AI data center glossary: 47 terms in plain words

Size and measurement

How big a data center is, and what the numbers do and do not mean.

Megawatt (MW)

A megawatt is a million watts, a unit of electrical power. Data center size is usually quoted in megawatts. It describes how much power a site can draw at once, not how much energy it uses over a year.

Gigawatt (GW)

A gigawatt is 1,000 megawatts. Projects of 1 GW or more are the largest class of U.S. data center campus. In Spezia's tracker they make up 87 projects and 80% of planned capacity.

Critical IT load

Critical IT load is the power available to servers, storage and networking, after cooling and other overhead are taken out. It is always smaller than the power a site draws from the grid, so two projects quoted in megawatts may not be the same size.

Gross power

Gross power is the total electricity a site draws, including cooling, power conversion and lighting. The gap between gross power and critical IT load is overhead, and it is why a project's megawatts can mean two different things.

Power usage effectiveness (PUE)

Power usage effectiveness is total facility energy divided by the energy used by IT equipment. A PUE of 1.0 would mean no overhead. Lower is better, and 1.3 means 30% extra energy for cooling and everything else.

Campus

A campus is a data center site with more than one building, usually built in phases. Announcements quote the capacity of the full campus, while only the first phase may be funded or under construction.

Hyperscaler

A hyperscaler is a very large cloud and internet company, such as Amazon, Alphabet, Meta or Microsoft, that builds or leases data centers at very large scale. Hyperscale also describes the size of the facilities themselves.

Colocation

Colocation, or colo, means renting space, power and cooling in a data center owned by someone else. The tenant brings its own servers. Companies that build data centers to lease to others are called colocation or wholesale developers.

Neocloud

A neocloud is a newer cloud company that rents out AI computing capacity, usually built around GPUs. Neoclouds often lease their data center space from developers and sign long contracts with large customers.

GPU

A GPU, or graphics processing unit, is the chip most often used to train and run AI models. Racks of GPUs draw much more power per rack than conventional servers, which is why AI data centers need more power and cooling.

Training and inference

Training is building an AI model from data. Inference is running the finished model to answer requests. Training tends to need very large clusters in one place, while inference can be spread closer to users.

Power and grid

Where the electricity comes from and how it gets to the site. Power is often the slowest part of a data center project.

Grid operator

A grid operator, also called an independent system operator or regional transmission organization, runs the high-voltage grid and power markets in a region. PJM and ERCOT are examples. A data center's power timeline often depends on its decisions.

Interconnection

Interconnection is the process of connecting a new power plant or a very large customer to the grid. It includes studies of what upgrades are needed and who pays. It is one of the slowest steps for both new plants and new data centers.

Interconnection queue

The interconnection queue is the waiting list of new power plants that have asked to connect to the grid. Very large customers such as data centers usually go through a utility's own large-load process, which can have its own wait. A place in line, and the studies still needed, are clues to when power can arrive.

Energization

Energization is the day a utility first delivers power to a site. It is also called the power date. Full power often ramps up in stages after it. It is a firmer sign of progress than an announcement or a groundbreaking.

Substation

A substation changes electricity from one voltage to another between the high-voltage grid and local lines. A large data center often needs a dedicated substation, and building one can take years.

Large load

Large load is the utility term for a very large new customer, such as a data center. Utilities sign special contracts with them. Southern Company reported contracts since 2023 covering about 16 GW of electric load from new data centers and other large customers, with about 4 GW more awaiting review.

Electric service agreement

An electric service agreement is the contract between a utility and a customer for supplying power. It sets the amount, the terms and the date. Entergy Louisiana reported one with a Meta subsidiary for a second new data center in north Louisiana.

Power purchase agreement (PPA)

A power purchase agreement is a long-term contract to buy electricity from a specific plant or supplier on agreed terms. Vistra reported 20-year agreements to supply Meta with 2,609 MW of carbon-free power and capacity.

Capacity auction

A capacity auction is a market in which a grid operator buys commitments from power plants to be available in a future year. Talen Energy's quarterly report refers to a shortfall of 6.8 GW in PJM's auction for the 2028/2029 delivery year.

Behind-the-meter power

Behind-the-meter power is generated on the customer's side of the utility meter and serves the site directly, rather than flowing through the grid. Some campuses plan their own gas plants this way instead of waiting for a grid connection. Many keep a grid connection as well.

