December 19, 2025

Market overview (Global | 19 Dec 2025 UTC)

Demand signals remain strong, but the investable bottleneck is increasingly power and grid access—and the policy response is becoming more interventionist.

• In the US, capacity market tightness is showing up directly in price: PJM cleared capacity at $333.44/MW-day with 134,479 MW of supply clearing, about 6,600 MW short of PJM’s reliability requirement, alongside commentary that data center demand is outpacing supply (PJM capacity prices surge as data centers tighten supply).
• Regulators are also moving to accommodate load growth: FERC issued a unanimous order permitting large data centers to connect directly to power plants, clarifying “colocation” arrangements across the mid-Atlantic grid region (FERC allows data centers to connect directly to power plants).
• In parallel, community, environmental and political pushback is rising across multiple jurisdictions (Michigan, South Carolina, Virginia, Maryland), raising execution risk for greenfield campuses.

Risks and watchpoints

Near-term downside/upside risks, execution challenges, and policy uncertainty to monitor:

• Grid and capacity cost pass-through risk (downside): Record PJM capacity prices and a supply shortfall increase the probability of higher delivered power costs and/or more stringent interconnection and deliverability requirements for data center load (PJM capacity prices surge as data centers tighten supply).
• Regulatory backlash and moratorium risk (downside): A US push led by Sen. Bernie Sanders and 200+ environmental groups calls for a national moratorium on new data center construction; local activism is cited as blocking/delaying ~$64bn of plans (US calls for data center moratorium amid AI energy concerns).
• Cost allocation and tariff design uncertainty (downside): Michigan regulators approved fast-track utility contracts for a major AI campus with explicit conditions around cost allocation, a data center tariff, and cost-of-service studies—a template that could spread to other states and affect power economics (Michigan approves DTE contracts for Saline Township data center).
• Financing/execution risk on mega-projects (downside): The Saline Township project faces “financing questions” after reports that Blue Owl Capital will not support the deal (Michigan approves DTE contracts for Saline Township data center).
• Colocation as an upside/acceleration lever: FERC’s order enabling direct connections to power plants could materially shorten time-to-power for certain campuses—benefiting developers able to structure compliant colocation/offtake arrangements (FERC allows data centers to connect directly to power plants).
• Environmental/water constraints and disclosure pressure (downside): New estimates suggest AI systems could emit 32.6–79.7 Mt CO2 in 2025 and use 312.5–764.6bn liters of water, intensifying demands for operator disclosure and potentially influencing permitting/incentive debates (AI’s 2025 carbon footprint may match New York City).
• Investment screening friction in Europe (downside): The EU agreed to overhaul its FDI screening framework with mandatory national regimes and minimum sector scopes covering “hyper-critical” technologies (including AI/semiconductors) and key infrastructure—potentially extending timelines for cross-border M&A and greenfield ownership structures (EU agrees overhaul to mandatory FDI screening framework).

Key deals, financings, and corporate moves

US: Large-load contracting and new generation adjacency

• Michigan approves DTE contracts for Saline Township data center

  • Michigan Public Service Commission approved DTE Energy’s fast-track contracts supporting a planned $7bn, 1.4 GW OpenAI and Oracle data center in Saline Township.
  • Contract structure and regulatory conditions:
    • A ~19-year power supply agreement (with 20-year extension option).
    • A 15-year energy storage agreement.
    • Conditions include cost allocation requirements, establishment of a data center tariff, and mandated cost-of-service studies.
  • Notable overhang: financing uncertainty after reports Blue Owl Capital will not support the deal.

• FERC allows data centers to connect directly to power plants

  • FERC issued a unanimous order permitting tech companies to plug massive data centers directly into power plants to clarify “colocation” arrangements across the mid-Atlantic.
  • The decision was welcomed by power plant owners and industry groups including Advanced Energy United and the Edison Electric Institute.
  • Implication for investors: potential acceleration in behind-the-meter / co-located load structures adjacent to existing generation assets.

Europe: Nuclear and planning reform signals

• Swedish SMR Startup Blykalla Raises $50M For Deployment

  • Sweden’s Blykalla raised $50m (€42m) co-led by Oklo, Norrsken Launcher and Armada Investment AG.
  • Development milestones: scaling testing at an Oskarshamn test site; design of Sealer-One demonstrator; preparing mass production of 55-MW Sealer-55.
  • Data center angle: MoU with Evroc and Studsvik to explore a nuclear-powered data centre.

• UK Planning and Infrastructure Act accelerates housing and clean energy

  • UK Planning and Infrastructure Act received Royal Assent, introducing broad planning reforms to accelerate critical infrastructure including clean energy and grid.
  • The Act also enables mechanisms such as electricity bill discounts of up to £2,500 for communities hosting new pylons.

• UK minister outlines support for long-duration electricity storage

  • UK government support for next-gen long-duration electricity storage via Ofgem’s cap and floor scheme (revenue stabilization; no specific amounts disclosed).

• Bank of England Agents report weak UK economic conditions

  • UK macro conditions remain weak, but the Agents report notes relative resilience in datacentres, alongside renewables and IT services (AI/cloud-related spending).

