Episode summary
The Utilities Analyst Who Says The Data Center Demand Story Doesn't Add Up | Odd Lots
Odd Lots
· · 47 min · Hosts: Tracy Alloway, Joe Weisenthal · Guests: Andy DeVries
Summary
Andy DeVries argues that the data center buildout story is running ahead of the actual power system math. He says data centers are currently using about 45GW, third-party estimates put 2030 demand near 90-95GW, and utilities are already pursuing roughly 110GW of apples-to-apples near-term supply, suggesting an overbuild rather than a shortage. His broader point is that the grid already has enough existing capacity, plus some dispatchable plants and demand-response tools, to cover much of the near-term load growth.
He also says the market is not fully pricing in the bullish narrative. In Texas, he points to forward power curves and gas curves that do not reflect the kind of jump in demand many AI bulls expect, even though data center customers are signing expensive long-term deals. DeVries says the more interesting trade may be timing: short power for the next few years, then flip long later if the buildout and demand finally converge.
The episode also explores who gets stuck with the bill if demand disappoints. DeVries warns that without strong ratepayer protections, utilities or customers could bear the cost of transmission and generation investments. He also sees risk migrating into private credit, where off-balance-sheet data center financing, circular vendor deals, and aggressive spreads could become the next pressure point.
Key takeaways
- DeVries says utilities are already working on about 110GW of near-term data center supply versus roughly 50GW of incremental demand needed by 2030.
- He argues the Texas forward power curve and gas curve do not price in the demand surge bulls expect.
- He thinks the near-term trade may be to be short power, then long later if the timing of demand and supply flips.
- He says ratepayer protections matter because overbuild costs could land on customers or utility shareholders if demand falls short.
- He sees private credit as a growing risk area because data center deals are being financed off balance sheet at rich spreads.
Notable quotes
“the utilities are working on already connecting almost as much as you need by 2035”
“So you actually want to be a little short power for the next few years and then flip to being long”
“the bond market saying we want a 10% yield to lend you 2030 paper, you might not be a real company”
How the episode opens
So all this data set of numbers are weighted towards the end of the decade, whereas the new solar is right here, right now, crushing power prices. So you actually want to be a little short power for the next few years and then flip to being long. And if you can figure out when that flip is, you can make a lot of money in either the forward power curves or the natural gas curves.
But as far as your original question, as I said, data centers, 2 or 3 years to build new power plants, 4 or 5. But then you don't need as many new power plants as everyone's saying. So constellation CEO said on a call the other day, he said he use the Texas market.
He said 87 gigawatt peak market. You could add ten gigawatts to Texas tomorrow, which would be the equivalent of sending every single Nvidia chip for an entire year to Texas and running them 24 over seven. That's ten gigawatts.
He was you could run it right now. Existing grid, existing plants for all but 40 50 hours a year. We stress tested it.
There are some coal plants that could ramp up capacity factor. There's plenty of gas plants I can so I don't know if it's 40 hours, 100 hours, 140 hours, but it makes more sense to pay someone else not to run their chemical company, the refinery company, for 40 50 hours a year, rather than have the utilities go out and spend $10 billion connecting far away wind farms. That's the argument.
We're sort of come in the middle of it, but there is plenty of existing capacity on the grid that could ramp up to meet it. Hello, and welcome to another episode of the Odd Lots podcast.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- data center power demand
- utilities overbuild
- credit markets
- private credit risks
- nuclear power prospects
Companies and tickers mentioned
- META
- CreditSights
- Meta
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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