> ## Content Index > Fetch the complete content index at: https://www.sotkn.com/llms.txt > Use this file to discover other available public pages before exploring further. # Where Are AI Data Centers Located? Follow the Substation - URL: https://www.sotkn.com/explained/where-are-ai-data-centers-located/ - Published: 2026-10-25T03:35:49.000Z - Updated: 2026-10-25T03:35:49.000Z - Description: AI data centers sit in a few dense clusters, led by Northern Virginia and Texas, with Johor, Singapore, Sydney and Melbourne in Asia-Pacific. They go where a utility can promise megawatts on a date, so the map of signed power is far bigger than the map of halls switched on. - Author: Sean - Tags: Mechanism, #desk-explained EXPLAINED · Mechanism · Last reviewed: 25 Oct 2026 · Next review: after ERCOT’s 10 Dec 2026 Batch Zero report and Dominion’s Q4 2026 data center update AI data centers are located in a small number of dense clusters where a large grid connection, long-haul fibre and a nearby city meet: Northern Virginia and Texas in the United States, and, in Asia-Pacific, Johor next to Singapore and the Sydney and Melbourne metros in Australia. They go where a utility can promise hundreds of megawatts on a known date, which is why the map of power that has been signed for is several times bigger than the map of halls that are switched on. **In short.** AI data centers are not spread out. The IEA counts about 60% of the world’s data center capacity in clusters of at least 500 MW within 100 km, and expects that share to pass 70% if announced projects are built. Northern Virginia is the biggest cluster, Texas is where most new US ones are forming, and in Asia-Pacific the hubs are Johor beside Singapore, and Sydney and Melbourne. What decides the spot is a grid connection with a date on it, plus fibre and a city within reach. That is also where it sticks: Dominion Energy has about 53.8 GW of data center capacity contracted in Virginia, but only 12.0 GW at a signed electric service agreement, about 22% (our arithmetic). Texas has paused energizing new data centers of 75 MW or more while it audits its queue. The people who get paid first are the ones who own the connection: utilities, holders of powered land, and landlords with halls already switched on. Why an investor cares: location decides who gets paid while a data center waits, and how long it waits. A hall in the wrong place is just a building. This page builds on [what an AI data center is](https://www.sotkn.com/explained/what-is-an-ai-data-center/) and follows one question: why do AI data centers end up where they do? ## Where are AI data centers located? In clusters. The IEA, in its April 2026 report Key Questions on Energy and AI, defines a cluster as data centers with at least 500 MW of combined designed capacity within a 100 km radius. By that test about 60% of the world’s capacity sits in clusters today. The share rises to over 65% once projects already under construction come online, and to more than 70% if every announced project is built, which not all will be. The United States holds about half of the world’s installed data center capacity and about half of announced additions, the IEA says. Within it, a few states take most of the growth. In Virginia and Ohio nearly all future capacity expands existing clusters. Texas is different: most of its new capacity forms new clusters near Dallas, Houston, San Antonio and Austin, and in places close to energy resources rather than people. Outside the US, the IEA names Frankfurt, London, Amsterdam, Paris and Dublin as Europe’s current clusters. Southeast Asia has more than 6 GW of projects proposed, with Malaysia a key driver next to Singapore, and in Australia the build is centred on Sydney and Melbourne. The IEA also notes the other side of the map: 60% of the world’s people live in countries with just 9% of data center capacity. | Hub | Why AI data centers go there | The number | What is stuck | | -------------------------------------- | -------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------- | | **Northern Virginia (Loudoun County)** | The densest fibre and interconnection in the world; new halls land next to old ones | About 53.8 GW of data center capacity contracted with Dominion Energy, up from about 16.5 GW in July 2023 | Only 12.0 GW at a signed electric service agreement | | **Texas (ERCOT)** | Land, competitive power, new clusters near Dallas, Houston, San Antonio and Austin and in rural counties near energy | 66.4 GW conditionally classed as base load; 302.2 GW excluded | Energization of new 75 MW+ data centers paused since 3 Aug 2026; audit due 10 Dec 2026 | | **Johor, Malaysia** | Next to Singapore, with land and a utility signing supply deals | 5.6 GW of 8.35 GW of Malaysia’s secured data center demand (67%) | 1,256 MW of actual load against 5.65 GW of connected sites | | **Singapore** | Network hub and home of many operators and REITs | 200 MW allocated in Aug 2026, 50 MW each to four operators | Capacity is rationed by the government, not the market | | **Sydney and Melbourne** | Australia’s two biggest cities, cable landings and cloud regions | About 95% of NEXTDC’s 536.9 MW in progress (our arithmetic) | New grid-connection rules in New South Wales and nationally | *Figures from the IEA, Dominion Energy, ERCOT, TNB, EDB and IMDA, and NEXTDC documents listed under References, checked on 25 Oct 2026.* ## What state has the most data centers? Virginia, and within it Loudoun County. The IEA calls Northern Virginia the world’s most significant area for data center development, and says practically all of its pipeline sits inside or right next to the existing cluster, because the communications network is already there. Dominion Energy, the utility that serves it, lists the concentration of data centers primarily in Loudoun County as a risk in its investor materials. Our [hyperscale vs colocation](https://www.sotkn.com/explained/hyperscale-vs-colocation-data-center/) page explains the two kinds of building you see there. Dominion’s numbers show how much more is coming. Its Q2 2026 slides put Virginia data center contracted capacity at about 53.8 GW in July 2026, up from about 16.5 GW in July 2023, more than three times (our arithmetic). Contracted, here, covers three stages. A substation engineering letter, 32.4 GW, pays for detailed engineering. A construction letter, 9.4 GW, lets Dominion build and makes the customer repay its costs if it walks away. An electric service agreement, 12.0 GW, sets how the customer will take power. Only that last stage is close to a working hall. ## Why do AI data centers go where they go? Five filters, in roughly this order. A site has to pass all of them. - **1\. A grid connection on a date.** A large AI campus needs hundreds of megawatts, and a utility has to say when it can deliver them. This is the filter most projects wait at. - **2\. Fibre and a city within reach.** The IEA tracked 21 large AI-focused data centers in the US, from 600 MW to 5 GW each, and found 19 of them within 65 km of a city of at least 100,000 people. AI halls have more freedom than older data centers, but they still sit close to networks and workers. - **3\. Land and a permit.** Big, flat, zoned plots next to a substation or a transmission line. That is getting scarcer inside the old hubs, which is why new clusters form nearby. - **4\. The rules.** Governments decide how much load a grid can take. Singapore rations new capacity; Alberta capped data center connections at 1.2 GW after requests reached 16 GW, more than the province’s peak demand. - **5\. A tenant who will pay there.** A hyperscaler, a neocloud or an AI lab has to want the site. See [what Equinix does](https://www.sotkn.com/stack/ai-data-centers/what-does-equinix-do/) and [what Digital Realty does](https://www.sotkn.com/stack/ai-data-centers/what-does-digital-realty-do/) for how landlords sell space in the big hubs. ![Five filters that decide where an AI data center goes: grid connection on a date (the stuck step), fibre and a nearby city, land and a permit, the rules, and a tenant who will pay there](https://storage.ghost.io/c/cd/10/cd10e222-131f-4ba4-b4a9-ca4214e8c12d/content/images/2026/10/ai-data-center-location-filters.png) A site has to pass all five; most projects wait at the first. IEA, Dominion Energy, ERCOT, EDB and IMDA; Second Order. Our view: people search for a map of AI data centers, but the more useful map is of substations. The pins on most maps are announcements. What decides whether a pin becomes a working hall is whether the local utility has signed it up for power and can deliver on the date promised. ## Why are AI data centers moving to Texas? Land, competitive power and room to build