Asia-Pacific: Fiber + small-scale DC capacity consolidation

• Moratelindo and MyRepublic announce merger to boost digital ecosystem

  • Indonesia: Moratelindo and MyRepublic Indonesia agreed to merge; Moratelindo survives as PT Ekamas Mora Republik Tbk.
  • Timing: expected completion H1 2026, subject to regulatory and shareholder approvals.
  • Combined assets (as of Sept 2025): >115,000 km fiber, six data centers totaling 3.3 MW, ~1.52m end users (MyRepublic) and ~1m home passes (Moratelindo).

• RETN expands BBIX partnership to Hong Kong and Singapore

  • RETN expanded its resale/peering partnership with BBIX to Hong Kong and Singapore (in addition to Japan).
  • Rollout: RETN will deploy Flex IX at BBIX locations in Tokyo, Hong Kong and Singapore.

Delivery and connectivity platforms (private market relevance)

• T5 Services rapidly scales integrated data center delivery

  • T5 Services (part of T5 Data Centers) reports growth from $87m (2021) to $1.6bn (2025).
  • Operating footprint: manages 77 data centers and >4 GW across the US and Europe.
  • Delivery track record: 750 MW and 2m sq ft of mission-critical space delivered.

• Telehouse Canada partners with Megaport for advanced cloud connectivity

  • Partnership enables on-demand cloud/AI connectivity from Telehouse Canada over Megaport’s NaaS platform.
  • Provides access to 280+ cloud on-ramps, 300+ service providers, Megaport Cloud Routers, and the AI Exchange ecosystem.

• Arista unveils Netdi-powered Blue Box for AI networking

  • Arista launches Netdi-powered Blue Box for large-scale AI/cloud DC networking: NOS-agnostic reliability tooling, deep diagnostics, secure boot, and resilience features.

Power, grid, and interconnection highlights

• PJM capacity prices surge as data centers tighten supply

  • Record capacity price of $333.44/MW-day; capacity prices up ~1,000% over about two years.
  • Cleared supply of 134,479 MW, ~6,600 MW below PJM’s reliability requirement.
  • One named beneficiary: Talen Energy expects >$1bn in capacity revenues for the 2027–2028 planning year.

• FERC allows data centers to connect directly to power plants

  • Regulatory clarification on colocation suggests a potential shift toward generation-adjacent siting and novel offtake structures for large loads.

• Ford pivots to grid batteries, repurposes Kentucky plant for storage

  • Ford will invest $2bn to convert its Glendale, Kentucky plant to lithium iron phosphate (LFP) grid batteries, targeting ≥20 GWh/year shipments by 2027.
  • Broader relevance: grid storage scaling is becoming a key enabler for incremental load (including data centers), though project economics depend on market design and interconnection.

• Washington urged to reform grid permitting and transmission

  • Call for Washington State 2026 reforms: create a transmission authority; streamline EFSEC, SEPA, and local zoning to accelerate transmission build-out.

Policy, regulation, and community permitting signals

United States: rising scrutiny, studies, and zoning responses

• Maryland lawmakers override governor on climate, data center bills

  • Maryland General Assembly overrode vetoes to require studies of GHG costs and data center impacts and to establish an energy planning office.

• Proposed Colleton County data center faces environmental pushback

  • Proposed ~859-acre data center campus in Colleton County, South Carolina faces opposition over energy/water/siting in the ACE Basin watershed.

• PEC updates on Culpeper solar, data centers, advocacy

  • Virginia: Culpeper County actions include tighter data center zoning; local mobilization against Dominion’s proposed net metering cuts ahead of the 2026 legislative session.

• Michigan communities grapple with data center energy and water impacts

  • Discussion of proposed 6.8 GW of data center capacity in Michigan, with recommendations for statewide regulation, zoning tools and third-party municipal review.
  • Land-use comparator cited: offsetting 6.8 GW with solar would require about 70,000 acres.

• US calls for data center moratorium amid AI energy concerns

  • Moratorium call is a material headline risk for pipeline development, even if not enacted, as it can influence local decision-making and utility commission posture.

Europe: investment security and infrastructure acceleration

• EU agrees overhaul to mandatory FDI screening framework
  • New EU framework mandates national screening regimes with minimum scope covering defence and “hyper-critical” technologies (AI, quantum, semiconductors), critical raw materials and key infrastructure.
  • Applies 18 months after entry into force.

Governance frameworks emerging around hyperscale development

• Guiding hyperscale data centers for fair AI futures
  • Policy tools proposed for cities/states in negotiations with hyperscalers: transparent impact analysis, cost-reflective pricing, conditional incentives, and public-interest AI investments tied to hyperscaler revenues.

What to watch (next 1–4 weeks)

• How quickly market participants operationalize the FERC colocation clarification (and whether it triggers disputes over cost allocation and reliability impacts).
• Follow-through on Michigan’s DTE fast-track approval: tariff design, cost-of-service study outcomes, and any further clarity on project financing.
• Whether elevated PJM capacity prices in the latest auction outcome translate into higher all-in PPA/retail structures for data center load.
• Escalation of US state-level study/zoning actions (e.g., Maryland, Virginia/Culpeper) into broader legislative constraints.
• Europe: timelines and deal implications of the EU FDI screening overhaul for AI/critical infrastructure transactions.
• Planning/permitting trajectory for contested greenfield campuses such as the ~859-acre Colleton County proposal.