts family, and our next episode arrives Monday, November 2nd. Happy Halloween, and thanks for spending part of your Saturday with us.