from scratch. But Texas also shows how far the queue runs ahead of the grid. ERCOT’s September 2026 board update sorted the large loads asking to connect in its one-time Batch Zero study: 204 projects, 66.4 GW, were conditionally included as base load, the firmer of the two included categories; 158 projects, 125.4 GW on its chart (127.9 GW in its summary), were conditionally included as studied load; and 302.2 GW across 373 projects was excluded. Base load is about 13% of the total (our arithmetic). The map in that update is telling. The counties with the most base and studied load are Cameron, Dallas, Jones, Harris and Childress, a mix of big metros and rural counties near the energy. After Governor Abbott’s directive of 3 August 2026, ERCOT paused energizing new data centers and crypto mines of 75 MW or more until an eligibility audit and a community-impact review report to the regulator by 10 December 2026\. Our [US Pulse on the Texas large-load rule](https://www.sotkn.com/markets/us/us-texas-large-load-rule-october-2026/) covers what the state now charges to join that queue. ![Share of booked data center power at the stage named: Texas ERCOT base load 13 percent; Virginia Dominion electric service agreement 22 percent; Malaysia actual load versus connected maximum demand 22 percent; Australia NEXTDC billing versus contracted 24 percent](https://storage.ghost.io/c/cd/10/cd10e222-131f-4ba4-b4a9-ca4214e8c12d/content/images/2026/10/ai-data-center-locations-signed-vs-live.png) In every hub, most of the power signed for is not yet running. ERCOT, Dominion Energy, TNB, NEXTDC; Second Order arithmetic. Read that chart one bar at a time. Each grid reports a different stage: a planning class in Texas, a contract stage in Virginia, actual load in Malaysia and billing at one Australian operator. The common point is the size of the gap. Between a quarter and an eighth of the power booked in each hub is at the stage closest to a working hall. ## Who gets paid when data centers cluster? - **Utilities and grid builders.** They own the scarce thing. Under Dominion’s construction letters, a customer that walks away must repay what the utility has spent, so the wires get paid for even if the hall is never switched on. - **Owners of powered land.** A plot with a confirmed connection date is worth more than the same plot without one, because it saves a developer years in the queue. - **Landlords with live halls in the hub.** Space that is already energized in Northern Virginia, Singapore or Sydney can be let now. See [how a data center lease works](https://www.sotkn.com/explained/data-center-lease-explained/). - **Builders and equipment makers.** They are paid while the halls go up, whether or not the power arrives on time. Our [data center cost page](https://www.sotkn.com/explained/how-much-does-it-cost-to-build-an-ai-data-center/) shows where the money goes. - **Last: the developer waiting in the queue.** It has spent on land, design and deposits and earns nothing until the hall is energized and billing. Our [data center financing page](https://www.sotkn.com/explained/data-center-financing-explained/) shows what that wait costs in interest. ## What is the stuck step? The grid connection, and the date attached to it. Not land, not money, and in most hubs not demand. Every hub on this page has far more power signed for than switched on. In Virginia 12.0 GW of 53.8 GW has reached a service agreement. In Texas the operator has stopped switching on new large data centers while it checks which requests are real. In Malaysia, TNB’s 42 data center projects already on its system have 5.65 GW of maximum demand, but actual load in June 2026 was 1,256 MW, about 22% (our arithmetic). Our [page on how long a data center takes to build](https://www.sotkn.com/explained/how-long-does-it-take-to-build-an-ai-data-center/) shows where those months go. That is why location and timing are the same question. A site in an existing cluster has the network and the tenants but waits longer for new power. A site in a new cluster may get power sooner but has to build everything else. Our [US Pulse on a 3 GW Virginia campus](https://www.sotkn.com/markets/us/us-virginia-3gw-data-center-first-power-october-2026/) shows the first case, and our [Wire on Israel’s 200 MW cap](https://www.sotkn.com/wire/israel-200-mw-data-center-cap-27-gw-power-queue-wire/) shows