Let’s bring the grid—and the community—back in.
Thinking about how to de-risk your power project? Reach out for a consultation with my team.
You can’t open your news clips without seeing some data center drama. In today’s edition, my Adamantine colleague Jack Ridilla and I give one surprising answer to this question: How can data center development actually win community support rather than ever-growing opposition?
In “Three Crazy Ideas,” I encouraged you to embrace the challenges of data center development and provide win-win solutions. One of the biggest emerging solutions—behind-the-meter (BTM) energy—seems like the answer. But while BTM seems like a perfectly rational solution when taken in isolation, it will create problems of its own if not paired with some crazy ideas to deliver more comprehensive community value. Read on for why Jack and I are telling our clients that BTM—which is being positioned as a go-to solution—is an important but insufficient answer to the data center power problem.
Both of these things are true:
- Data center developers cannot—and will not—wait for the grid to modernize.
- Communities cannot benefit from a modernizing grid if large loads opt out by creating their own power.
The situation
It’s not that data center developers are ignorant of community opposition. Just the opposite! Rising energy costs, long timelines, and heightened anxiety around grid reliability have pushed these developers toward a relatively novel solution: Bring the power generation “behind the meter”. In other words: build their own power, often on site.
The move is rational—even necessary in many cases. But while BTM might solve today’s power constraints for data centers, it risks creating tomorrow’s grid problem—and saddling many of your community stakeholders with it.
The future of the U.S. power system is being reshaped by a class of customers (dominated by data centers) that need power quickly and cannot afford to delay reliably securing that power. Yet it is the communities—where both the power and the project are built—that must live with the consequences of that build-out. The result: dramatically rising opposition in those communities to data centers.
BTM generation is not entirely new. But it is becoming an increasingly popular primary strategy for addressing concerns about consumer energy prices. And as it scales, it will inevitably change the nature of the challenge.
From panic to possibility
Of course, community opposition isn’t the only force driving BTM adoption. Interconnection queues stretch for years. Transmission upgrades lag behind demand. Utility capital planning cycles move slowly by design. And for AI-driven infrastructure, speed to market is existential.
In this environment, BTM is a practical choice. On-site gas generation, hybrid systems, and modular designs offer developers speed and control. They reduce exposure to grid uncertainty and decouple project timelines from regional infrastructure bottlenecks.
So BTM solves real problems: It shortens timelines, reduces uncertainty, and puts customers in control of their power supply. But it also concentrates impacts locally, often outside the regulatory frameworks communities are used to navigating. And the concentration also means that the remaining grid misses the opportunity for a large customer to fund new infrastructure and take on part of the existing consumers’ cost burden. As developers respond to one set of concerns—new strain on an already strained grid—they are also creating a new problem: building an industrial facility (with all the impacts it may create) without contributing to the system-wide investment signals that the grid depends on to evolve. This tension is structural, not accidental—and it will continue to grow unless there is a move by developers to recognize that the community’s interests are theirs as well.
In “Three Crazy Ideas,” I invited you to reframe the data center debate around possibility rather than panic. After all, a key element of The Moment is providing leadership in the face of seemingly intractable problems. So developers—whether of data centers or their energy partners—should look for opportunities to provide an enduring value proposition for the community as anchor tenants in their projects. That value proposition includes positioning a project as an innovation platform for economic development and a modernized energy system.
The “Three Crazy Ideas” turn out to be the kind of ideas you should be taking seriously.
Too good to be true?
Traditional siting processes assumed utility-driven projects, diffuse ratepayer benefits, and shared system improvements. BTM data centers challenge all three assumptions; they are privately initiated and privately financed, and their impacts and benefits are isolated from the grid. This means they can often sidestep both the grid and the community oversight that comes with it. But is that actually a good thing for our industry?
Avoiding the grid can mean avoiding years of permitting, planning, and public engagement—and that might sound dreamy for developers, at least at first. But from an adjacent community’s standpoint, a BTM project can very well seem like a losing proposal: it provides no grid modernization, no shared infrastructure, and fewer public levers. In some states, new laws have explicitly streamlined approvals for off-grid data centers, limiting traditional local review and fueling concerns that major industrial energy facilities are being permitted with far less public visibility than communities expect. So BTM projects often compress (or bypass altogether) many of the formal engagement channels and processes that give communities a say in data center development.
And as BTM catches on, utilities may be forced to spread fixed infrastructure costs across fewer customers, potentially driving up rates and slowing grid upgrades. Without large new buyers anchoring investment, grids struggle to modernize, fixed costs are spread across fewer customers, and the whole system weakens. Designed to outrun the difficulties of cost and community resistance, BTM power risks hardening each of these factors into lasting constraints.
Seize the day—crazy-style
The question is not whether BTM will happen. It is whether it will be designed to strengthen—or sidestep—the broader energy system. If data centers are to function as anchor tenants of the next-generation energy system, then BTM generation cannot be the end game. It must be part of a more holistic project plan that recognizes the larger stakeholder environment. To de-risk the project, BTM endeavors must bring community upside.
One crazy idea: build into an energy system that does more than simply bypass constraints:
- Collaborate with community leaders on the grid needs and priorities in, around, and adjacent to your project.
- Where possible, design your project to enhance and supplement their priorities. Examples could include providing backup power in emergencies, delivering excess power to ratepayers, or investing in pilot projects to accelerate the cost curve on community priorities.
- Design BTM arrangements in partnership with utilities and regulators so they strengthen, rather than weaken, the financial and planning foundations of the grid.
- Deliver tangible benefits to community stakeholders—ideally benefits that deliver more modern, reliable, and affordable energy. Benefits could also include education and talent pipelines, workforce training, and investment in innovation.
This is not about charitable afterthoughts. This is about designing a project that is resilient to community opposition because the project’s clear benefits attract community champions.
Making the most of The Moment
The Moment is an incredibly exciting time to be in energy! Let’s embrace the oppositional challenges. Here’s what you can do:
- Forward this email to a colleague who is wrestling with community engagement on a project.
- Take a moment (pun intended!) to rate The Myth and The Moment—thanks for your support!
- Comment, share, repost, and like—the more conversation, the better the ideas. Hit that heart!
Rationally wild,
Tisha
