Morning Analysis — 2026-10-12

Dek

More data centers are catching fire and losing power, and every incident gives opponents a fresh reason to say no.

The Big Shift

New data from the Energy Incident Register shows that data-center fires and power failures have doubled since 2024 (¹). Some of that rise just reflects more buildings. But it lands in the middle of a growing local backlash, so it is likely to become a political talking point, not just an engineering note. It points two ways. Demand for better power and cooling gear goes up (good for Vertiv and Eaton). And the case for slowing approvals gets stronger (bad for how fast all that gear gets installed). Today, watch whether the figure turns up in moratorium debates or utility filings.

Analysis

Power: getting permission is now the hard part, and it keeps coming back. Our running theme across several days is that the scarce thing is approval, not electrons. Today adds to it. Orcadian Energy has ended its deal to power a data center from a North Sea gas field (²). Google's deal to uprate 11 nuclear reactors (³) still needs regulators to sign off. An uprate means getting more output from reactors that already exist, and each one needs an amendment to an existing license. So even "already approved" power has to go back through review. In PJM, the biggest US grid operator, the proposed backstop auction (an emergency way to buy power capacity when the regular market falls short) is drawing criticism from NYU policy researchers (⁴). What it implies: the companies with the most pricing power are the ones that already hold approvals and working sites. Owners of existing plants, like VST and TLN, gain value compared with anyone still planning to build from scratch.

Politics: the backlash has reached Washington. The fight against data centers is now hitting congressional races in Michigan (⁵). A major conservation group, The Wilderness Society, backs a moratorium (⁶), and the issue is colliding with permitting reform in Congress (⁷). The industry's answer so far is to drop NDAs, the secrecy agreements that keep local officials from naming the company behind a project (⁸). That treats it as a messaging problem when it is really about electricity bills and land use. Meanwhile a five-building campus proposed in Metter, Georgia still has no named developer (⁹), which is exactly the kind of secrecy opponents attack. What it implies: the $260B in cancellations this year (¹⁰) is not just companies changing their minds about demand. Some projects can't get built. For ETN and VRT, a delay mostly pushes orders later rather than wiping them out. That only holds while big tech companies keep their total spending plans intact.

Building is still happening where approvals exist. Serverfarm topped out (finished the main structure of) a 108MW building in Arkansas (¹¹). Construction is moving toward friendlier states and away from the contested ones. This is the main reason we hold ETN rather than cut it. Quanta Services, which builds power lines and grid hookups, is being pitched as a direct AI-infrastructure bet (¹²). Treat that as opinion, not news. On the people side, Anthropic hired Google's Jacqueline Dory Prescott to run its data-center portfolio (¹³). AI labs are building their own teams to secure sites and power instead of relying only on cloud providers. That adds more buyers competing for the same scarce approved sites.

Materials: copper is being treated as a security asset. Copper hit a two-week high on hopes of easier interest rates and a fatal mine avalanche in Chile (¹⁴). Reuters commentary notes the US has built a strategic copper reserve, a government stockpile, and asks whether it can keep it (¹⁵). What it implies: governments now treat copper like oil, something to stockpile. That puts a soft floor under demand for FCX and SCCO. But a one-day jump on a mine accident is noise until we see how long the Chile outage lasts. Today, watch whether copper holds the gain after the rate-news effect fades.

Geopolitics and compute: data centers as targets, and models that need less hardware. Ukraine's drones have now hit a Yandex data center in Russia three times (¹⁶). In wartime, compute counts as national infrastructure, and that adds a security cost to building near conflict zones, including Gulf projects like the UAE data center being sold to retail investors (¹⁷). That pitch is a late-cycle warning sign in its own right. On compute, Reddit posts say a 32GB Mac can now run strong models locally (¹⁸). Open-source tools to measure exactly where GPU time goes are also spreading (¹⁹). These are social-media leads only, not confirmed news. But getting more work out of the same chip is the one trend that could break the "own the bottleneck" thesis, so we track it.

What Would Prove Us Wrong

• Big tech cuts its spending plans 15% or more. If the cancellations reach the top-line budgets of the largest tech companies, the "delay, not destruction" view fails. That would hit ETN, VRT and Quanta first. Watch Q3 earnings calls over the next three weeks for any company cutting its 2027 capex guidance.
• Uprates get approved fast and with no fight. If regulators sign off on Google's uprates within months and states pass permitting reform despite the backlash, approval stops being the bottleneck. That weakens the scarcity premium for owners of existing plants like VST and TLN. Watch NRC review timelines and the permitting bill's progress before the midterms.
• Copper gives back the gain within a week, or the US starts selling its reserve. That would mean today's move was about interest rates, not a real supply shortage. It would hit the copper-deficit pillar behind FCX, SCCO and Own-the-Bottleneck. Concrete triggers: the Chile mine restarts within days, or Washington signals it will release reserve copper.

