Infrastructure Intelligence No. 10: The Price of the Next Megawatt
Energy. Power. Development. Capital. | November 3, 2026 | Issue No. 10
THE WEEK IN INFRASTRUCTURE
The Price of the Next Megawatt
The energy infrastructure market is entering a new phase. The central question is no longer simply how much electricity must be developed to support artificial intelligence, manufacturing and economic expansion.
It is increasingly who pays for that capacity, how quickly it can be delivered, and what obligations large customers must accept to receive it.
This week brought consequential developments across all three questions.
On October 29, PJM filed an amended proposal to procure capacity against a shortfall of approximately 6,800 MW, with costs directed toward the large-load growth driving the requirement. It is a proposal, not an approved program.
California's grid operator approved a large-load interconnection framework for filing at FERC, while NERC's Board adopted reliability standards addressing the operational behavior of data centers and other computational facilities.
OpenAI announced a national program intended to make its computing campuses more flexible electricity customers, building on a Georgia contract that allows up to 1,000 MW of demand reduction.
Meanwhile, GE Vernova reported 122 GW of gas-power equipment backlog and slot reservations and agreed a $9 billion acquisition to expand its position in high-voltage electrical equipment.
In the United Kingdom, Drax, Brookfield and Radiant proposed a gigawatt-scale data-center development that Brookfield estimates could eventually attract more than £20 billion in investment.
Together, these announcements illustrate a fundamental transition.
Power availability, development certainty and cost responsibility are becoming inseparable.
01 | THE LEAD
PJM Moves to Close a 6.8 GW Capacity Gap, With Large Loads Expected to Bear More of the Cost
On October 29, PJM filed a revised Reliability Backstop Procurement proposal with FERC.
The procurement, first covered in Issue No. 02, is designed to address the 6,831 MW capacity shortfall left by the 2028/2029 Base Residual Auction. PJM says the target will be recalculated with updated information under the new timeline.
FERC accepted the original proposal in a September 29 order but suspended it for five months and set a paper hearing on three issues, as reported in Issues No. 06 and No. 09. The amended filing changes those three elements: cost allocation, credit requirements and the obligations of load-serving entities that leave the market.
Under the revised structure, procurement charges would be allocated to load-serving entities based on large-load growth between the actual 2026 summer peak and the forecast for the 2028/2029 delivery year. Electric distribution companies would report firm large-load growth, and each zone would pay according to its share.
Load-serving entities would post credit at a lower uniform rate, and one that leaves PJM would remain responsible for its charges for the rest of the commitment term. The opt-out for certain municipal utilities and cooperatives is removed.
PJM proposes launching the procurement on March 1, 2027. The bid window would close March 28, the final target would be set April 28 and results would be posted May 10.
The proposal retains contract terms of up to 15 years and a maximum willingness to pay of a MW-weighted average of $555 per MW-day. PJM would reduce the target by qualifying capacity already secured through executed bilateral contracts between large loads and suppliers, to avoid buying the same capacity twice.
None of this is approved. The amended filing is before FERC, and the original proposal remains suspended until February 28, 2027.
Why This Matters
This is a potentially consequential change in infrastructure economics.
Grid operators have historically planned resource adequacy around forecast system demand. Rapidly expanding data-center loads have made those forecasts harder to rely on and raised concerns about how the cost of serving new demand is distributed.
PJM's revised approach seeks a clearer connection between incremental large-load growth and the cost of obtaining additional generation capacity.
That raises commercial questions for developers, hyperscalers, utilities and investors. Who ultimately carries the procurement charges once a utility passes them through? How are they treated if a campus is delayed? What happens if forecast load materially exceeds actual consumption? And how might these costs change the economics of dedicated generation or long-term bilateral power contracts?
The allocation formula does not set retail rates. How charges reach an individual customer within a zone will still depend on the utility, the state regulator and the customer's contract.
Developer Takeaway
Large-load development agreements increasingly need to address capacity responsibility alongside energy pricing and infrastructure construction.
The financial exposure of bringing a new electricity customer onto the system can extend well beyond the cost of a substation or transmission upgrade.
Developers in PJM should ask their utility now how backstop charges would be passed through, what credit support would be required and whether a bilateral capacity contract would reduce their exposure.
The next competitive advantage may come from structuring power obligations before they become project liabilities.
03 | POWER & GRID
California Approves a Large-Load Framework for FERC
On October 28, the CAISO Board of Governors approved its large-load proposal, followed in Issues No. 05 through No. 09.
The initiative responds to FERC's June show-cause orders, first covered in Issue No. 02, which required regional grid operators to justify or reform how they serve large electricity customers without compromising reliability or shifting costs to other consumers.
