The traditional, broad sectors of energy and infrastructure in the USA continues to predominate in the project financing market. Many of the macro trends that have been with us in recent years continue, some with increasing force and urgency – power generation facilities, grid and network infrastructures, so-called digital infrastructure. And significant recent developments in US federal policy towards energy, tax, tariffs and immigration are affecting major projects and asset portfolios.

The demand curve for power generation in the USA continues its upward trajectory, outpacing the power generation supply curve on an exponentially increasing basis. The key drivers to this dynamic include the ongoing overall strength of the US economy (if strains are beginning to become more apparent as of the date of this writing – economic recessions, by contrast, are often associated with slowing power generation demand growth), a technology-driven boom in artificial intelligence (AI) applications and the significant additional per-unit energy usage demands of AI chip processing, and ongoing systemic constraints in US grid and transmission infrastructure.

This broadly applicable ongoing market-driven trend would seem to point to an “all of the above” approach to new power generation in the US market, for technologies across the carbon spectrum from oil and gas to renewables and energy storage and nuclear (next-generation small modular reactors (SMRs) in particular). But during the course of 2025, US policy towards the energy sector made a marked shift away from certain renewable energy technologies in the One Big Beautiful Bill Act (OBBBA) – directly, through the rapid sunsetting of tax credit subsidies for wind and solar and related administrative regulations narrowing the window for “begun construction” rules under the US tax code necessary to qualify for such remaining tax credits, and indirectly, through stricter “prohibited foreign entity” rules affecting the direct and indirect foreign ownership and control positions in energy projects qualifying for federal tax credit subsidies.

With AI applications driving a large segment of the growth in the US economy, the demand for new data centre developments with huge energy consumption requirements will require the deployment of all available power generation solutions, from short term to long term: mobile gas generating units, co-located solar-plus-storage, traditional utility sources with associated grid and transmission infrastructure investments, combined cycle plants and nuclear plants (existing plants and soon SMRs). The authors delve into some of the details as follows.

Significant Overhaul of US Clean Energy Tax Credits Under OBBBA

On 4 July 2025, President Trump signed the OBBBA into law, imposing sweeping changes to the clean energy tax credit regime and shifting federal support away from certain renewable energy sources, particularly wind and solar, and towards energy deregulation and fossil fuel development, while also imposing new restrictions on foreign participation in the US energy sector. The OBBBA’s mandate stands in stark contrast to the energy policies established by the Biden administration’s Inflation Reduction Act, under which the renewable energy industry experienced robust deal flow and rapid investment through 2024.

The OBBBA accelerates the phase-out of – or fully eliminates – a number of clean energy tax credits (subject to transition rules), introduces new restrictions on foreign ownership and sourcing of components, and modifies a range of eligibility requirements for surviving clean energy tax credits. Notably, the legislation did retain federal tax credits for battery energy storage projects (including those co-located with wind and solar facilities) and preserved the ability to transfer eligible tax credits under Code Section 6418.

The OBBBA and related administrative regulatory changes to the clean energy tax credit regime are impacting renewable energy financing, investment and development. In particular, developers of wind and solar projects must accelerate timelines to meet new deadlines for beginning construction and placement in service or risk losing eligibility for key clean energy tax credits that are typically underlying assumptions in the economic viability analysis of a proposed capital stack. Similarly, the expanded foreign-entity restrictions require enhanced sourcing and supply chain due diligence, with the potential to increase project costs and financing complexity. In response, tax equity investors and tax credit buyers are increasingly likely to demand additional contractual protections, compliance audits and third-party certifications, and other risk mitigation strategies going forward.

The authors continue to observe a strong pipeline of clean energy projects and investments planned for 2026 and 2027, with adaptations to align with the rapidly changing regulatory landscape implemented where feasible. Nonetheless, the current political climate and increased economic uncertainty, combined with the overall reduction in federal support for renewable energy projects, including in the form of clean energy tax credits, is projected to slow clean energy generation growth and flatten the industry’s growth trajectory, with potentially broad implications for US energy supply and decarbonisation goals.

AI Boom Driving Data Centre Developments and Co-Located Power Generation

The data centre sector is experiencing unprecedented demand, fuelled by cloud computing, AI, streaming and digital transformation. This has led to a significant influx of capital from a broad range of investors, including infrastructure funds, pension funds, sovereign wealth funds and private equity. The sector’s perceived resilience and long-term cash flow profile have made it a favoured asset class, even amid broader market volatility. As a result, we are seeing an evolution of financing structures.

While corporate balance sheet financing remains common for hyperscalers, there is a clear trend towards project finance for independent operators and joint ventures. Project finance structures are increasingly used for both greenfield and brownfield developments, especially where the sponsor is not an investment-grade entity or where the project is structured as a standalone asset.

North American data centre vacancy rates are currently at all-time lows, hovering around 1.6% to 2.3% during the first half of 2025. Given this demand, lenders are likely more willing to rely on project cash flows and collateral, rather than sponsor guarantees, provided there are strong offtake agreements and robust risk mitigation.

Hybrid data centre financing structures have emerged that combine elements of real estate finance, corporate finance, leveraged finance and project/infrastructure finance, creating specialised debt and equity solutions.

Rather than financing single assets, sponsors and lenders are increasingly structuring portfolio financings, covering multiple data centres under a single facility. This approach allows for risk diversification, operational synergies and larger financing tranches. Platform financings, where a sponsor raises capital to develop a pipeline of projects, are also on the rise.

Some mature data centre operators are exploring securitisation of revenue streams, particularly for stabilised cash-flowing assets. This trend is more pronounced in the USA, where REITs and other capital markets vehicles are active. Securitisation can provide lower-cost, long-term capital and free up balance sheet capacity for further development.

Given the sector’s high energy consumption, there is growing demand for green financing. Lenders and investors are offering green loans and bonds, where proceeds are earmarked for projects meeting specific environmental criteria (eg, renewable energy sourcing, energy-efficient design). Sustainability-linked loans are gaining traction, with loan pricing linked to the borrower’s achievement of sustainability KPIs, such as reductions in carbon emissions, increased use of renewable energy, or attainment of green building certifications (eg, LEED, BREEAM).

Securing long-term, triple-net leases with hyperscale cloud providers is a key driver of bankability. These leases provide predictable cash flows and creditworthy counterparties, making projects more attractive to lenders. For multi-tenant data centres, lenders focus on the diversity and credit quality of the tenant base, lease terms and renewal risk. The trend is towards longer lease terms and higher pre-leasing thresholds before financial close.

Reliable access to power (and, increasingly, renewable power) is a gating issue. In some markets, grid constraints or moratoria on new connections have delayed or derailed projects.

Data centre operators are increasingly entering into power purchase agreements (PPAs) for renewable energy, both to meet sustainability goals and to lock in energy costs. Lenders view long-term PPAs as a credit positive, reducing exposure to energy price volatility.

The financing of data centre projects is becoming more sophisticated and diverse, reflecting the sector’s rapid growth, technological evolution and increasing focus on sustainability. Key trends include the shift towards project and portfolio financings, the rise of green and sustainability-linked loans, the importance of robust offtake and power arrangements, and the entry of new investor classes.