US datacenter buildout lags as half of 2026 targets unstarted

The US datacenter construction pipeline is facing significant delays, with only half of the capacity targeted for 2026 currently under construction. Financial analyst Jefferies reports that while developers have announced 24 GW of new capacity for this year, just 12 GW has broken ground. The gap widens for 2027-2028, where up to 80% of planned capacity lacks visible construction progress, raising doubts about industry growth forecasts of 40+ GW annually by 2028.

Why construction is stalling

The delays stem from a combination of regulatory, logistical, and market challenges. Zoning and permitting hurdles remain primary obstacles, with some projects facing seven-year waits for grid interconnections. Power availability is another critical bottleneck, as datacenters compete for limited energy resources. Labor shortages further complicate construction timelines, while hyperscalers’ practice of submitting multiple energy requests to different utilities artificially inflates capacity projections. Jefferies warns that these "duplicative counts" distort forecasts, making announced capacity an unreliable metric for actual load growth.

The US Energy Secretary recently directed the Federal Energy Regulatory Commission (FERC) to expedite interconnection processes, but systemic changes may take years to materialize. In the interim, operators are adopting workarounds like behind-the-meter power generation and hybrid models, where facilities first draw from the grid before switching to on-site sources when demand peaks.

Regional shifts and market implications

The buildout slowdown is reshaping the geographic distribution of new capacity. Texas has emerged as a preferred destination, with 14 GW of new projects announced in the second quarter of 2026 alone. The state’s more streamlined permitting and interconnection processes offer a competitive advantage over traditional hubs like Virginia, where delays are more pronounced. Jefferies notes that operators are increasingly prioritizing regions with fewer regulatory barriers, even if it means deviating from established datacenter clusters.

For hyperscalers and colocation providers, the delays could tighten supply in key markets, potentially driving up leasing costs. The report suggests that offtake agreements, permitting progress, and financing milestones are better indicators of future capacity than announced projects. Investors may need to recalibrate expectations, as the current pipeline suggests annual growth of 15-20 GW—far below the 40+ GW some forecasts predict for 2027-2028.

What to watch

The next 12-18 months will be critical for assessing whether the industry can overcome its structural constraints. Key developments to monitor include FERC’s interconnection reforms, the pace of behind-the-meter power adoption, and hyperscalers’ willingness to commit to long-term offtake agreements. If delays persist, secondary markets like Texas could see accelerated growth, while legacy hubs may face prolonged capacity shortages. Meanwhile, the gap between announced and actual capacity could widen further, forcing operators to prioritize projects with clearer paths to completion.