The Department of Energy hosted a retreat evaluating transmission corridor development strategies in response to projected data center load growth.

Data center developers often seek gigawatts of power years before a transmission line can be permitted and built. This timeline mismatch is placing new pressure on grid planners, particularly as the U.S. Department of Energy (DOE) declined to designate three proposed National Interest Electric Transmission Corridors (NIETCs) that had advanced to Phase 3 of federal review.

The decision followed the release of the DOE’s draft 2026 National Transmission Needs Study, which identified accelerating electricity demand from data centers, domestic manufacturing, large industrial loads, and electrification as primary drivers of future transmission requirements. The study underscores a pressing need for additional transmission capacity to accommodate this growth.

This leaves utilities and regulators with a familiar dilemma: build transmission early enough to support emerging demand, or risk allowing the grid to become a bottleneck once projects are committed. Conversely, building too far ahead risks stranding capital, leaving utilities and ratepayers to fund infrastructure for load that never materializes.

Texas offers a proven example of proactive planning at scale. The state’s Competitive Renewable Energy Zones (CREZ) program was designed to transport electricity from resource-rich West Texas to major load centers, with transmission infrastructure planned ahead of the full generation buildout. Nearly two decades later, data center developers are increasingly drawn to regions served by that same grid, precisely because of the transmission and power infrastructure CREZ established.

Former DOE Secretary Jennifer Granholm publicly questioned the NIETC decision. In a LinkedIn post, she highlighted the contradiction in timing, noting that the DOE’s own transmission study explicitly identified a “pressing need” for new infrastructure to accommodate load growth and maintain grid reliability.

“You can’t declare an energy emergency, demand that America pump out more electricity, and then purposefully make it harder to deliver that power where it’s needed,” Granholm wrote.

The failure to designate the three corridors does not necessarily contradict the broader conclusion that the nation requires more transmission capacity, according to Neil Osnato, founder of Persistence Analytics Group. “The Needs Study identifies a national transmission problem,” Osnato said. “The NIETC process asks a different question: whether specific geographic corridors satisfy the statutory and evidentiary basis for federal designation.”

The DOE concluded there was insufficient justification to designate any of the three Phase 3 candidates—the Tribal Energy Access Corridor, the Southwestern Grid Connector Corridor, and the Lake Erie-Canada Corridor—citing the 2023 National Transmission Needs Study, public and governmental feedback, and other data collected throughout the designation process.

A NIETC is strictly a geographic designation, not an approval for a specific transmission project. However, designation can unlock certain federal transmission tools and, in limited circumstances, trigger Federal Energy Regulatory Commission (FERC) authority to permit eligible transmission facilities within the corridor.

Osnato noted that the episode underscores a systemic challenge: while the U.S. possesses robust tools to identify transmission needs, it lacks equivalent mechanisms to translate those findings into timely, coordinated interstate projects. This gap is compounded by the starkly different timelines governing transmission planning versus large-load development.

As previously reported by Data Center Knowledge, Texas developed CREZ to connect anticipated wind generation in West Texas to population centers, deliberately planning transmission ahead of the generation buildout. Nearly two decades later, major data center projects are clustering in regions where CREZ-enabled infrastructure provides reliable access to substantial power. Galaxy Digital’s Helios campus in Dickens County, for instance, is being developed as a multi-gigawatt data center platform in an area equipped with significant transmission capacity that was not originally built for data centers.

A July 2026 report from the Energy Systems Integration Group (ESIG) Large Loads Task Force—prepared by Brattle principal Johannes Pfeifenberger, Warren Lasher, and ESIG’s James Okullo—cites CREZ as a model for planning transmission around anticipated development rather than waiting for individual projects to materialize. The report advocates shifting away from isolated, project-by-project upgrades toward proactive, scenario-based, and multi-value planning. It also highlights development-zone frameworks such as Texas CREZ and the Illinois Renewable Energy Access Plan (REAP).

Osnato emphasized that while the CREZ model can inform data center planning, the underlying evidence for each type of development differs. “CREZ showed the value of identifying development zones, planning transmission at scale, and avoiding a sequence of one-off upgrades that become slower and more expensive over time,” Osnato said. “That logic absolutely applies to clustered data center growth.”

However, whereas CREZ was anchored to geographically concentrated generation development, data center planning frequently depends on future load that remains contingent on customer contracts, power delivery agreements, financing, permitting, site readiness, and technology choices. “I would borrow the CREZ concept of proactive zones and scaled planning,” he said, “but pair it with a much stricter requirement to prove which loads have actually earned the right to drive that investment.”

According to the ESIG report, transmission planning, permitting, and construction typically span five to ten years or longer, whereas large-load projects can seek interconnection within months or a few years. Waiting until every customer is fully energized risks turning transmission into a critical bottleneck, yet building billions of dollars in infrastructure around every announced gigawatt exposes utilities to stranded capital and complex cost-allocation risks.

When asked whether today’s data center expansion pace justifies building transmission ahead of firm commitments, Osnato replied, “In some places, yes.” He added, “But ‘ahead of firm commitments’ should not mean ‘ahead of evidence.’”

Osnato advocates for a staged approach: develop broad scenarios, preserve transmission corridors and development options early, and then deploy increasingly irreversible capital only as underlying load passes defined evidence gates. Under this model, a utility might secure rights-of-way or engineer a scalable transmission solution before every megawatt is contracted, deferring full capital expenditure until the evidence of durable demand solidifies.

He recommended structuring the evaluation around three core questions: What is currently represented? What is independently supported today? And what change would invalidate that conclusion?

The ESIG report underscores how contemporary large loads diverge from historical demand patterns: individual facilities can now reach gigawatt scale, projects frequently cluster geographically, and development cycles often outpace major transmission projects. This dynamic creates a persistent mismatch between the lengthy timeline required to build transmission and the rapid pace at which large loads seek interconnection.

ERCOT’s large-load pipeline illustrates the magnitude of the challenge. As of June 2026, ERCOT tracked approximately 474.7 GW of large-load interconnection requests, roughly 420.8 GW—or 90.2%—of which were associated with data centers. These figures do not represent committed demand and instead span a wide spectrum of development stages.

The sheer size of the queue has prompted Texas officials to rigorously evaluate which projects warrant inclusion in grid planning. On June 10, Governor Greg Abbott directed the Public Utility Commission of Texas (PUCT) and ERCOT to review data center projects and mitigate development risks and costs that might otherwise be passed on to Texas ratepayers. By August, Abbott had ordered a comprehensive audit of data centers progressing through ERCOT’s interconnection process.

For transmission planners, the central question remains how much of this pipeline should inform current investment decisions. The ESIG report recommends transitioning away from isolated, project-by-project upgrades toward proactive, scenario-based, and multi-value planning frameworks that can scale alongside accumulating evidence of durable demand.

Utilities may need to begin planning years before a data center executes a final power contract. This reality elevates the importance of rigorous evidence behind load forecasts and dictates how capital is deployed at each development stage. Development zones, scenario-based planning, and modular transmission designs can provide planners with greater flexibility as demand crystallizes.

Texas demonstrates how early transmission investment can catalyze future development in ways planners rarely anticipate. For Osnato, the lesson is not to wait for absolute certainty on every megawatt before beginning planning—it’s to distinguish between speculative interest and evidence-backed demand, scaling infrastructure deployment as commitments solidify.