A data centre location may have land, fibre optics, permits, and a ready customer, yet still be almost worthless. The reason for this lies in a shift in the criteria developers are looking for. Electricity scarcity is changing the economic framework for development.
Capacity prices at the PJM grid operator, for example, rose from $28.92 per megawatt-day for 2024-2025 to $269.92 for 2025-2026, and subsequently climbed to $329.17 for 2026-2027. The availability of electricity is increasingly becoming the asset around which everything else revolves.
Land and fibre optics remain important. However, neither leads to a viable project if electricity cannot be supplied when the customer needs it. This changes the discussion during site selection: Where is the substation located? How much capacity is actually available? When can the first phase of electricity be supplied? A hyperscaler may ultimately need hundreds of megawatts, but not all on day one. If 50 megawatts can be activated immediately and another 100 follow in 18 months, this site may be more valuable than one promising 300 megawatts only several years later.
Electricity as the driving force of development
Electricity is not merely valuable because it appears on a utility map. It is valuable if it can be delivered. This distinction forces developers deeper into the energy business. They cultivate relationships with utilities, secure access to transmission networks, substations, and gas infrastructure with the same intensity they once applied to land and building rights. In doing so, they also face an imbalance in timelines. AI companies plan their deployments in months, while large transmission projects, substations, and generation facilities can take significantly longer.
The consequence is a growing market for solutions that close this gap. Behind-the-meter generation, combined heat and power, and direct energy partnerships are increasingly part of the discussions. The question is no longer just whether a utility can serve a project, but whether and how the developer can assemble an energy system until the grid can catch up.
The importance of 'digital dirt'
This changes the meaning of site readiness. A hundred-acre plot next to a fibre-optic route may seem attractive. However, if the required electricity is only available in five years, it may be little more than a land position. A less obvious site with existing electrical infrastructure and a path for phased energy supply can be significantly more valuable.
It also changes the perception of existing infrastructure. Across the country, former production centres, industrial areas, and old energy sites with transmission infrastructure, substations, gas connections, or power allocations exist today unused. The buildings may be obsolete, but the underlying infrastructure may not be. Suhail Y Tayeb, Clinical Assistant Professor at New York University, refers to these locations as a new form of 'digital dirt'.
'Powered land' describes access to electricity. 'Digital dirt' is more comprehensive: it is land whose value results from an inherited infrastructure chain that would be difficult, costly, or slow to recreate. Paducah, Ken., offers an example: its former gas diffusion plant once consumed enormous amounts of electricity and water. Today, the site is partially being repurposed for a large AI data centre and an energy campus, as its transmission capacity, water infrastructure, fibre-optic connectivity, and industrial land remain valuable. The building was closed, but the infrastructure was not.
This distinction is relevant because conventional real estate values land based on location, density, and the economic activity it can support. AI infrastructure adds another layer. The value of the land increasingly depends on the attached energy infrastructure and how quickly this infrastructure can provide usable capacity. This changes the meaning of location. For an office building, location might mean proximity to workers. For logistics, it could be motorways and population centres. For AI infrastructure, location is increasingly defined by the geography of deliverable electricity.
Electricity does not eliminate the importance of land, fibre optics, water, or permits. However, it increasingly determines where the search begins. Developers no longer merely seek sites and ask utilities to supply them with power. Instead, they increasingly find power and ask what can be built around it. This reversal has implications beyond the data centre itself. It changes the value of industrial land, increases the strategic importance of relationships with utilities, and gives new economic relevance to infrastructure built for other purposes. The next major AI infrastructure project may not begin with cheap land or generous tax incentives, but with an old substation, an unused transmission corridor, or a former industrial site that already possesses what everyone else is waiting for. Geography will increasingly follow power supply. If electricity determines where a project can go, electricity is no longer just an input. It is the product.
