Up to half of planned US data centres at risk of delay or cancellation, Kimmeridge says
Kimmeridge Energy Management asserts that as many as half of the proposed data centres in the United States are vulnerable to delays or cancellations. This warning comes amid political backlash and the challenges of constructing physical infrastructure.
According to Ben Dell, the firm’s managing partner and co-founder, this situation could significantly impact forecasts for US gas demand, particularly in terms of LNG (Liquified Natural Gas) exports to Europe.
"The sort of Silicon Valley model is running into a real-world infrastructure constraint," said Dell.
Kimmeridge’s own investments in gas producers and an LNG export plant in Louisiana provide a unique perspective on this issue. Delays, they claim, would necessitate revising downward US gas demand projections.
Political Backlash and Infrastructure Challenges
The firm attributes these risks to political opposition and logistical hurdles:
- Political Backlash: Kimmeridge notes that over 500 US jurisdictions impose restrictions on data centres, with states like New York and Texas taking measures to slow down or halt approvals.
- Infrastructure Difficulties: Similar challenges occur in Europe, where grid issues, as demonstrated by Nscale’s experience with National Grid, hinder the development of data centre projects.
Impact on US-Europe Gas Trade
Given that Europe relies heavily on US LNG imports, any delays could have significant implications for European energy security. The International Energy Agency (IEFA) predicts that the United States will supply two-thirds of European LNG imports this year, a figure expected to rise to 80% by 2028.
A Call for Sustainable Data Centre Development
Dell advocates for "zero impact" data centres, aiming for projects with neutral effects on water use, land, emissions, and power prices. However, achieving such goals remains a challenge.