Powerstack #2: OpenAI’s Texas pullback, $32bn to privatize AES

Welcome to the second edition of Sightline Climate’s Powerstack. This is our new weekly newsletter on the moves and motives shaping the load growth era. Every Thursday, we distill 10,000+ signals into a clear view of what's changing and what it means. 

Read on for our breakdown of the OpenAI-Oracle data center expansion pullback, this week’s key numbers, and what to watch.  

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Oracle and OpenAI just scrapped their plans to jointly expand a flagship AI data center in Abilene, Texas. Negotiations collapsed over financing terms, OpenAI's shifting demand forecasts, and a winter outage that damaged liquid cooling systems and raised concerns with site developer Crusoe. If even the most high-profile AI data center in the US can’t hold onto its anchor tenants, that's a signal the broader infrastructure buildout may be even more uncertain, slower, and more distributed than the power sector expects.

Oracle, OpenAI, and SoftBank have all teamed up for Stargate, the planned $500bn, 10GW AI infrastructure initiative announced last year at the White House to compete in the AI infra race. As part of it, Crusoe has been building a 1,000-acre, 1.2GW data center campus in Abilene, Texas. It’s so far Stargate's only live site, with two buildings operational and housing Nvidia Blackwell servers that OpenAI is using for AI training through Oracle's cloud infrastructure.

The two companies had been in discussions since mid-2025 to nearly double the site's capacity from 1.2GW to 2GW, but financing disputes and OpenAI's frequently shifting demand forecasts proved too difficult to resolve. Further complicating matters, January winter weather damaged the facilities' liquid cooling systems and took the data centers offline for a few days.

Ultimately, OpenAI and Oracle elected not to move forward with the expansion, leaving Crusoe without a tenant but the door open (Meta immediately knocked). OpenAI and Oracle say the relationship is intact and their existing agreement for 4.5GW of data center capacity elsewhere is unchanged. However, the news sent shares of Oracle, Nvidia, AMD, and CoreWeave lower on Friday (they’ve since bounced back).

In our 2026 Outlook in January, one of our predictions was ‘at least one very public cancellation of a gigascale data center.’ I know this was an expansion, but I’m gonna count it.

AI load forecasts have seemed overblown from the jump, especially these multi-GW complexes. With GPU generations moving faster than data center buildout timelines, these huge projects carry structural risk for everyone involved. OpenAI retreated because it doesn’t want to expand a Blackwell cluster at Abilene, when Nvidia will be selling new Vera Rubin chips by the time the expansion is ready. The company would rather buy these for a different data center designed around those. 

And the liquid cooling failures during cold weather are hard to ignore. Texas’ grid survived the weird winter this year, but can the data center buildout survive the weird winters? As loads get larger, and rack densities climb, air cooling alone is not really an option. It has to be liquid, or at least a hybrid. But companies building these systems are charting new territory - there’s no real standard or best practice for how to do this, because it hasn’t been done before at this scale or pace. So, the reliability of these liquid cooling systems is emerging as nearly as big a constraint as power availability and quality. On-site back-up power doesn’t matter much if your cooling loop freezes. 

Utilities and grid operators in the other Stargate target states (Wisconsin, Ohio, New Mexico). Oracle and OpenAI say they’re pushing ahead elsewhere, so fresh interconnection and generation requests are coming, and OpenAI's Vera Rubin deployment preference means new campuses with new power needs.

Alternative site developers (Related Digital, CoreWeave). Every time a flagship Stargate site stumbles, OpenAI's compute needs get redistributed. If you're already in the pipeline with OpenAI, your negotiating position just improved.

Modular and prefabricated infrastructure providers. The Abilene story shows that chip generations are turning over faster than traditional data center construction can keep up. If a facility designed for Blackwell is already outdated before it's energized, the buildout model has to change. Prefab and containerized solutions that can be rapidly reconfigured around new Nvidia reference architectures are becoming the default (partner companies like Vertiv, Schneider Electric, Eaton, and Compass) are best positioned to capture that shift.

Utilities and transmission developers with concentrated hyperscaler exposure. If you've committed capital to serve a single data center campus based on a non-binding load forecast, Abilene is your case study in stranded investment risk. Renegotiate offtake terms to include demand binding commitments, capacity reservation fees, and take-or-pay structures before you pour concrete.

ERCOT planners. Texas has multiple gigawatt-scale data center projects in various stages of development. If hyperscalers routinely shift capacity across sites and timelines, ERCOT's load forecasting (which is already challenged) becomes even less reliable.

Private credit investors without rigorous collateral stress-testing. There is enormous capital tied up in highly complex, fast-moving projects. When an anchor tenant redirects load, the collateral assumptions behind project finance structures can shift materially. This move should prompt a hard look at concentration risk across AI infrastructure lending portfolios.

A quick read on the numbers shaping the market. The capex, the contracts, the regs, all anchored in the so-what.

$33.4bn // the price BlackRock and EQT paid to take AES private. AES became an extremely attractive take-private after the energy company spent the last five years aggressively building out renewables and storage projects supercharged by the IRA’s PTC and ITC. It took on $30bn in debt against a $10bn market cap to fund them, but rising interest rates and the removal of clean energy tax credits under the OBBBA loaded it up with massive debt overhang. PE can make their data center play through the power angle, striking megadeals that offer capital flexibility and patient time horizon requirements. This is the continuation of a growing trend of PE snap-ups of renewables developers - ones with portfolios of projects in locations linked to data center demand whose near term backlogs are tax credit safe-harbored. It’s a win-win as this brings new capital flexibility for the developer as well too.

