Technology

Regulatory delays in AI data centres shift financial risks and energy policies

Tuesday, 18 November 2025 4:15PM UTC

Public utility commissions' pause on new AI data centre connections is redefining risk assessments, affecting financing, market stability, and energy sustainability amidst growing environmental concerns and regulatory scrutiny.

Public utility commissions are increasingly pausing approvals for new power connections to AI data centers, a development that is reverberating through the financial and technology sectors. Edward Dowd, a noted analyst, has highlighted how this regulatory standstill is compelling lenders to adjust their financing models for AI startups. This involves extending cash flow projections by several years and relying on more speculative assumptions, which could erode the present value of loans and diminish equity buffers, thereby tightening credit availability for AI firms.

This regulatory intervention is not a mere delay but a significant recalibration of risk assessments for financial institutions supporting AI ventures. With future revenues pushed further out, loan values may depreciate, especially in a context of elevated interest rates. Banks might respond by demanding higher collateral or reducing their exposure to AI startups, which could create short-term selling pressure on AI infrastructure stocks. The impact extends to the cryptocurrency market, where AI-related tokens like Fetch.ai (FET) and Render Token (RNDR) have gained prominence. Uncertainty in funding and regulatory hurdles could increase volatility for these assets, as traders reassess the growth prospects of blockchain projects tied to AI computations.

This development occurs amid broader debates and initiatives surrounding the energy demands of AI data centers. In January 2025, President Joe Biden signed an executive order aimed at boosting energy resources for AI infrastructure in the United States. The order emphasizes accelerating the creation of AI data centers and clean energy facilities by leveraging federal sites and supporting grid connections. Importantly, developers are expected to shoulder construction costs and ensure sufficient clean power generation to mitigate consumer price impacts. This federal push underscores the strategic importance and energy intensity of AI technologies but contrasts with local regulatory hesitations.

Energy consumption concerns are not unfounded. The National Consumer Law Center (NCLC) recently highlighted that data centers accounted for 4.4% of total U.S. electricity consumption in 2023, with projections to rise sharply, potentially reaching up to 12% by 2028. The environmental implications include not only increased electricity use but also heightened air pollution from backup generators and water consumption for cooling. Consumer advocacy groups stress the risks to both energy security and electricity affordability as the AI data center footprint expands.

Local authorities are also weighing in. For example, the St. Louis Planning Commission unanimously recommended a moratorium on new data center developments in September 2025. Concerns raised by commissioners reflect unease about inadequate regulation, uncertain impacts on local infrastructure, and questions about the economic benefits of new data centers, which often consume vast amounts of energy but offer limited job creation. This cautious stance illustrates the patchwork of responses across the U.S., where national ambitions for AI infrastructure coexist with local energy and environmental concerns.

To address operational challenges, some industry players are pursuing innovative solutions. Google announced partnerships with utilities in Indiana and Tennessee to implement demand-response programs that temporarily reduce AI data center power consumption during peak grid demand. These programs leverage the flexibility of AI workloads, allowing compute-heavy processes to be paused or shifted without service disruption. Such collaborations aim to alleviate grid strain and support clean energy integration, highlighting pathways to balance AI growth with energy sustainability.

Smaller public utilities are also experiencing both opportunities and risks from the AI data center boom. According to the American Public Power Association, these utilities are seeing a surge in large-load interconnection requests, as data centers prioritize affordable and reliable power. However, they must carefully manage these developments to protect existing customers and maintain grid stability, suggesting that the AI energy demand phenomenon is reshaping utility business models and infrastructure planning.

Amid these shifts, regulatory scrutiny of market power is intensifying. Public Citizen has filed complaints with the Federal Energy Regulatory Commission concerning Blackstone’s growing data center ownership and its potential to distort energy markets. The complaints cite recent grid disruptions linked to high concentrations of data centers and warn of anti-competitive risks that could exacerbate energy insecurity for consumers. This underscores the broad spectrum of challenges, from financial risk and regulatory uncertainty to grid reliability, that intersect in the AI data center sector.

For traders navigating this evolving landscape, attention to key metrics such as price levels, volume trends, and on-chain activity in AI-related cryptocurrencies can provide crucial insights. Resistance levels around $2.50 for FET and support near $1.20 have historically been significant during tech sell-offs. Market indicators like the Relative Strength Index (RSI) suggest potential corrections if regulatory headwinds persist. Meanwhile, cross-market dynamics, including the correlation between major tech stocks and cryptocurrencies, may prompt risk-off flows toward safe-haven assets such as Bitcoin. This environment encourages diversified trading strategies that weigh regulatory risks alongside emerging opportunities in the AI and crypto domains.

In summary, the pause on AI data center power connections by public utility commissions, as analysed by Edward Dowd, represents a critical juncture with far-reaching implications. It pressures lenders and AI startups to reconsider growth timelines and financial viability while also influencing market sentiment across equities and cryptocurrencies. This situation highlights the intertwined nature of AI technology growth, energy policy, financial markets, and regulatory oversight, underscoring the need for balanced approaches to foster innovation without compromising energy security or market stability.

