To kick off the quarter I thought I would share five themes I am watching in Power & Energy Transition. We’ll revisit them in January, see what changed, and reset the list for the quarter ahead. Ink is a strong antidote to selective memory, and I know you will keep me honest.
1 | Regulators are slowing and repricing grid-connected load, so permission decides where data centers get built. Rising electricity bills are being attributed to data center load growth. Add in AI safety concerns, and I think data center development and cost allocation will remain a focus for regulators and policymakers beyond the midterms, ERCOT’s Batch Zero process and FERC’s show-cause orders.
2 | Developers are going behind the meter in phases, with premium off-takers paying for the speed that merchant economics cannot fund. We think of data centers as premium off-takers: buyers that value speed to power and have a business model that can support premium power contracts. The pull to BTM gets stronger when regulation and policy push grid-connected timelines to the right, when a new-build merchant CCGT needs about $500/MW-day of PJM capacity or a $70/MWh ERCOT contract, both above where markets clear today, and when behind-the-meter supply can energize 3.5 years sooner.
3 | Batteries and over-procurement erode the merchant revenue gas depends on, first in ERCOT and next in PJM. We see strong battery additions across markets for years to come, and that growth puts downward pressure on ancillary service and capacity prices for everyone, including gas. BESS growth in ERCOT has brought ancillary service revenue per kW of storage down from about $125 in 2023 to $8 in 2025. Meanwhile, elevated load forecasts risk over-procuring capacity. PJM’s backstop procurement targets about 15 GW where our load view supports about 6 GW, enough to cut capacity prices by up to 29%.
4 | Premium buyers rank speed to power ahead of low carbon today, so clean supply has to prove itself at scale to move up their list. Most of the low-carbon value chain depends on off-takers that value low-carbon attributes. Many of those are the same data center developers focused on speed to power near term, even if low carbon remains a longer-term priority. That can switch once technologies like geothermal prove their technical reliability. Fervo’s Cape Station is operating, and we are excited to see the data on sustained output, thermal drawdown and water loss.
5 | Coordination is the next bottleneck, rewarding developers who can bring labor, equipment, fuel and approvals together on schedule. I have heard some version of this repeatedly in recent weeks. Pipeline permit denials delayed the gas supply intended for Oracle’s Project Jupiter, where one missing approval exposed the wider investment to delivery risk. It is telling that businesses with capable, secured labor forces suddenly look like compelling acquisition targets when that labor derisks part of your execution. I expect construction capability and captive labor pools to become more valuable.
It all keeps coming back to one set of customers. Data centers are setting the economics of new dispatchable power, drawing the attention of regulators and policymakers, pushing up supply chain costs and holding the lifeline for low-carbon technology. We see a way to play in each theme for every segment of the industry, and we have the detail to help you find and derisk yours.
Comments, questions or things I missed? Send me a note (or hit reply) - I would love to hear from you. Thanks for reading!
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