After Being Selected, the Data Center Pricing Logic Has Changed! Saying Goodbye to Disorderly Expansion, Shifting Focus from Competing for Growth to Competing for Scarcity

The core pricing anchor of the data center industry is shifting. After the US midterm elections, policy changes have quickly moved the market's focus from new capacity to the scarcity of assets that are already built, approved, or under construction.

According to Wind Chaser Trading Desk, JPMorgan noted in its November 4 North America Credit Research Report that the Democratic Party gained control of both the House and Senate, and won gubernatorial races in key data center states such as Texas, Georgia, New Mexico, and Nevada. Meanwhile, among 45 local ballot measures restricting data centers, 42 have passed or are likely to pass.

This means that data center developers are facing higher approval thresholds, longer construction cycles, and more complex local political constraints. The previously favored expansion narrative in the market is being repriced based on permit certainty, power access, and landed capacity.

For investors, the most direct impacts are on high-yield project finance, independent power producers, bridge power suppliers, and data center developers. JPMorgan expects that capital planning changes in 2027 will be limited, with real pressure concentrating on projects scheduled for 2028 and beyond.

Policy Direction Shifts, Higher Barriers for New Projects

JPMorgan stated that the "Blue Wave" has profound impacts on the data center and power industries. Gubernatorial platforms are especially important, as post-election policy shifts rarely diverge immediately from campaign promises.

In Texas, Gina Hinojosa explicitly proposed an immediate moratorium on new data centers during her campaign, granting local communities more authority in development decisions. She also emphasized freezing rates and enhancing scrutiny of data center infrastructure to control residential electricity costs.

In Georgia, Keisha Lance Bottoms did not make data centers a core policy issue, but has supported pausing new data center development “for one to six months or longer” to evaluate long-term state impacts. Senator Jon Ossoff’s stance is stricter; he advocates for a full moratorium and investigation of data center development in Georgia.

In New Mexico, Haaland’s platform calls for an immediate pause on new large projects until clear regulatory guidelines are established. In Nevada, Ford proposed suspending data center tax incentives, setting standards for employee wages and benefits, and requiring data centers to bear additional costs stemming from residential electricity rate increases. In Ohio, Acton supports a conditional pause, requiring data centers to cover 100% of utility costs, utilize union labor, and improve operational transparency.

Local-level ballot results reinforce this trend. JPMorgan cited Ballotpedia data, stating that out of 45 local ballot measures limiting data centers, 42 have passed or are likely to, with only one defeat in Harwood, North Dakota, and two more yet to be announced.

These measures are mainly concentrated in the Midwest and include MW caps, requirements for voter approval, or outright bans on development. By state, Ohio leads with 20 measures, followed by Illinois and Maine. The report notes that given the success rate and public engagement of these recent ballots, similar restrictions may further proliferate in 2028. According to a quoted observer, “The 2028 election has already begun.”

Premiums Rise for Existing Assets; Approved Projects Hold Relative Advantage

This shift is changing the pricing logic in the data center market. JPMorgan noted that data centers and power infrastructure that are already built, fully approved, or under construction are now valued higher than pre-election levels.

The report quoted a trader as saying, “Previously, the market was willing to pay a premium for investment-grade leases, now it is paying a premium for assets that are already built.” This reflects the shift in investor focus: contract quality still matters, but deliverable capacity and permit certainty carry greater weight.

In Texas, Georgia, New Mexico, Nevada, and other key states, the path to obtaining permits and completing new data centers is expected to be harder, slower, and more costly. JPMorgan believes the likelihood that moratoriums evolve into permanent bans is limited, but the pace of industry expansion has already been materially affected.

Relatively “friendly” jurisdictions may attract more attention. The report highlighted Louisiana and North Dakota as potential destinations for developer investment, where more attractive capital costs may be available. As the US development environment gets more complex, international data centers may also draw greater interest.

Some projects that are already approved or underway will be less affected. JPMorgan stated that Vistra Energy’s 2.6 GW projects associated with Meta in Ohio and Pennsylvania are progressing, utilizing nuclear power assets, which provides some resilience to possible policy shocks. In Georgia, Georgia Power’s 3.2 GW project linked to OpenAI has been approved by the Georgia Public Service Commission and is set to start construction at the end of 2026. The report views this project as relatively safe.

In Texas, American Electric Power Texas may receive some support. Recently, the company increased the scale of permitted data center development in the state to 1.6 GW. By contrast, projects not yet approved, financed, or under construction will face steeper discounts.

Texas Becomes an Investor Focal Point

In the fields of high-performance computing and high-yield project finance, investors are most focused on Texas regulatory changes. According to JPMorgan, about 27% of the financed data center capacity in the high-yield project finance market is being built in Texas.

Risks are concentrated in projects scheduled for energization in 2028 and 2029. These projects may face delays or, in extreme scenarios, even cancellation. Unfinanced projects are more uncertain, with financing becoming more challenging.

Among publicly tracked high-yield data center builders monitored by JPMorgan, about 78% are located in Texas, primarily involving Cipher and Galaxy. The report states this makes Texas policy changes one of the most critical variables in the data center credit market.

Neocloud enterprises also face indirect risks. If data center construction is delayed, capacity online dates will be pushed back, affecting contract execution. According to public information, CRWV’s US data center leases or planned leases are in North Dakota, Illinois, Georgia, Texas, North Carolina, Oklahoma, Virginia, and New York, with additional data centers in Pennsylvania and New Jersey; its international projects span the UK, Denmark, Indonesia, India, and Canada.

Power Industry Under Pressure; Bridge Power Feels Faster Impact

A slowdown in data center development will first impact expectations for power demand. JPMorgan expects that most independent power producers may come under pressure, especially those with a high exposure to Texas, Ohio, Pennsylvania, and Georgia.

The report notes that while most states have not directly banned data center development, new project approval thresholds will be higher, giving a clear edge to already approved projects. Slowdown in data center development may suppress power prices, but significant new generation capacity is only expected to come online around 2029.

Bridge power and behind-the-meter power suppliers may be hit harder in the short term. JPMorgan stated that longer data center build cycles will weaken the demand for bridge power solutions, especially in Texas and the PJM market.

The impact on regulated utilities is relatively mild. The report notes that previous data center demand underpinned 6% to 9% of EPS growth expectations for some utility companies, but a pullback in related capex may ease balance sheet pressures, particularly as capital investment is expected to increase at least through 2030.

Bond Supply May Slow, Scarcity Supports Compute Pricing

JPMorgan expects no significant changes to capital plans for 2027, as most spending for that year involves projects already underway. More substantial impacts will be seen in 2028 and beyond.

From a financing perspective, most 2027 projects have already secured funding. The next market focus will be on when projects for 2028 and beyond can obtain financial backing. The report forecasts that near-term bond supply may slow, with initial new deals more likely to focus on data centers and GPU deployment projects in "safe" jurisdictions.

This slowdown also has a positive side. A flatter growth curve helps commercialization catch up with capital spending while keeping compute supply tight for a longer period. For investors, the data center industry is shifting from a pure expansion cycle to a new stage where pricing is determined by permits, power, construction progress, and the degree of asset completion.