📌 Reference Map:

^[1] (Blockchain.News) - Paragraphs 1, 2, 5, 9, 10
^[2] (AP News) - Paragraph 3
^[3] (National Consumer Law Center) - Paragraph 4
^[4] (GovTech) - Paragraph 5
^[5] (Data Center Frontier) - Paragraph 6
^[6] (Utility Dive) - Paragraph 7
^[7] (Public Citizen) - Paragraph 8

Source: Noah Wire Services

More on this

https://blockchain.news/flashnews/pucs-pause-ai-data-center-connections-in-2025-lenders-face-lower-loan-pv-thinner-equity-buffers-rising-credit-risk - Please view link - unable to able to access data
https://www.apnews.com/article/7458d9d1bb537929c5dcfb5192695223 - In January 2025, President Joe Biden signed an executive order to bolster energy resources for AI data centers in the U.S. The order aims to expedite the development of large-scale AI infrastructure and clean energy facilities. Federal agencies are directed to make government sites available for AI data centers and facilitate their connection to the electric grid. The initiative addresses the rising energy demands of AI technologies and emphasizes national security concerns, while also requiring developers to cover construction costs and ensure sufficient clean power generation to mitigate the impact on electricity prices for consumers.
https://www.nclc.org/wp-content/uploads/2025/03/2025.03.15_Comments_OSTP_RFI-on-AI-Action-Plan.pdf - The National Consumer Law Center (NCLC) submitted comments on the Office of Science and Technology Policy's Request for Information on the AI Action Plan. The NCLC emphasizes the environmental and energy insecurity risks posed by data centers, particularly those used for artificial intelligence. They highlight the significant energy consumption of data centers, which represented 4.4% of total U.S. electricity consumption in 2023, with projections indicating growth to 6.7% to 12% by 2028. The NCLC raises concerns about the impact of this growth on electricity bills and the environmental risks associated with data centers, such as increased air pollution from backup generators and water usage for cooling.
https://www.govtech.com/artificial-intelligence/st-louis-mo-planning-commission-seeks-data-center-pause - In September 2025, the St. Louis Planning Commission unanimously voted to recommend a moratorium on the development of new data centers in the city. The commission cited the need for more research and regulation before allowing new projects to proceed. Commissioner Cristina Garmendia expressed concerns about the lack of regulation and the unknowns associated with data center development. The city already has a dozen data centers, mostly in older buildings, but the recent boom in artificial intelligence has led to increased interest in new data center projects, raising concerns about their large energy use and limited job creation.
https://www.datacenterfrontier.com/energy/article/55316600/google-partners-with-utilities-to-ease-ai-data-center-grid-strain - In September 2025, Google announced partnerships with utilities in Indiana and Tennessee to reduce data center power use during peak demand periods. The demand-response programs target AI workloads, allowing temporary power reductions without disrupting critical services. These partnerships aim to stabilize the grid, support clean energy, and potentially streamline project interconnections. The flexibility of AI data center workloads enables Google to pause or shift certain compute-heavy processes in coordination with utilities, providing significant energy savings and grid relief.
https://www.utilitydive.com/news/smaller-public-utilities-see-growth-potential-in-data-centers-but-there-are-risks-ap/746254/ - The American Public Power Association (APPA) has highlighted the growth potential and associated risks of data centers for smaller public utilities. The boom in AI data center development is driving significant growth in large-load interconnection requests to not-for-profit public utilities. Public power electric utilities tend to be smaller than investor-owned utilities, emphasizing affordability and reliability, which appeal to data center operators. However, the APPA advises utility leaders to take steps to attract large loads while mitigating risks for existing customers.
https://www.citizen.org/news/blackstones-ai-power-grab-faces-federal-scrutiny/ - Public Citizen has filed a complaint with the Federal Energy Regulatory Commission (FERC) regarding Blackstone's substantial ownership of data centers and its potential impact on energy markets. The complaint raises concerns about Blackstone's control over data center loads and the risk of anti-competitive behavior and abuse of consumer protections. The filing references recent grid disruptions in July 2024 and February 2025, which nearly triggered cascading blackouts in regions with high concentrations of data centers. Public Citizen asserts that federal energy regulators lack adequate authority to ensure that the demand for data center energy will not disrupt current demand by homes and businesses.

Noah Fact Check Pro

The draft above was created using the information available at the time the story first emerged. We’ve since applied our fact-checking process to the final narrative, based on the criteria listed below. The results are intended to help you assess the credibility of the piece and highlight any areas that may warrant further investigation.

Freshness check

Score: 8

Notes: The narrative appears to be original, with no evidence of prior publication. The earliest known publication date is October 17, 2025. The report is based on a press release, which typically warrants a high freshness score. No discrepancies in figures, dates, or quotes were found. No recycled content or republishing across low-quality sites was identified. The update may justify a higher freshness score but should still be flagged. ([blockchain.news](https://blockchain.news/flashnews/pucs-pause-ai-data-center-connections-in-2025-lenders-face-lower-loan-pv-thinner-equity-buffers-rising-credit-risk?utm_source=openai))

Quotes check

Score: 9

Notes: The direct quotes attributed to Edward Dowd are unique to this report, with no identical matches found in earlier material. This suggests potentially original or exclusive content. No variations in quote wording were noted.

Source reliability

Score: 6

Notes: The narrative originates from Blockchain.News, a source that is not widely recognised. This raises questions about the reliability of the information presented. Edward Dowd is a known analyst with a background in financial markets, lending some credibility to the report. ([eddowd.com](https://www.eddowd.com/?utm_source=openai))

Plausability check

Score: 7

Notes: The claims regarding public utility commissions pausing approvals for new AI data center connections and the subsequent impact on lenders and AI startups are plausible and align with known industry trends. However, the lack of supporting detail from other reputable outlets and the reliance on a single, less-known source reduce the overall credibility. The tone and language used are consistent with typical financial reporting.

Overall assessment

Verdict (FAIL, OPEN, PASS): OPEN

Confidence (LOW, MEDIUM, HIGH): MEDIUM

Summary: The report presents plausible claims about regulatory actions affecting AI data centers and their impact on financial markets. However, the reliance on a less-known source and the absence of corroboration from other reputable outlets raise concerns about the overall credibility. Further verification from established news organisations is recommended to confirm the accuracy of the information presented.

AI data centres
Energy policy
Financial markets