The Data Center Slowdown: Why Power, Water, and Rising Bills Are Rewriting Growth Plans
- Timothy Beggans
- Nov 27, 2025
- 2 min read
After years of breakneck expansion, some of the nation’s largest data-center markets — including Virginia and parts of PJM — are showing signs of cooling demand. Not because tech is slowing, but because power, water, and retail rate pressure are forcing a rethink.
In northern Virginia, long the epicenter of hyperscale development, utilities and regulators are signaling that future growth cannot rely on unlimited access to cheap electricity and water. Constraints on transmission build-out, rising congestion costs, and siting challenges have introduced new friction. Developers that once assumed near-automatic interconnections are now weighing delays, higher costs, or the need to relocate.
Across PJM, similar headwinds are emerging. Grid operators and state commissions face intensifying scrutiny from residential and small-business customers who fear that accommodating massive new loads could shift costs onto retail ratepayers. The optics of subsidizing large industrial and data-center development during a period of bill inflation have triggered political and regulatory pushback.
Water adds another complicating layer. High-density computing can be water-intensive, and in regions already navigating drought risk or municipal limits, planners are raising red flags. Several jurisdictions are now imposing stricter water-use standards or requiring alternative cooling technologies — adding cost and slowing timelines.
The result:
Some large loads are delaying commitments or shrinking proposed footprints.
States are tailoring interconnection rules to avoid cross-subsidization.
RTOs are revisiting planning assumptions once thought rock-solid.
This isn’t a retreat from digital infrastructure; it’s a recalibration. The next wave of growth will hinge on energy-efficient design, flexible siting, advanced cooling, and grid upgrades that don’t burden households.
The message from states and RTOs is increasingly clear: growth is welcome — but not at any price.
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