The framework sets a 50 MW threshold for large loads and proposes a flexible interim load interconnection (FILI) service, which could allow qualifying customers to receive service before all required long-term grid upgrades are complete, subject to operating limits.
CAISO posted second revised draft tariff language on October 30, adding ride-through provisions from its large-load technical working group.
CAISO intends to file with FERC by November 16. Board approval is not FERC approval, and none of the framework is yet in effect.
Developer Takeaway
Interim service could create value by letting certain facilities begin operating before permanent electrical infrastructure is available.
But developers must understand the curtailment requirements, operating restrictions, financial implications and conditions for moving to firm service before relying on it.
Earlier energization is valuable only when its limitations are compatible with the underlying business model.
NERC Adopts Reliability Standards for Computational Loads
On October 26, NERC's Board of Trustees adopted reliability standards for computational loads, after the standards passed their final industry ballot on October 14.
The standards, developed under Project 2026-02, apply to computational loads of 50 MW or more connected at 100 kV or above. They address modeling data and verification for planning studies, and the site data and communications protocols that transmission operators, balancing authorities and reliability coordinators need to monitor operations and act on emerging problems.
They respond to concerns that data centers can behave differently from conventional industrial customers during system disturbances, the issue at the center of the July 22 northern Virginia event covered in Issue No. 03.
NERC must still file the standards with FERC. They are not yet federally approved or enforceable.
Developer Takeaway
Data-center electrical engineering is becoming part of the regulatory and reliability record.
Developers should expect closer scrutiny of voltage and frequency ride-through, backup-generation transfers, operating controls and the quality of technical data supplied to utilities, and should budget for that engineering early rather than at interconnection.
Grid compatibility is becoming as important as grid capacity.
04 | DATA CENTER / MISSION CRITICAL
OpenAI Proposes a New Role for Data Centers: Supporting the Grid Under Stress
On November 2, OpenAI announced its Grid Protectors Program, intended to let its computing campuses reduce electricity demand when the grid is under strain.
The program builds on OpenAI's contract with Georgia Power for a planned campus in Effingham County, Georgia. Georgia Power says the Georgia Public Service Commission approved the contract in August. The facility represents about 3,200 MW of new demand, and the contract allows Georgia Power to reduce energy delivered to it by up to 1,000 MW during periods of high demand. Reporting describes the agreement as running 25 years.
Georgia Power also says OpenAI will pay the full cost of the infrastructure needed to serve the campus.
The campus remains in development. The 1,000 MW is contracted flexibility at a future facility, not installed generation or demonstrated demand reduction.
OpenAI intends to pursue similar arrangements at other campuses, with terms to be agreed with each utility and potentially including onsite generation and batteries. It has not named other sites.
Developer Takeaway
A large computing facility may increasingly be evaluated not only by its peak demand but by how much of it can be reduced when the system needs support.
For developers, that could open flexible service, demand-response agreements, behind-the-meter resources and smaller upfront infrastructure requirements.
But flexibility has value only when it is technically real and contractually enforceable. Developers offering it should be able to show the controls, backup resources and operating model that deliver it.
The data center of the future may be both a major electricity customer and a controllable grid resource.
Drax and Brookfield Target a Gigawatt-Scale AI Campus on Existing Power Infrastructure
On November 3, Drax announced a partnership with Brookfield and Radiant to develop an AI data-center campus at the Drax Power Station estate in North Yorkshire, England.
The estate has about 4 GW of grid access and 2.6 GW of generating capacity.
The first phase would provide up to 100 MW of computing capacity from early 2028, with about £2.5 billion of investment, drawing power from the grid. A second phase of up to 500 MW between 2028 and 2031 would be supplied directly by Drax's generators, which requires government consent. Longer-term ambitions exceed 1 GW.
Brookfield estimates total investment, including chips, could exceed £20 billion.
The project remains subject to planning and regulatory approvals, tenant commitments and final investment decisions by each partner.
Developer Takeaway
The proposal shows the growing value of existing industrial infrastructure.
Major generation sites can offer land, grid connections, access, cooling infrastructure and industrial zoning.
But existing grid access does not automatically confer the right to serve a new customer at the proposed scale, and direct supply from an on-site plant may need approvals the grid connection never did.
Legacy energy infrastructure is becoming a potential platform for the next generation of digital infrastructure.
05 | ENERGY INFRASTRUCTURE
Austin Energy Expands Battery-Storage Commitments
On October 28, Austin Energy announced an agreement with Jupiter Power for up to 200 MW of two-hour battery storage, about 400 MWh, expected to begin operating in 2030.