another grid setting its own limit. ## Where are AI data centers in Asia? Johor, next to Singapore, is the fastest-growing hub. TNB, Malaysia’s national utility, told analysts on 28 August 2026 that it had 61 secured data center projects with 8.35 GW of maximum demand, and that 29 of them, with 5.6 GW, about 67% of the capacity, are in Johor. Actual data center load on its system reached 1,256 MW in June 2026, 2.1 times the level a year earlier. TNB also showed a Cushman & Wakefield ranking that puts Johor first among Asia-Pacific markets that operators prefer, ahead of Sydney and Shanghai. Our [Wire on Princeton Digital’s Johor loan](https://www.sotkn.com/wire/princeton-digital-1-2b-loan-198-8-mw-johor-data-center-wire/) and our [Malaysia Pulse on the unused-power charge](https://www.sotkn.com/markets/malaysia/malaysia-data-centre-unused-power-charge-october-2026/) follow the money and the power rules there. Singapore is the hub that rations. The IEA notes that Singapore paused new data center projects from 2019 before reopening with calls for applications. On 21 August 2026 the Economic Development Board and IMDA provisionally allocated 200 MW to four operators, 50 MW each to Digital Realty, Equinix, Keppel Data Centres and ST Telemedia, chosen from more than 20 proposals and required to draw more than half their power from green sources. That 200 MW is about 2.4% of Malaysia’s secured data center demand (our arithmetic), which is why so much of the region’s new building has crossed the border. See [our Singapore Pulse on the allocation](https://www.sotkn.com/markets/singapore/singapore-data-centre-licence-october-2026/) and [what Keppel DC REIT does](https://www.sotkn.com/stack/ai-data-centers/what-does-keppel-dc-reit-do/). Australia’s AI build is concentrated in its two largest cities. NEXTDC’s FY26 results show 536.9 MW of capacity in progress at 30 June 2026: 272.8 MW in New South Wales and the ACT, mostly at S4 Sydney, and 236 MW in Victoria, mostly at M2 and M3 Melbourne, about 95% of the total (our arithmetic). It has bought a site for M5 Melbourne planned for up to 1.2 GW. New South Wales and the federal government are both proposing new rules for data center grid connections; NEXTDC says its existing order book is unaffected. See [what NEXTDC does](https://www.sotkn.com/stack/ai-data-centers/what-does-nextdc-do/) and our [Australia Pulse on Sydney’s power condition](https://www.sotkn.com/markets/australia/australia-nsw-data-centre-power-condition-october-2026/). ## What would change this view? - **Queues clear faster.** If Dominion’s service agreements and ERCOT’s base-load list grow quickly, the stuck step moves from the grid to construction. - **AI training leaves the cities.** If big training campuses move far from population centres to sit on cheap power, the IEA’s finding that 19 of 21 stay near cities would no longer hold. - **Rules spread.** More caps like Alberta’s and Israel’s, or rationing like Singapore’s, would push building to new clusters faster. - **Load catches up with bookings.** If Malaysia’s actual load closes on its connected maximum demand, Johor stops being a pipeline story and becomes a cash one. ## How to read a data center location announcement - **Is there a utility named?** A campus with no named utility or grid operator is a plan, not a site. - **Which contract stage?** An engineering letter, a construction letter and a service agreement are very different promises. - **What date is the power due?** The energization date matters more than the headline megawatts. - **Is it in a cluster?** Inside one means network and tenants; outside one means building the ecosystem too. - **Is there a cap or audit?** Texas, Singapore and Alberta show that the rules can change after the land is bought. ## FAQ **Where are AI data centers located?** Mostly in a handful of clusters. In the United States, Northern Virginia is the biggest and Texas is where most new clusters are forming, near Dallas, Houston, San Antonio and Austin and in rural counties close to power. In Asia-Pacific the main AI hubs are Johor in Malaysia, next to Singapore, and Sydney and Melbourne in Australia. The IEA counts about 60% of the world’s data center capacity in clusters today, rising to over 70% if announced projects are built. **What state has the most data centers?