Phantom data centers: What they are (or aren’t) and why they’re hampering the true promise of AI
Join our daily and weekly newsletters for the latest updates and exclusive content on industry-leading AI coverage. Learn More In the age of AI, public utilities are now facing a new, unexpected problem: Phantom data centers. On the surface, it may seem absurd: Why (and how) would anyone fabricate something as complex as a data center? But as AI demand skyrockets along with the need for more compute power, speculation around data center development is creating chaos, particularly in areas like Northern Virginia, the data center capital of the world. In this evolving landscape, utilities are being bombarded with power requests from real estate developers who may or may not actually build the infrastructure they claim. Fake data centers represent an urgent bottleneck in scaling data infrastructure to keep up with compute demand. This emerging phenomenon is preventing capital from flowing where it actually needs to. Any enterprise that can help solve this problem — perhaps leveraging AI to solve a problem created by AI — will have a significant edge. The mirage of gigawatt demands Dominion Energy, Northern Virginia’s largest utility, has received aggregate requests for 50 gigawatts of power from data center projects. That’s more power than Iceland consumes in a year. But many of these requests are either speculative or outright false. Developers are eyeing potential sites and staking their claims to power capacity long before they have the capital or any strategy around how to break ground. In fact, estimates suggest that as much as 90% of these requests are entirely bogus. In the early days of the data center boom, utilities never had to worry about fake demand. Companies like Amazon, Google and Microsoft — dubbed “hyperscalers” because they operate data centers with hundreds of thousands of servers — submitted straightforward power requests, and utilities