Inside Digital Infrastructure: ASG’s Allison Clements and Dustin Wertheimer on What’s Driving the Power Bottleneck in AI Infrastructure
Step into the full digital infrastructure ecosystem with our Q&A series featuring innovators who are redefining what’s possible across data centers, fiber networks, broadband, and next‑generation connectivity. Hear from investors, lenders, developers, and operators on what’s changing across power, capital, and risk — and what it takes to scale at speed.
Allison Clements, partner at Appleby Strategy Group (ASG) and former commissioner at the Federal Energy Regulatory Commission (FERC), and Dustin Wertheimer, partner at ASG and former chief financial officer of Cumulus Data, join Steven Shparber, Co-chair of Mintz’s Digital Infrastructure Practice, to discuss how power availability and grid constraints have become the gating factor for data center development and artificial intelligence (AI) infrastructure growth.
In this Q&A, Allison and Dustin break down the structural forces behind today’s power bottleneck, including interconnection delays, supply constraints, and fragmented regulatory frameworks. They also share what developers and investors are getting wrong and how leading groups are adapting to navigate uncertainty around power availability, timelines, and project viability.
Why Power Became the Gating Factor for AI Infrastructure and Data Center Site Viability
Steven: Not long ago, data center development was driven by land, fiber, and incentives. Why has power now become the defining constraint for AI and digital infrastructure growth?
Allison: The electricity system wasn’t designed for this level of demand growth. For most of the last decade, load growth was relatively flat, so there wasn’t a strong incentive to invest in new infrastructure or modernize regulatory frameworks. Now demand is accelerating rapidly, but the system that enables supply — both physical and regulatory — hasn’t caught up.
That has shifted the conversation toward certainty and timing, not just availability. It’s no longer enough to know that power might be available; decision-makers need to understand when it can be delivered and under what conditions.
Steven: From the developer side, how has that played out on the ground?
Dustin: Power has gone from being an assumption to being the gating factor. Power teams from data center operators are now the first ones at the table to determine if a site is viable. That’s a fundamental shift in how projects get evaluated. Site development for power has also shifted from simply finding a site with transmission lines adjacent to it to trying to find solutions to the power supply.
That exposes a circular challenge. If you don’t have a defined power strategy, the site doesn’t get underwritten. You need power to sell a data center project, but you often need a committed project to secure the power. That’s a dynamic that is derailing a lot of projects.
What’s Driving the Power Constraint: AI Demand, Supply Limits, Interconnection Queues, and Regulatory Fragmentation
Steven: Capital is flowing into this space at record levels, but supply is not responding quickly enough. What’s actually constraining what gets built?
Allison: A big part of this is structural. Baseload generation has been declining, and in many markets, developers are reluctant to build new capacity without long-term offtake agreements due to lack of market certainty or sufficiency. At the same time, interconnection processes have become overwhelmed, with significant volumes of generation sitting in queues that can’t get through the system.
The demand pressure is real, but the way it’s showing up in forecasts may be overstated. Utilities are seeing large volumes of load requests, but some of that is duplicative or speculative. That makes it difficult to distinguish between committed demand and optionality, which in turn complicates planning and investment decisions.
Regulatory frameworks and market design are central to the bottleneck issue. The US electricity system is highly fragmented, with different rules and processes across utilities, states, and regions. Those frameworks were not built for the pace or scale of demand we’re seeing now. Even under ideal conditions, regulatory processes are deliberate and relatively slow, which makes it difficult to respond to rapid changes in market demand.
Steven: What does that constraint look like within projects your teams are structuring today?
Dustin: Even when you are able to overcome the economic challenges, it’s not deliverable on the timelines the market needs. You’re dealing with multi-year delays tied to permitting, interconnection studies, and supply chain limitations. What looks like a viable power solution early in a project can turn into a multi-year delay or a materially different cost structure once you get deeper into the process.
There’s also a forecasting problem distorting the system. Developers are securing multiple options because they have to — there’s so much uncertainty around power availability. But that creates a situation where forecasted demand can look much higher than what actually materializes. Duplicative load forecasts can lead to misaligned or premature investment decisions in the transmission system and accelerate reductions in reserve margins forecasts which lead to overly inflated capacity prices.
What the Market Is Getting Wrong About Solving the Power Problem
Steven: The market is full of answers about how to solve this: more capital, off-grid generation, behind-the-meter solutions. What’s the most expensive misconception you see right now?
Allison: One of the biggest misconceptions is that this is a problem that can be solved purely through capital. In reality, the constraints are embedded in the regulatory and market structure. Even well-funded projects have to operate within those systems, and those systems are only slowly moving towards commercial realities.
Steven: On the project side, you see developers trying to build their way around the problem. When does that work, and when does that fail?
Dustin: We still see a lot of people assuming they can “engineer around” the problem — whether that’s through off-grid solutions or bespoke generation. Those approaches can work in certain cases, but they tend to be more expensive and less efficient. There isn’t a simple workaround to what is fundamentally a system-level constraint.
What Successful Developers Are Doing Differently – and What’s Next
Steven: What separates the developers and investors who are successfully navigating these constraints from those who are not?
Allison: The successful groups tend to engage early and proactively with utilities and regulators. They understand the system they’re working within and look for ways to align their projects with broader grid needs rather than working against them.
Steven: From the project side, what’s the mindset shift that separates the groups closing deals?
Dustin: You have to look at the power companies as your partners. The groups that are getting deals done are treating power as a strategic capability. They’re flexible, they engage early, and they’re willing to structure projects in a way that works for the utility. In a lot of cases, helping the utility solve its constraints is what ultimately gets your project over the line.
Explore more insights in our Inside Digital Infrastructure Q&A series.
About the Authors
Allison Clements
Allison is a partner at ASG, where she advises clients on the regulatory and grid-level dynamics shaping digital infrastructure development. She brings over two decades of energy policy experience, most recently serving as a Commissioner at the FERC. She focuses on grid planning, interconnection, and energy market design.
Dustin Wertheimer
Dustin is a partner at ASG, where he advises data center investors and operators on power strategy and project development. He previously served as chief financial officer of Cumulus Data and brings more than 20 years of experience in the power industry, focused on power strategy, project development, and infrastructure investment.
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