** Virginia. The IEA calls Northern Virginia the world’s most significant area for data center development, and Dominion Energy, the main utility there, had about 53.8 GW of data center capacity in some stage of contracting in July 2026, with data centers concentrated primarily in Loudoun County. Texas is the fastest-growing challenger: ERCOT’s large-load queue runs to hundreds of gigawatts, though most of it is not expected to be built. **How many AI data centers are in the US?** There is no official count, because there is no agreed definition of an AI data center. The IEA’s satellite tracking followed 21 large AI-focused data centers in the United States, each 600 MW to 5 GW in nameplate capacity, and found 19 of them within 65 km of a city of at least 100,000 people. The US holds about half of the world’s installed data center capacity. **Why are so many data centers in Northern Virginia?** Because the network and the power were there first. Decades of fibre, interconnection and existing halls mean new projects keep landing next to the old ones. The IEA says practically all of Northern Virginia’s pipeline sits within or right next to the existing cluster. The limit now is the grid: only about 12.0 GW of Dominion’s 53.8 GW of contracted data center capacity had reached a signed electric service agreement in July 2026. **Why are AI data centers being built in Texas?** Land, competitive power and room to build new clusters. Texas runs its own grid, ERCOT, which by September 2026 had sorted about 494 GW of requests from data centers, crypto mines and other large loads (our arithmetic, from its board chart). But ERCOT paused energizing new data centers of 75 MW or more after the governor’s 3 August 2026 directive, and only 66.4 GW was conditionally classed as base load. The queue shows where developers want to go, not what will be built. **Why is Johor a data center hub?** It sits across the border from Singapore, which paused new data centers from 2019 and now rations new capacity. Malaysia’s utility TNB counts 61 secured data center projects with 8.35 GW of maximum demand, and 67% of that capacity is in Johor. Actual data center load on its system was 1,256 MW in June 2026, more than double a year earlier. **Does Singapore still allow new data centers?** Yes, in small, rationed amounts. Singapore’s EDB and IMDA provisionally allocated 200 MW in August 2026 under their second call for applications, 50 MW each to Digital Realty, Equinix, Keppel Data Centres and ST Telemedia, picked from more than 20 proposals. Winners had to commit to drawing more than half their power from green sources. **Where are Australia’s AI data centers?** Mostly in Sydney and Melbourne. NEXTDC, a large Australian operator, had 536.9 MW of capacity in progress at 30 June 2026, and about 95% of it was in New South Wales and Victoria (our arithmetic). It has also bought a Melbourne site planned for up to 1.2 GW. **Is this a list of stocks to buy or sell?** No. Second Order Explained pages explain how the money and the constraints move. They do not give buy or sell calls. Not investment advice. Do your own research. Related: [what is an AI data center](https://www.sotkn.com/explained/what-is-an-ai-data-center/); [data center tiers](https://www.sotkn.com/explained/data-center-tiers-explained/); [PUE](https://www.sotkn.com/explained/pue-explained/); [AI data center water use](https://www.sotkn.com/explained/ai-data-center-water-usage/); [what Applied Digital does](https://www.sotkn.com/stack/ai-data-centers/what-does-applied-digital-do/); [what Digital Core REIT does](https://www.sotkn.com/stack/ai-data-centers/what-does-digital-core-reit-do/). ## Stack doors Layer: [AI Data Centers](https://www.sotkn.com/stack/ai-data-centers/). Also: [Hyperscalers](https://www.sotkn.com/stack/hyperscalers/), [Neoclouds](https://www.sotkn.com/stack/neoclouds/), [Semiconductors](https://www.sotkn.com/stack/semiconductors/). Markets: [US](https://www.sotkn.com/markets/us/), [Singapore](https://www.sotkn.com/markets/singapore/), [Malaysia](https://www.sotkn.com/markets/malaysia/), [Australia](https://www.sotkn.com/markets/australia/). [Get the Wire](https://www.sotkn.com/#/portal/signup) — short daily notes when a data center hub gets power, a cap or a new campus. **How we check this** Every figure on this page comes from a document we read in full: the IEA’s Key Questions on