Ep. 032 - 300 Datacenter Bans, 3 Projects Delayed: Moratoriums Explained (Datacenter, Energy) | Maya Barkin, Reyk Knühtsen, Jordan Nanos

Jordan Nanos (0:07)

Hello everyone, welcome back to SemiAnalysis Weekly. I'm joined this week by Maya and Reyk from our data center energy and industrials team. We're going to talk everything about data center moratoriums, what they are, our methodology for tracking them, some examples of local and state ones, what are all the things that have to go wrong for them to actually be delayed, and then a few specific examples of how people are potentially circumventing them. Guys, welcome to the show. I'm excited for this one.

Reyk Knühtsen (0:31)

Thanks for having us.

Maya Barkin (0:33)

Happy to be here on my first podcast.

Reyk Knühtsen (0:36)

Love it.

Jordan Nanos (0:37)

Welcome, Maya. Very first up front, Maya, could you take us through just the definition, what's a moratorium? It's a politically charged topic that a lot of people are talking about right now.

Maya Barkin (0:49)

Yeah. A data center moratorium is essentially a temporary legal pause that's usually enacted by a local government. It can also be a state government, and it generally halts approval, permitting, and construction of new data centers. Almost every one of these is a freeze on accepting new applications. It doesn't affect existing data centers. These can last anywhere from months to a year, and can be often revoked or replaced by new regulation, and can also be extended.

We've seen that moratoriums in the US are overwhelmingly local, so at the county, city, township level. But we've also seen that state-level action has started over the past summer, mostly through executive orders rather than legislation.

And governments use them for, I would say, two main reasons. They use them because many zoning codes were written before anyone was considering those huge 100-plus megawatts to the multiple gigawatt facilities that are being built. And so a pause buys time to write data center-specific rules and assess infrastructure needs. And it's also a quite low-cost way for elected officials to answer local opposition.

Jordan Nanos (2:35)

Makes sense, yeah. Yeah.

Maya Barkin (2:37)

So how this piece came about is we've all seen like in the headlines over the past year, especially in the summer, that US data center built out like, it looked like it was coming under increasing pressure with one moratorium after another being announced. And then several states taking action. First, New York, then Texas, pausing the next step in the aircott interconnection queue. Then Pennsylvania and Oregon, which we touched upon in the article, also taking measures, but stopping short from an actual moratorium.

And yeah, also over the past year and a half, so it's a quite recent phenomenon. More than 300 towns, cities, local governments have voted to pause data centers. And there's been a sharp acceleration over the summer with, as you can see in the chart in our article, a visible peak in May, June of this year.

Jordan Nanos (3:51)

So it kind of looks like it's declining. Do you think that there's a change in the political tides or there's just, you know, you're running out of, you know, locales to actually enact these moratoriums? Like, what do you see?

Maya Barkin (4:04)

Yeah, I think it's a bit early to say. It could, there could be a new peak. So those track enacted moratoriums, especially, yeah, in June, there was a huge peak, but you can see July is still quite high.

So I wouldn't read into it. I think a lot of the moratoriums also that were adopted late last year, early this year that were six months are slowly expiring.

Jordan Nanos (4:34)

So what's the methodology generally that you are using to track these? Like if you're having a Q300 plus, and there's many more townships, I guess, or cities to track around the country, how do you actually keep track of all of these?

Maya Barkin (4:50)

Yeah. So following all of these announcements, when moratoriums seemed like they were popping up all across the US, I decided I wanted to understand actually how much capacity was actually at risk of delay. Because most people, it seemed to me, were counting these moratoriums, but were not mapping them onto the data center sites.

So what I did is I started by building a data center moratorium database, recorded, I think, 400 plus local instruments, actions, proposals. Oh, we have a guest.

Jeremie Eliahou Ontiveros (5:35)

Who has some?

Maya Barkin (5:37)

Unannounced guest.

Jordan Nanos (5:39)

Third continent has entered the podcast here. We've got Jeremie calling in from, where are you?

Jeremie Eliahou Ontiveros (5:45)

In Bangkok. But sorry, I don't want to interrupt.

You were saying, Maya, it seemed interesting. You were saying, please.

Maya Barkin (5:51)

I was in the flow there. Yeah. Yeah, yeah. So I was talking about how I build the data center moratorium database, tracking over 400 local instruments across 17 states in the US, and each one through the whole life cycle. So from proposed to either enacted or rejected, also like expired, lifted, et cetera. I also included permanent bans and restrictions that were written into zoning codes because those constrain development the same way as a moratorium does, just without an expiry date. And so once I had an overview of all of these moratoriums, I mapped it against our data center project pipeline, which for the US is I think 3,500 projects, not projects because it's by buildings but like entries. And I tested each active restriction against the relevant projects. So for every instrument, I verified whether the campus sat inside the jurisdiction. But that's actually not enough. You also need to check whether the developer still needs an approval, if it hasn't secured it before the moratorium came into place. There's a bunch of other things which I can get into later.