Austin Energy says it will not be required to invest in the project's construction or ongoing maintenance.
The agreement brings Austin Energy's contracted storage to 340 MW, above its goal of 300 MW by 2030. It builds on an earlier 100 MW contract with Jupiter Power, expected online by the end of 2027.
Developer Takeaway
Utility storage contracts that leave construction and maintenance with the developer continue to give utilities flexible capacity without balance-sheet investment.
For developers, the agreement reinforces the importance of matching battery duration, interconnection availability and contracted revenue to what the utility actually needs.
The investment case for storage is increasingly set by the specific grid services it can reliably deliver.
06 | EQUIPMENT & SUPPLY CHAIN
GE Vernova's 122 GW Gas-Turbine Position Illustrates the Equipment Bottleneck
GE Vernova's October 28 third-quarter results gave a clear view of demand for major generation equipment.
Its gas-power backlog and slot reservation agreements reached 122 GW, up from 116 GW the previous quarter, and the company expects at least 130 GW by year-end. Total company orders were $29 billion and backlog about $197 billion.
The 122 GW is not all firm. Reporting on the results puts firm backlog at 64 GW and slot reservations at 58 GW. It does not mean 122 GW of generation is under construction or contracted for delivery.
GE Vernova's CFO attributed part of the backlog growth to favorable pricing.
Developer Takeaway
Equipment availability is becoming a significant determinant of development schedules.
For gas-fired generation, data-center backup systems and behind-the-meter power, equipment strategy must be set early enough to align manufacturing slots with construction and commercial commitments.
Developers should distinguish reservations from binding purchase orders, and verify delivery positions, cancellation terms and performance requirements before relying on them.
A power project with land, permits and financing may still face substantial delay if its equipment cannot be delivered.
07 | CAPITAL & DEAL FLOW
GE Vernova Agrees to Acquire Trench Group for $9 Billion
Alongside its results on October 28, GE Vernova agreed to acquire Trench Group from Triton Partners for about $9 billion, to be funded equally with cash and debt.
Trench, based in Berlin, makes high- and medium-voltage bushings, instrument transformers and coils, with 11 manufacturing sites across Europe, North America and Asia.
It has recently opened a facility in Charlotte, North Carolina, where production of 765-kV equipment is expected to begin in late 2027.
The acquisition is expected to close in late 2027, subject to regulatory approvals.
Developer Takeaway
The transaction reflects the strategic value of electrical equipment manufacturing.
High-voltage components sit on the critical path for grid expansion and for connecting new generation and large loads.
Control of manufacturing capacity is becoming a source of competitive advantage throughout the infrastructure value chain.
Xcel Energy Lays Out a $70 Billion Five-Year Plan
Xcel Energy's October 29 earnings release set a base capital plan of $70 billion for 2027 through 2031:
Renewable generation: $21.36 billion
Transmission: $18.56 billion
Distribution: $13.66 billion
Other generation: $9.21 billion
Natural gas: $3.72 billion
Other: $3.49 billion
The base plan excludes investment to serve future large-load customers, incremental generation from current procurements and additional transmission from future MISO and SPP planning.
Xcel expects to fund it with about $35.8 billion of operating cash flow, $26.2 billion of new debt and $8 billion of equity.
Developer Takeaway
The plan's composition shows that the investment cycle extends well beyond new generation: transmission and distribution together exceed renewables.
Long-term utility capital plans can help developers and engineering firms anticipate where permitting, surveying, electrical engineering and construction support will be needed.
The investment opportunity extends throughout the grid, from generation to the final point of delivery.
Hyperscaler Spending: A Follow-Up to Issue No. 09
Third-quarter results updated the spending covered in Issue No. 09.
Alphabet held its 2026 capital expenditure guidance at $195 billion to $205 billion, after $51.4 billion in the third quarter.
Amazon, which reported on October 29, is reported to expect about $220 billion of 2026 capital spending.
Microsoft indicated about $170 billion for its fiscal year ending June 2027, with spending weighted toward the second half as third-party capacity is delivered.
Meta's most recent outlook remains $135 billion to $145 billion for 2026.
The periods and definitions differ, including Microsoft's fiscal year and the treatment of finance leases, so the figures should not simply be added together. They are corporate capital spending, not data-center construction budgets.
Developer Takeaway
Spending at this scale reinforces the opportunity in power and construction.
It also intensifies scrutiny of returns, financing costs and how quickly computing capacity reaches revenue-producing operation.
Projected capital expenditure indicates demand. Executable contracts, financing and operating assets determine value.
