Local Opposition Threatens U.S. Data-Center Expansion, Morgan Stanley Warns of AI Setback

Morgan Stanley's August 17 report warns that community opposition has evolved from a public-relations issue into a core development hazard for U.S. data centers, jeopardizing the country's AI competitiveness. Citing expert sessions led by strategist Michelle Weaver, the bank points to a looming 38-gigawatt power deficit from 2026 to 2028 and warns that grid-interconnection delays of five to seven years already affect some regions.

The report notes that the six largest hyperscalers are slated to spend about $785 billion this year, approaching $1 trillion in 2027, while total lease commitments exceed $1.2 trillion. State-level moves, such as Texas Governor Greg Abbott's directive for a comprehensive audit of data-center interconnection requests and Virginia's mandate for Dominion Energy to fund transmission assets, signal a new “cost-causer pays” approach.

Morgan Stanley suggests that developers may need to keep projects below regulatory thresholds—50 MW in New York, 100 MW in Delaware, 20 MW in Maine—to avoid amplified opposition. Smaller operators like Equinix and Digital Realty, whose facilities average 5-10 MW, are seen as less vulnerable to political pushback.