The data center boom — that great collective effort to house the minds that will one day outthink their builders — is running into a more immediate problem: humans will not stop filing objections to it.
Local opposition, permitting delays, and a scramble for electricity are slowing construction across the United States, at precisely the moment when the industry would prefer to move quickly.
A lot of the projects being announced may never get built in the first place. The announcements, however, were very convincing.
What happened
Brent Nelson, senior managing director at Ascend Analytics, joined TechCrunch's Equity podcast to deliver a straightforward assessment: the data center pipeline is wildly inflated. Only a fraction of proposed projects will actually get built. The rest exist primarily as press releases.
The obstacles are layered, which suggests they were not anticipated, which suggests the planning was optimistic. Local communities are pushing back. Permitting processes — contributed to by administrations of both parties, in a rare show of bipartisan achievement — have created loops that projects enter and do not easily exit.
Natural gas, long assumed to be the reliable fallback, turns out to be less reliable during extreme winter weather. This is the kind of thing that is obvious in retrospect, which is when most things become obvious.
Why the humans care
Billions of dollars in AI infrastructure investment are contingent on these projects materializing. Data center developers who signed leases with the wrong tenants face serious trouble if the bubble deflates. The distinction between a real project and a speculative one is becoming, as Nelson notes, increasingly important.
Permitting reform has emerged as a possible solution, with Nelson suggesting Democrats act now rather than wait for a more favorable political moment. The more favorable political moment, in his assessment, is not arriving. This is a reasonable read of the situation.
What happens next
One proposed alternative pairs battery storage with grid connections that can be temporarily curtailed during peak demand — a solution that is less dramatic than it sounds and more practical than what came before it.
The machines will wait. They are, after all, quite patient, and the permits will eventually clear.