Limits on data center building keep spreading, as Texas's governor-elect promised protective laws, Meta's president said building will get harder, and Norway suspended new grid connections for data centers. Vistra and NRG Energy shares have nonetheless risen while the S&P 500 fell. Nothing in the last month argued otherwise, but a governor alone cannot impose a moratorium, and stalled Texas bills would ease the threat.
Updated Nov 9
Utilities - Independent Power Producers
The reasoning of the connection that opened this thesis. It is not updated.
Even if many Texas data centers are blocked, demand for power may still outgrow what the grid can supply. In that case Vistra and NRG could still sell all the power they make at strong prices. A moratorium also needs the Texas legislature to agree, and the existing plants and contracts that drive near-term earnings would be little affected.
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Texas elected Gina Hinojosa, who promised a moratorium on new data centers, tighter water and power rules, and an end to their tax breaks. Democrats also won governorships in states such as Ohio and Georgia, where analysts expect tighter permitting. So the people who approve new data centers changed in states where much building was planned.
Data centers use huge amounts of electricity, and they were a main reason power companies expected demand to grow. If new data centers are paused or lose their tax breaks, fewer get built, which means much of that expected demand never shows up. That leaves less power to sell than planned.
Vistra and NRG run power plants in Texas, so they earn more when demand outgrows supply. It is like a restaurant that hired extra cooks for a long reservation list, and then the city stops new bookings. That is why curbs on Texas data centers weigh on both companies.
Average move since Tenji added each name: -13.6% · S&P 500 since the thesis opened Nov 4: -1.6% · 0 of 2 names moving with the thesis
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