What Data Center Growth Means for Co-ops
Welcome to CFC’s 2026 Trends Report. I’m Chris Whittle, CFC Energy and Data Analyst.
“It’s hard to make predictions, especially about the future.”
You may recognize that quote. It’s from the late, great Hall of Famer Yogi Berra. I’ve referenced it before, but it bears repeating. Predictions ARE hard.
As we think about what 2026 holds for electric cooperatives, there is a lot we don’t know. But one thing we feel pretty certain about is load growth. Co-ops will see A LOT of load growth in 2026, especially from data centers.
It’s not only electric co-ops. It’s all electric utilities.
According to consulting firm Grid Strategies, electric utility planning areas in the U.S. are forecasting a peak load growth of 90 GW from data centers through 2030. That’s nearly 10% of forecast peak load.
It’s worth noting that this projection is based on FERC-submitted load forecasts. But there’s an important caveat here: These estimates are often overstated due to market constraints and timing issues, which are becoming increasingly common as a multitude of new data centers compete for limited grid resources.
According to a survey from Schneider Electric, the largest factors slowing down data center development are utility capacity or transmission constraints, with 92% of respondents listing this as a significant challenge.
As these constraints intensify, data center developers are getting creative and looking to build their own co-located/on-site generation, especially for larger data centers that require substantial capacity and transmission at scale. These strategies help developers mitigate risks associated with wholesale power grid constraints.
According to Grid Strategies, 16 GW-scale data centers are expected to come online in the next two years, with a total aggregate demand of nearly 30 GW. Of those, at least six projects are planning co-located/on-site generation. In addition, of the data center projects tracked by Wood Mackenzie, just 9% of them are planning to include on-site generation. However, these projects are typically very large, representing one-third of the total projected capacity being tracked. This is a trend that we expect to become more prevalent in the coming years.
So, what does this mean for electric cooperatives? As cooperatives continue to field inquiries from new data center members, it will be important to prioritize risk management and cost recovery. Before serving a data center, cooperatives should have a clear understanding of how they will manage risk and recover costs. This includes having financial safeguards in place to cover the risk of overbuilding, should the data center decide to add on-site generation.
Equally important will be to plan for uncertainty. As the data center industry continues growing at an alarming pace, electric cooperatives need to be flexible to successfully navigate market constraints and unexpected challenges. In the planning phase, cooperatives need to evaluate how their ability to source equipment and build infrastructure could be impacted by increased lead times and costs, and how these trends could impact their ability to provide service and manage risk.
We also recommend close coordination between retail service providers and wholesale power suppliers to ensure the necessary capacity, infrastructure and supplies are in place to meet data center “mission-critical” standards without exposing existing members to unnecessary risk.
And finally, we encourage electric cooperatives to be proactive about engaging with members and local communities when serving a data center. Members need to know how data center growth will affect their rates and service reliability. In addition, distribution cooperatives should encourage data centers to participate in community activities to build trust, address concerns, align projects with community expectations and demonstrate their commitment to being good neighbors.
As long as these best practices are followed, electric cooperatives will be well-positioned for success as they serve these new data center loads.
That’s all for today. As always, thank you for watching. Be sure to check out CFC’s issue brief, “Powering the AI Boom: What Data Center Growth Means for Electric Cooperatives,” which is available as a PDF download and a digital experience on the CFC Member Website. And be on the lookout for more industry and technology Trends report content. We’ll talk with you soon!
