Washington Can't Agree Where Data Centers Go. It Agrees They Can't Plug In.

On August 3, the Army conditionally selected Carlyle to build a $2 billion data center at Fort Bliss and CyrusOne for another at Dugway Proving Ground, trading federal land for computing power ^[1]. Twenty-four days later, the House introduced a bill to ban large AI data centers from all federal land — military bases included — and to remove the ones already standing ^[2]. Two federal actions, the same month, pointing in opposite directions on the same question: where do the machines go? The split is real, and it is about location. But read the Army's own leases and the argument narrows. The Fort Bliss and Dugway deals come with conditions attached.

Honored to pass this amendment to protect our military installations from Chinese components being used in data centers on our installations. — Cory Mills

The branch of government that wants data centers on federal land is demanding the same thing as the state regulators and legislators who are letting data centers be built but refusing to carry them: bring your own power. The fight over where is splitting the government against itself. The demand that data centers generate their own electricity is the one thing every faction that accepts they'll be built agrees on. The reason is not environmental politics. It is a physical constraint the grid operator has named. PJM, which runs the power market for 13 states, put it plainly this month.

The present trajectory of rapid load growth, tightening supply and rising capacity costs is not sustainable. — PJM Interconnection

The trajectory is not a forecast. It is already priced. PJM's July 2025 capacity auction closed at a record $329.17 per megawatt-day, a 22% jump that raised bills 1.5% to 5% for 67 million customers ^[3]. That price signal is what turned scattered zoning fights into a legislative and regulatory wave. Pennsylvania's governor signed an order in August requiring data centers over 25 megawatts to procure their own capacity and pay all interconnection costs ^[4]. Pennsylvania Republicans had already introduced a bill mandating developers build their own generation — nuclear, solar, wind, or gas ^[5]. Oklahoma and Ohio wrote laws requiring data centers to guarantee minimum payments and fund their own infrastructure ^[6]. Michigan's public service commission imposed long-term contracts with steep exit penalties, and Wisconsin and Oregon moved the same way ^[7]. PJM itself filed a proposal to make unsupported data centers — those over 50 megawatts without their own generation — the first to be cut off in a shortage ^[8]. Even the executive branch's own pro-build push carries the same condition. The Energy Secretary's October directive to speed up grid connections for data centers over 20 megawatts requires them to pay 100% of network upgrade costs ^[9]. Build wherever you like, the federal government is saying — but don't expect the grid to carry you. The proof that this is physics rather than politics comes from the market itself. Exelon's CEO Calvin Butler, after filtering out speculative projects, still counts 11 gigawatts of high-probability data center demand — and says the market cannot meet it ^[10].

Even at the highest allowed price, the market is not attracting the level of new supply the system needs. — Calvin Butler

The price signal fired, and the market couldn't answer. So the industry is answering the only way the numbers allow. BloombergNEF found that on-site gas generation costs $21.50 to $43.20 per megawatt-hour, against a forecast grid tariff of $88.60 by 2027 ^[11]. Less than a quarter of the price. The "bridge" gas plants developers promised would be temporary are becoming permanent, because the alternative is paying four times as much to plug into a grid that has already said it will cut them first. Every level of government has converged on a single demand — generate your own power — and the industry's answer to that demand is a fossil-fuel buildout no rule has yet confronted.