Kevin O'Leary Slashes Utah Data Center Project by 75%
1h ago|4 min readStandard
Fazen Markets Editorial Desk
Collective editorial team · methodology
kevin-olearydata-centers
Fazen Markets Editorial Desk
Collective editorial team · methodology
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Shark Tank investor Kevin O’Leary has dramatically scaled back a major data center project in Utah by 75% following pressure from state lawmakers. The decision, announced on June 4, 2026, represents a significant capital reevaluation. It highlights growing political friction between large-scale energy consumers and public utility concerns.
Data center development faces increasing scrutiny over its massive energy and water consumption. The U.S. data center industry is projected to consume 8% of total national electricity by 2030, up from approximately 3% in 2022. This surge is primarily driven by the computational demands of artificial intelligence model training and inference.
Political resistance to new data centers is emerging as a material investment risk. In 2024, Loudoun County, Virginia, considered moratoriums on new construction. Singapore has imposed strict efficiency standards on data centers since 2019 to manage energy load.
The Utah project encountered specific opposition from state legislators concerned about water usage in an arid region. Lawmakers publicly questioned the allocation of scarce public resources to a private, energy-intensive enterprise, prompting O'Leary's strategic pullback.
The initial project was slated for a $800 million investment to construct a 1.2 million square foot facility. This scale would have consumed an estimated 45 megawatts of power, equivalent to powering 36,000 homes. The revised plan now entails a $200 million investment for a 300,000 square foot building.
O'Leary's investment vehicle had secured land options and preliminary utility agreements for the full build-out. The 75% reduction directly impacts local construction jobs, reducing estimated temporary employment from 1,200 to 300 positions. Permanent operations staff will be cut from 150 to under 40.
| Metric | Original Plan | Revised Plan | Change |
|---|---|---|---|
| Investment | $800M | $200M | -75% |
| Square Footage | 1.2M | 300,000 | -75% |
| Power Draw | 45 MW | 11.25 MW | -75% |
This contraction contrasts with the broader industry trend. Data center real estate investment trusts like Equinix and Digital Realty Trust continue expanding their portfolios, with development pipelines exceeding $10 billion.
The decision signals a new layer of regulatory risk for infrastructure investors. Public utility commissions and state legislatures now represent a tangible threat to project economics. This could compress valuation multiples for pure-play data center developers reliant on greenfield expansion in water-constrained regions.
Specialized construction firms and electrical equipment suppliers like Vertiv Holdings and Eaton Corporation face potential headwinds in certain markets. Their growth projections often assume a continuous pipeline of new megaprojects. A political backlash causing project cancellations would directly impact their revenue.
Conversely, companies focused on retrofitting existing facilities for higher density or water-free cooling gain a relative advantage. The investment shift favors technologies that improve efficiency within established footprints rather than new ground-up construction. Secondary markets with abundant power and water may see increased developer interest, potentially boosting local utility stocks.
The counter-argument is that demand for compute is so insatiable that projects will simply migrate to more permissive jurisdictions. This event may prove isolated rather than indicative of a broad trend. Capital is likely to flow to states with clearer regulatory frameworks and surplus energy, such as Texas or Ohio.
The Utah state legislature's next session will be critical for monitoring proposed bills that could formalize restrictions on data center water and energy use. Any proposed legislation will set a precedent for other states facing similar infrastructure pressures.
Earnings calls for Digital Realty Trust (DLR) and Equinix (EQIX) on July 23 and July 30, respectively, will provide essential commentary on whether management teams are seeing similar permitting delays or political hurdles in other markets. Analyst questions will focus on project pipelines and geographical risk assessments.
Power consumption metrics from major cloud providers Amazon Web Services, Microsoft Azure, and Google Cloud Platform will be scrutinized in their upcoming quarterly reports. Accelerating growth in energy use could intensify political scrutiny industry-wide. The North American Electric Reliability Corporation's next assessment of grid reliability, due in December 2026, may highlight data center concentration as a key risk factor.
Other developers are reassessing political risk in their project pipelines. Due diligence now must include analysis of local water rights, utility commission sentiments, and political appetite for large power consumers. This may slow development approvals and increase legal costs, impacting overall returns on invested capital for the sector.
Data centers are significant but not the largest water consumers. Agriculture typically accounts for over 70% of water withdrawals in western states. However, data center water use is often concentrated near population centers, creating localized scarcity issues that attract more political attention than dispersed agricultural use.
The AI industry requires immense computing power, primarily delivered through data centers. If political resistance limits physical expansion, it could constrain GPU supply and increase cloud computing costs. This may accelerate innovation in liquid immersion cooling and other water-free technologies to bypass the constraint.
Political risk is now a material factor in data center development capital allocation.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.
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