U.S. banks are factoring local protests into their risk assessments for data center projects, influencing financing decisions across the sector.
U.S. financial institutions are now incorporating local community protests into their credit risk evaluations for data center projects, as reported by Reuters. Executives from major banks indicate that lenders are increasingly considering community objections when deciding on financing, favoring regions that demonstrate support for such developments.
Karen Fan, Bank of America’s head of infrastructure and sustainable finance, highlighted two critical factors in project assessments: readiness, which includes necessary permits and community backing, and credit quality. She noted, “Readiness means having all necessary permits and approvals, as well as support from the local residents.”
Financing discussions typically begin a year before construction starts, and any project failures can lead to wasted time and increased diligence for banks. Kevin Curtin from JPMorgan explained that securing financing is a complex process that requires ongoing compliance checks throughout the construction phase.
Protests Impacting Projects
Data from Data Center Watch reveals that in early 2026, over 75 data center projects valued at approximately $130 billion faced local opposition. Goldman Sachs anticipates that major tech companies will invest over $6 trillion in AI by 2030, outpacing prior internet infrastructure investments.
Notable companies like Microsoft, Meta, and Amazon have already committed around $1.09 trillion in future leasing for AI-oriented data centers. Currently, banks are involved in several controversial projects, including a $12.3 billion bond issuance for BlackRock’s data center partnership with Meta in El Paso, Texas.
While JPMorgan, Morgan Stanley, and BlackRock refrained from commenting, Meta has stated its commitment to engaging with local communities. Meanwhile, QTS’s Prince William Digital Gateway project in Virginia was canceled amid significant local resistance without bank financing.
Morgan Stanley and KKR Capital Markets are leading a $9.7 billion credit line for CyrusOne, which is facing local opposition for a $500 million project in Illinois. CyrusOne confirmed financing is secured but withheld details regarding permit conditions.
Bank of America is also involved as the structuring agent for a $16 billion campus project in Michigan for Oracle, which has encountered community pushback but is still moving forward.
Industry Responses to Local Concerns
To address these local concerns, an anonymous foreign bank representative mentioned that investors are adjusting pricing to account for potential project cancellations. Operators are proactively seeking to minimize conflicts by considering on-site power generation, as seen with Amazon’s plans for a data center campus in Texas featuring a 7.65 GW gas power plant.
Other companies like Crusoe and Aalo are exploring AI factories powered by small nuclear reactors. However, regulatory responses are tightening, with New York implementing a moratorium on large data center constructions. Residents express concerns over noise, visual impacts, rising electricity costs, and increased water usage, with similar issues emerging in the UK.
Ray Dalio, founder of Bridgewater Associates, recently compared the current enthusiasm for AI to past financial crises, suggesting a cautious outlook for the future of the industry.