08 | THE INTERCONNECTION DESK
PJM
Backstop Refiled; Large-Load Service Still Unresolved
PJM's October 29 filing (see 01) seeks a March 1, 2027 launch for the backstop procurement, subject to FERC action.
It is separate from FERC's October 9 order, covered in Issue No. 07, which accepted PJM's Large Load Registry and 50 MW definition and rejected interim resource adequacy service. PJM's compliance filing on that order is due November 9.
Developer Implication
Capacity procurement, large-load registration and permission to energize are separate regulatory and commercial questions.
CAISO
Board Approval Complete, FERC Review Next
The Board-approved framework (see 03) is targeted for filing at FERC by November 16. Its interim-service, flexibility and technical-performance provisions remain subject to FERC approval.
Developer Implication
Evaluate the proposed flexibility framework, but do not structure firm project commitments on the assumption that it is in effect.
ERCOT
Batch Zero Remains Paused
Texas' Batch Zero process, followed since Issue No. 01, remains paused. ERCOT's September Board update states that the Batch Zero study process and final classification have been paused since August 3, and that energization of new large-load data centers and crypto-mining facilities of 75 MW or more is paused until the verification, audit and community-impact review are complete.
ERCOT expects to publish its State and Community Impact report, covering demand, water, cooling, onsite generation and community infrastructure, and to file its Batch Zero Eligibility Verification Report, both by December 10.
Developer Implication
Project representations, utility studies, load forecasts and infrastructure assumptions should remain consistent and verifiable. Submitting information is not clearance to energize.
FERC
Section 206 Proceedings Continue
The six large-load proceedings opened in June, first covered in Issue No. 02, remain open. PJM's response in its own proceeding is due November 16. FERC has not issued final determinations in any of the six.
09 | ON OUR RADAR
Duke Energy | November 5
Third-quarter results. Watch generation requirements, grid capital plans and large-load service agreements.
Vistra | November 6
Third-quarter results. Watch nuclear, gas and storage positions and long-term contracts with large customers.
PJM | November 9
Compliance filing due on FERC's October 9 large-load order.
CAISO | November 16
Targeted FERC filing of the Board-approved large-load framework. Filing is not approval.
FERC | November 16
Comments due on the draft NEPA air-quality policy statement for natural-gas projects, covered in Issue No. 08, and PJM's response due in its Section 206 large-load proceeding.
Congress | Mid-November
The Senate returns after the November 3 election. Watch for floor consideration of S. 5653, covered in Issue No. 07, which needs 60 votes and then House passage.
ERCOT | December 10
The State and Community Impact report and the Batch Zero Eligibility Verification Report are both expected.
THE INTERFACE VIEW
Infrastructure Development Is Becoming an Exercise in Managing Dependencies
The infrastructure market is no longer defined solely by the availability of land, capital or demand.
It is increasingly defined by the relationships among them.
This week's developments show how closely connected those relationships have become.
PJM is proposing a clearer financial link between new electricity demand and the generation capacity required to serve it.
CAISO is setting rules for flexible large-load service while protecting reliability and existing customers.
NERC has adopted technical standards intended to ensure major computing facilities operate compatibly with the grid.
OpenAI is proposing that data-center flexibility become part of the infrastructure solution.
GE Vernova is building its equipment position and buying high-voltage manufacturing capacity.
And Drax, Brookfield and Radiant are testing whether an existing power station can anchor an entirely new digital-infrastructure platform.
These announcements reinforce an important principle.
The greatest challenge is not identifying infrastructure demand. It is coordinating everything required to satisfy it.
For developers, that requires an increasingly integrated approach.
Land must be judged against actual transmission and distribution capability.
Generation strategies must account for equipment availability, fuel, interconnection and financing.
Data-center agreements must address power procurement, cost responsibility, operating flexibility and reliability standards.
Environmental and regulatory approvals must advance alongside engineering and commercial development.
And capital must be committed with an understanding of the schedule and risk attached to every critical dependency.
The Development Equation
Land + Power + Interconnection + Equipment + Regulatory Certainty + Capital + Execution
The opportunity for integrated infrastructure development firms is substantial.
But the advantage belongs to those capable of converting fragmented opportunities into coordinated, financeable and executable projects.
The industry will keep announcing gigawatts of demand, new generating resources and major investment commitments.
What matters is how many become operating infrastructure.
The next megawatt has a price.
The developer's responsibility is to understand that price, structure the opportunity and deliver the asset.
That is where infrastructure value is created.
Interface Holdings and Development Firm
Building the Future of Infrastructure Through Strategy, Capital, and Integration.
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