Thesis Impact

• FCX | Conviction: HOLD | Surprise: LOW | Copper rose to a two-week high on hopes for easier interest rates and a fatal mine avalanche in Chile that could cut supply. This CONFIRMS the copper-deficit pillar, but it is a one-day price move, and FCX's main risk (output at Grasberg, its giant Indonesian mine) is untouched. Watch whether the Chile outage lasts and copper holds its gains. | ¹⁴
• SCCO | Conviction: HOLD | Surprise: LOW | The same copper rally. A supply hit at another miner's site in Chile helps price without exposing SCCO's own operations in Peru and Mexico. CONFIRMS the thesis. It is a small move against an already-high prior (0.82), so no change. | ¹⁴
• Own-the-Bottleneck | Conviction: HOLD | Surprise: LOW | Reuters commentary says the US has built a strategic copper reserve, and asks whether it can keep it. Copper is being treated as a security asset, which CONFIRMS pillar 3 (supply security = pricing power). The open question about keeping the reserve is a mild risk to watch. Two Reddit posts (graphsignal-top, a GPU profiler, and whatmodel.sh) say a 32GB Mac can now run strong models locally. That hints at efficiency gains, the thesis-breaking trigger, but these are social-media leads only (T3), so no move without wire or established-outlet confirmation. | ¹⁵
• VRT | Conviction: HOLD | Surprise: MED | New data from the Energy Incident Register shows data-center fires and power failures have doubled since 2024. That CONFIRMS the case for better power and cooling equipment as rack density rises. It also raises a question about how safe the gear already installed is. It does not touch orders or capex, so the prior (0.36) stays. Watch for any incidents tied to specific vendors. | ¹
• ETN | Conviction: HOLD | Surprise: LOW | The disconfirming thread is still running: $260B in data-center cancellations this year, plus growing moratorium and permitting backlash ahead of the midterms. This CONTRADICTS the capex-growth story at the edges, but we have carried it for 3–6 days and it is already in the prior. Today it is offset by Serverfarm topping out its first 108MW building in Arkansas. The trigger to watch is whether cancellations turn into an industry-wide capex cut of 15–30%. | ¹⁰

Inflection Radar

[emergent] Gov Compute Nexus | US DOE funding 12 projects under Genesis Mission, with major cloud providers (AWS, Crusoe) signing up to support compute capacity, signaling a federal push for distributed, high-power AI/energy infrastructure. | Touches: NEW | ²⁰

[emergent] Humanoid Motion Planning | Research advancing graph-based heuristics for minimum constraint removal, addressing motion planning in highly cluttered human environments rather than treating them as fixed obstacles. | Touches: NEW | ²¹

[emergent] Physical Learning Architectures | New theoretical work proposing that all-transistor physical learning transformers can be trained to perform in-context learning, challenging the current reliance on standard MLP structures for generalization. | Touches: NEW | ²²

[emergent] Utility Geothermal Scale | Fervo Energy successfully selling power from its Cape Station project in Utah, marking the first utility-scale deployment of next-generation enhanced geothermal technology to the grid. | Touches: NEW | ²³

QA & Caveats

• Own-the-Bottleneck relies on T3 social media leads for a potential trigger; requires wire confirmation.
• The call regarding ETN is already priced in and correctly focuses on the larger industry capex risk rather than short-term contradiction.

Sources

1. Number of data center fires and power failures has doubled since 2024 datacenterdynamics.com
2. Orcadian Energy terminates data center agreement for North Sea gas field - report datacenterdynamics.com
3. Google Inks a Deal to Uprate 11 Nuclear Reactors heatmap.news
4. rtoinsider.com rtoinsider.com
5. Data Center Outrage Catches Up to Renewables Outrage in Michigan heatmap.news
6. Why the Wilderness Society Backs a Data Center Moratorium heatmap.news
7. The Data Center Backlash Is Coming for Permitting Reform heatmap.news
8. Can the AI industry persuade data center opponents by getting rid of NDAs? techcrunch.com
9. Five-building data center campus proposed in Metter, Georgia datacenterdynamics.com
10. Exclusive: Data Center Cancellations Top $260 Billion in 2026 heatmap.news
11. Serverfarm tops out first data center at Arkansas campus datacenterdynamics.com
12. Quanta Services: Big Bet On AI Infrastructure And Data Centers seekingalpha.com
13. Google's Jacqueline Dory Prescott named data center portfolio lead at Anthropic datacenterdynamics.com
14. Copper Gains on Interest-Rate Outlook and Chile Mine Avalanche bloomberg.com
15. COMMENTARY: US has built a strategic copper reserve. Now can it keep it? - Reuters news.google.com
16. Third strike on Yandex data center in Russia datacenterdynamics.com
17. ‘The prospectus looks impressive’: My financial adviser wants me to invest $350,000 in a UAE data center. Is this risky? marketwatch.com
18. I made an open-source AI leaderboard that shows the best models your machine can run reddit.com
19. graphsignal-top: a `top` for inference GPUs in the open-source Graphsignal profiler, kernels ranked by time, live, with reddit.com
20. US DOE funds 12 projects under Genesis Mission; cloud providers sign up to support effort datacenterdynamics.com
21. Graph-Based Heuristics for Minimum Constraint Removal in Cluttered Robot Motion Planning arxiv.org
22. An all-transistor physical-learning transformer can be trained to perform in-context learning arxiv.org
23. First Utility-Scale Enhanced Geothermal Plant Goes Live spectrum.ieee.org