Energy and AI report, Dominion Energy’s Q2 2026 earnings slides, ERCOT’s September 2026 Batch Zero board update, TNB’s 2QFY2026 analyst briefing, the EDB and IMDA fact sheet on the second data centre call for applications, and NEXTDC’s FY26 results release. All are listed under References and were checked on 25 Oct 2026\. Every number we derived by dividing or adding is labelled “our arithmetic”. The four hubs report different stages (base-load class, service agreement, actual load, billing), so the shares are not like-for-like and should be read one at a time. ERCOT’s large loads include crypto mines and other big users as well as data centers. The featured photo is “Data centers in Ashburn” by Theodore Christopher (CC0, Wikimedia Commons), graded by Second Order. This page explains how the money and the constraints move. It does not give buy or sell calls. Not investment advice. Do your own research. **Last reviewed:** 25 Oct 2026 · **Next review:** after ERCOT’s 10 Dec 2026 Batch Zero report and Dominion’s Q4 2026 data center update Spot an error? [Tell us](mailto:sean@thekopinotes.com) and we will correct it and note the change here. [Our editorial standards →](https://www.sotkn.com/editorial-standards/) ## References 1. [IEA — Key Questions on Energy and AI, chapter 3: Are new data centres moving to locations beyond existing clusters? (report, 16 Apr 2026)](https://www.iea.org/reports/key-questions-on-energy-and-ai?ref=sotkn.com) — clusters defined as 500 MW within 100 km; about 60% of capacity in clusters today, over 65% once projects under construction finish, over 70% with announced projects; US about half of global capacity; Northern Virginia; Texas new clusters; 19 of 21 large US AI data centres within 65 km of a 100,000-person city; 20–30% of local power demand; Alberta 16 GW requests and 1.2 GW cap; Singapore pause since 2019 2. [Dominion Energy — Q2 2026 earnings call slides, slide 5: data center contracted capacity (31 Jul 2026)](https://s2.q4cdn.com/510812146/files/doc%5Ffinancials/2026/q2/2026-07-31-DE-IR-2Q-2026-earnings-call-slides-vTCII.pdf?ref=sotkn.com) — about 53.8 GW contracted in Virginia (32.4 GW SELOA, 9.4 GW CLOA, 12.0 GW ESA), up from about 16.5 GW in July 2023; stage definitions; concentration of data centers primarily in Loudoun County 3. [ERCOT — Item 14: Batch Zero Update (board materials, 14–15 Sep 2026)](https://www.ercot.com/files/docs/2026/09/11/14-Batch-Zero-Update.pdf?ref=sotkn.com) — energization of new 75 MW+ data centers paused after the 3 Aug 2026 directive; 66.4 GW conditionally base load, 125.4 GW (chart) studied, 302.2 GW excluded; top counties Cameron, Dallas, Jones, Harris, Childress; reports due 10 Dec 2026 4. [Tenaga Nasional Berhad — Analyst briefing 2QFY2026 (28 Aug 2026)](https://www.tnb.com.my/assets/quarterly%5Fresults/Analyst%5FBriefing%5F-%5F2QFY2026.pdf?ref=sotkn.com) — 61 secured data centre projects, 8.35 GW; 42 projects, 5.65 GW in system; actual load 1,256 MW in June 2026, 2.1 times a year earlier; Johor 29 projects and 5.6 GW, 67% of Malaysia’s secured capacity 5. [EDB and IMDA — Four data centre proposals selected in DC-CFA2 (fact sheet, 21 Aug 2026)](https://www.edb.gov.sg/content/dam/edb-en/about-edb/media-releases/news/four-data-centre-proposals-selected-as-part-of-second-data-centre/Fact%20Sheet%20-Four%20data%20centre%20proposals%20selected%20as%20part%20of%20second%20data%20centre.pdf?ref=sotkn.com) — 200 MW provisionally allocated, 50 MW each to Digital Realty, Equinix, Keppel Data Centres and ST Telemedia; more than 20 proposals; more than 50% green energy 6. [NEXTDC — FY26 results (ASX release, 27 Aug 2026)](https://announcements.asx.com.au/asxpdf/20260827/pdf/073c04gt4ts40y.pdf?ref=sotkn.com) — 740.1 MW contracted vs 175.0 MW billing; capacity in progress by state (NSW/ACT 272.8 MW, Victoria 236 MW, rest of Australia 13.1 MW, KL1 15 MW); M5 Melbourne site up to 1.2 GW; NSW and federal grid-connection reforms S **[Sean](https://www.sotkn.com/author/sean/)** Writes Second Order by TKN — a plain-English map of AI infrastructure and semiconductors for non-specialist investors. Focus: who gets paid, where money sticks, and which step is stuck. Covers AI infrastructure, semiconductors, and second-order stack reads. [Author page →](https://www.sotkn.com/author/sean/) · [Editorial standards →](https://www.sotkn.com/editorial-standards/)