Navigating State-Level Cost Allocation Shifts: Strategies for Data Center Developers

Energy attorneys Joshua Belcher and Ram Sunkara, along with corporate attorneys Blaine Remmick and Ryan Kainz, co-authored an article in EnergyTech exploring how state utility regulation is shifting grid upgrade and interconnection costs to data center developers through new fees, large load tariffs and stricter contract terms. They explain how these changes, combined with community scrutiny of water use, diesel back-up generation and other impacts, can challenge project economics and financing. The authors outline strategies to maintain bankability, including stronger cost-sharing and termination protections, enhanced credit support, early engagement with regulators and more rigorous financial modeling to account for evolving cost allocation rules.

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