Clark Hill 2026 Commercial Real Estate Market Update: Powering the Next Wave of Data Center Growth: Behind-the-Meter Solutions and the AI-Driven Energy Shift

In our 2025 outlook, we identified power availability and interconnection delays as emerging constraints on data center development. We also noted a growing tension at the state and local level, as jurisdictions sought to balance economic development – often tied to redevelopment of brownfield or underutilized sites – against infrastructure strain and community concerns.

In 2026, those dynamics have intensified and, in many markets, become the defining factor in whether projects move forward at all. At the same time, the rapid acceleration of artificial intelligence (AI) workloads is fundamentally reshaping electricity demand curves, exposing the limits of legacy grid infrastructure and catalyzing a structural shift toward behind-the-meter (“BTM”) power solutions.

AI Demand Is Rewriting the Energy Playbook

AI is not an incremental driver of data center growth – it is a step change. Facilities that once required 20–50 megawatts are now being planned at hundreds of megawatts or even gigawatt scale, driving a renewed surge in U.S. electricity demand after years of relative stagnation.

Looking ahead, projections suggest data centers could consume a significant share of total U.S. electricity by 2030, with AI as the primary driver. At a local level, this demand is highly concentrated, creating acute stress on transmission systems, interconnection queues, and permitting processes.

For commercial real estate stakeholders, the implication is clear: access to reliable, scalable power has become the gating item for site selection, underwriting, and deal execution.

The Grid Can’t Keep Up

What was, in 2025, largely a timing and queue management issue has now evolved into a structural supply-demand imbalance – one that traditional grid expansion alone is unlikely to resolve on commercially relevant timelines.

The traditional model of utility-supplied power via grid interconnection is increasingly unable to keep pace. Transmission buildout timelines are long, and interconnection delays are now measured in years, not months. Meanwhile, the “always-on” nature of AI workloads require continuous, uninterrupted power. This mismatch is driving a fundamental shift: large-load users are no longer waiting for the grid – they are building around it.

Recent projects reflect this trend: in Greene County, Pennsylvania, for example, early-stage approvals have been granted for a hyperscale data center campus anchored by a nearly 1-gigawatt on-site natural gas “power island” – a behind-the-meter (BTM) configuration designed to supply dedicated energy directly to the facility.

These developments reflect a broader reality: for the largest users, energy procurement is becoming vertically integrated.

Behind-the-Meter Power Goes Mainstream

BTM power – generation located on-site or directly connected to a facility, rather than delivered through the broader utility grid – is rapidly moving from a backup or bridging solution to a primary power strategy. Industry estimates suggest that a meaningful share of incremental data center demand through 2030 may be met through BTM configurations.

These solutions take multiple forms, including:

• On-site natural gas generation
• Fuel cells and microgrids
• Co-located renewables paired with battery storage
• Hybrid systems designed to arbitrage between grid supply and self-generation

The key advantage is control: BTM allows developers to bypass interconnection delays, manage costs, and secure reliable power.

Increasingly, these systems are being integrated into the real estate itself – blurring the line between property and infrastructure and introducing new considerations around financing, ownership, and risk allocation.

Emerging Legal and Commercial Considerations

The community and zoning pressures we highlighted last year are becoming more pronounced, particularly as projects incorporate on-site generation and increase both their physical and operational footprint. Additionally, the rise of BTM power introduces a host of legal and deal-structuring implications that commercial real estate stakeholders are actively navigating, including the following:

• Entitlements and Zoning: Adding on-site power – especially gas generation – creates new permitting and land use hurdles, often drawing increased community and environmental scrutiny.
• Regulatory Risk: Policymakers are paying closer attention, including how large projects connect to the grid and whether developers must supply their own power or bear more of the related costs.
• Power and Ownership Structures: Standard utility power agreements are being replaced by more complex setups, including on-site generation, “energy-as-a-service” models, and combinations of grid and self-supplied power.
• Cost Allocation and Rate Impacts: Utilities and regulators are focused on making sure the costs of new infrastructure driven by data centers are not passed on to other customers.

Looking Ahead

The rise of AI and constrained grids is transforming how energy is sourced, financed, and integrated into commercial real estate. Data center developers are increasingly becoming energy developers, and power strategy is now as important as location. Those who can navigate BTM solutions, regulatory hurdles, and evolving market structures will be best positioned to capitalize on the next wave of digital infrastructure growth.

This article is one of several insights featured in Clark Hill’s 2026 Commercial Real Estate Market Update. Explore the full series for timely insights on legal, regulatory, and market developments impacting the CRE industry.

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