Data centers without full permits may stall beyond 2027

Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

1. 1:15:15

   what this election means. I mean, I'm seeing like Gavin Baker saying, oh, don't worry, you know, in a host, she seems totally reasonable. She's not threatening any projects. And, you know, I've watched interviews with her. Look, I went and watched the interviews that Gavin watched, and I don't see the things that he's saying. She does not say that existing projects are protected. She simply says that there'll be no new permits issued until they pass legislation you're right dealing with the issues she's talking about you're i saw an analyst she's talking about i'll explain it but look i saw an analyst from semi-analysis then come out and say that you do realize that projects that are under construction right now don't have every single permit they need to actually open for business. In other words, once you've

2. 1:16:05

   constructed the data center, you may still have to get an air pollution permit. There's various kinds of permits that sometimes you don't get till the end. So if you take what she's saying seriously, and literally that there'll be no new permits passed until this new regulatory regime comes into effect, we could end up with a bunch of stranded, half-finished projects. Now, I'm not saying that's necessarily going to happen. I'm not criticizing her because I don't know what she's going to do. She hasn't even taken office yet. I'm simply pointing out that this could go a lot of ways. They could do this in a reasonable way or an unreasonable way. So you could end up with a lot of half-finished projects. My base case is that the projects that are fully permitted will get done in 2027, but I don't think there's going to be major new projects in this new regime

3. 1:16:54

   for a long time for the simple reason that there's no political incentive for anyone to grant a new permit or a new project. What's their incentive? Think about this. In this last election, you had both Democrats and Republicans running campaign attack ads on any politician who approved any data center. So think about if you're a politician or you're just like a civil servant who maybe wants to move up the ladder.

4. 1:17:22

   what is your incentive to stamp approval on anything? I don't see it. I mean, I don't see anyone who is ambitious politically wanting to stick their neck out in any way to approve anything over the next four years. So look, I think probably the ones that are already approved and fully permitted, I think those probably get done. But the ones that are not approved yet, good luck i think it's gonna be very difficult so i think we get by in 2027 i think there'll still be meaningful capex i get really worried about 2028 and the democrats i think in a way have a perverse incentive around this because if that capex tanks in 2028 they all blame trump for