25.2GW // the total EU solar PV capacity auction awards in 2025. It was a record of new annual solar photovoltaic capacity in government auctions, but it also means record contracted solar entering the pipeline over the next 3–5 years and more electrons competing for the same grid slots. Government auctions seem to be now the dominant route to revenue certainty, as merchant and PPA markets wobble under falling wholesale prices. 

⇩60–80% // the California residential solar market’s drop in sales after the California’s 2022 Net Billing Tariff rule, which was just upheld in court. A California appellate court has sided with the state's Public Utilities Commission, affirming the NEM 3.0 "Net Billing Tariff" framework that slashed the compensation homeowners receive for exporting rooftop solar power back to the grid by roughly 75–80% compared to the previous NEM 2.0 system. The ruling effectively kills the standalone residential solar model in California.

$1.2bn // the cost of Europe's first microgrid-connected data center, a new 110MW islanded site in Dublin, switched on this week. Ireland made it law that new data centers must source 80% of their energy from renewables and provide dispatchable power back to the grid, but developers ended up building a microgrid anyway just to bypass the backlogged grid connection queue. The site currently runs on natural gas, with the possibility to switch to HVO. It shows behind-the-meter microgridded data centers can work at commercial scale, and might be the speed-to-power play as more jurisdictions want data centers to be good grid citizens.

47 regions // where PJM has implemented Ambient-Adjusted Ratings (AARs) for transmission lines, becoming the first RTO (Regional Transmission Organization) to do so. Per FERC Order 881,by accounting for real-time weather conditions, PJM can squeeze more capacity out of existing power lines without building new infrastructure, saving ratepayers money and setting a blueprint for other grid operators to follow.

600TWh // the electricity equivalent of LNG that transited the Strait of Hormuz in 2025. That total, 110bn cubic meters, is roughly 20% of global LNG seaborne trade, but only 3% of globally traded gas supply. The physical loss is manageable, but the sticker shock is still high: LNG markets clear at the cargo margin, revealing a 3% physical shortfall, which spikes prices. 

The policies, rulings, and company moves worth watching.

PJM Interconnection’s proposal to fast-track resources of >250MW. The proposed “expedited interconnection track” process for new or uprated capacity of >250MW, if passed, would allow up to 10 large load projects/year to receive a generation interconnection agreement within 10 months of applying. 

Terrapower’s Natrium plant on track for first utility-scale Gen IV nuclear plant in the US. The NRC approved Terrapower’s construction permit, and if all goes well, it could receive a full operational license in 3-5 years. Their success came down to smart regulatory choices (Part 50 license for flexibility) and securing fuel supply early.

The new “Utilize” coalition for increasing grid utilization. Carrier, Tesla, Google and others have launched "Utilize," a coalition committed to unlocking the ~47% of US grid capacity that sits idle most of the year and support energy affordability. It aims to work with states to change grid planning and policy so utilities can measure and use idle grid capacity with technologies like batteries, smart appliances, and demand response.

SPP and MISO evaluating two 500-kV transmission projects, across Arkansas and Louisiana. The seams between these two RTOs have historically been a dead zone for new capacity. The real signal here is that FERC Order 1920 is finally putting new pressure on RTOs to do long-term, scenario-based planning. 

Arizona's utility regulator repeal of the state's renewable energy standard. Previously, Arizona’s RPS required utilities to source <15% renewables, now with the regulator citing $2.3bn in customer surcharges. It's a warning sign that state-level RPS mandates are increasingly on the chopping block. 

Gridtech for deferring transmission build. Manufacturing, electrification, and data centers could add 120–170GW of US load by 2030, but transmission projects are not moving fast enough to keep up. Sightline clients can read about how utilities are assessing gridtech options like dynamic line ratings to topology optimization and power flow control to buy time. Clients can read it here.

Long-duration lithium-ion batteries. As transmission constraints start to reshape storage markets, lithium-ion is emerging as the bridge technology for early 8-hour projects while other long-duration chemistries mature. Clients, check out the Tech Profile here.

Volta conference recap. Head of Research Julia Attwood shared a recap from the Volta conference at Stanford, where one theme stood out: batteries may be entering a “filtering event” as EV demand softens and data center demand rises. Clients can read that here.

Where the market is meeting, and where to find us

📅 Future of Utilities: Energy Transition Summit // Amsterdam, 18-19 March, 2026 // A key event on the European calendar for utilities, OEMs, and investors in the EU market. Join our Head of Research, Julia Attwood, on site. 

📅 CERAWeek // Houston, 23-27 March, 2026 // Dubbed the Super Bowl of energy, where energy executives, policymakers, and technology leaders converge. Join our CEO, Kim Zou, on site.

📅 Europe Energy Tech Summit // Bilbao, Spain, 15-16 April, 2026 // Europe's premier energy innovation event, hosted at the Euskalduna Conference Centre. Join our EMEA lead, Lauren De Meulemeester, on site.

Attending one of these events? Send us a note at [email protected]. 

Interested in diving deeper? Talk to our team and leverage the decision intelligence that hundreds of energy and investment decision-makers like Southern Company, Tokyo Gas, Jefferies, Galvanize, B Capital and others use to stay ahead in the energy transition.