Energy Scarcity Alters Data Center Development Deal Terms

Carl Bivens of Troutman Pepper Locke LLP described how energy scarcity is changing data center development deals (quoted in Law360).

• Main announcement/action: Delay risk has become the primary commercial negotiation point in data center deals; hyperscalers typically seek liquidated damages tied to rent and a contractual termination right if energy is not supplied by a certain date, while lenders and investors generally oppose lease termination rights.
• Background/details: Developers are pressing for broader force majeure carveouts — explicitly including utility delays — so schedules can be extended without triggering liquidated damages or termination; negotiations now focus on how force majeure exceptions are drafted and allocated between parties.