Data center demand is booming, but getting a project financed is harder than it looks. In this episode of Data Center Counsel, Jared Berg sits down with Jeeseon Ahn, Jared Joyce-Schleimer and Jason Lewis to break down what it actually takes to make a data center project financeable in today’s market.

Their conversation covers the financing structures being used for data center development — from traditional project finance and private credit to private placements, ABS and CMBS. They also dig into what lenders require from offtake agreements, lease terms and power arrangements to get a deal done.

They also examine how lenders assess construction risk, project-on-project risk and GPU obsolescence, as well as behind-the-meter power solutions, interconnection delays and the growing role of hyperscalers in supporting data center and generation projects.

Episode Highlights 

Flexible Financing Structures — Data center projects may begin with traditional project finance construction facilities and later transition to takeout financing through private credit, private placements, ABS or CMBS once construction risk has been reduced. 

Financeable Offtake Agreements — Lenders are focused on leases and offtake agreements with creditworthy counterparties, particularly hyperscalers, and will closely evaluate termination rights, assignment rights, change-of-control provisions and revenue stability. 

Power as a Financing Issue — With grid interconnection delays and power shortages creating pressure across the market, developers are considering behind-the-meter generation, islanded solutions and concurrent financing of data center and power projects. 

Project-on-Project Risk — When a data center and its power source are financed together or developed on parallel timelines, construction schedules, capital structures, liquidated damages and contractual obligations must be aligned to avoid one project destabilizing the other.