Combined-cycle plant

A combined-cycle plant is a gas-fired power plant that uses the waste heat from its turbines to make extra electricity, which makes it more efficient than a simple turbine. Entergy Louisiana asked regulators to certify seven combined-cycle units, totaling 5,278 MW.

Peaking plant

A peaking plant, or peaker, runs only when demand is highest. Gas combustion turbines are often used this way. A developer may add on-site peakers to a campus as a backup, or as a bridge until the grid connection arrives.

Fuel cell

A fuel cell makes electricity from a fuel through a chemical reaction instead of burning it. Some data center plans use fuel cells for on-site power. Google's planned Wyoming data center is reported to rely on a 702 MW fuel-cell plant as its main source of power.

Carbon capture

Carbon capture removes carbon dioxide from a plant's exhaust so it is not released into the air. It is sometimes paired with gas power at data center campuses to lower their emissions.

Dispatchable power

Dispatchable power is power an operator can raise or lower on demand, such as gas, hydro and batteries. Solar and wind depend on the weather. Nuclear plants run steadily around the clock, which is called firm power.

Site, permits and construction

What has to happen before and during the build, and where it tends to go wrong.

Entitlements

Entitlements are the approvals a project needs before it can be built, such as zoning, site plans and environmental permits. They come from local, state and federal agencies. Global Data Center Hub puts permitting alone at 6 to 24 months of a project's timeline.

Rezoning

Rezoning changes the legal use of a piece of land, for example from farmland to industrial. A data center often needs it, and the vote is public, with hearings, which is why rezoning fights show up in the news.

Moratorium

A moratorium is a temporary ban on accepting or approving certain projects while a government writes rules. Mountain Home, Idaho adopted an emergency moratorium on data center permits, and Grant County, New Mexico enacted a one-year moratorium, both in October 2026.

Air permit

An air permit is a state or federal approval to release set amounts of pollutants. Equipment such as diesel backup generators and gas turbines needs one, so air permits are a step where a data center can be challenged.

EPC contract

An EPC contract covers engineering, procurement and construction under one company. The owner deals with a single builder responsible for the design, for buying the equipment and for building it.

Shell and core

Shell and core is the building structure and base systems before the tenant's equipment is fitted out. Cost guides often price it separately from the fit-out of servers, power and cooling.

Commissioning

Commissioning is the testing that proves a data center works as designed, from factory checks (Level 1) to a test of the whole facility under simulated failures (Level 5). Archdesk describes the five levels, and guides recommend running it alongside construction.

Long-lead equipment

Long-lead equipment is gear with long delivery times, such as large transformers and switchgear. It sets the schedule, because it has to be ordered long before the building is ready for it.

Change order

A change order is a written change to a construction contract's scope, price or schedule. StoneTurn gives an owner directive issued verbally and never turned into a formal change order as one way disputes on data center jobs begin.

Constructive acceleration

Constructive acceleration is when an owner refuses a time extension a contractor is owed, so the contractor speeds up at its own cost to hold the schedule. Stoel Rives lists it among the legal issues on data center projects.

Powered land

Powered land is a site that already has a utility commitment for power. Because power is often the slowest part of a project, such land can be worth more than the same land without the commitment.

Money and contracts

Who pays for a data center, and how the deals are written.

Capex

Capex, short for capital expenditure, is spending on long-lived assets such as buildings, chips and power equipment. A tally of Amazon, Alphabet, Meta, Microsoft and SpaceX puts their 2026 capex at $803 billion to $828 billion, covering all capital spending and not only AI, according to Hargreaves Lansdown, republishing Business Insider.

Cost per megawatt

Cost per megawatt is the build cost of a data center divided by its capacity. JLL forecasts that global data center construction costs will average about $11.3 million per MW in 2026, according to Datacentres.com. Costs vary widely with the design, the cooling and the location.

Hyperscale lease

A hyperscale lease is a long lease in which a large customer rents a whole building or campus. Its length gives lenders confidence in the debt that pays for construction.

Backstop

A backstop is a guarantee from a stronger company to cover a tenant's obligations if the tenant cannot pay. It helps a developer borrow against a lease signed by a younger tenant. In power markets the word means something else: a reliability backstop is a procurement a grid operator runs to cover a shortfall.

Project financing

Project financing is borrowing against the future income of one project, such as a lease, rather than against the whole company. Lenders look at the tenant, the lease term and whether the power is secured.

Tax abatement

A tax abatement, or incentive, cuts a project's local taxes for some years, usually in return for investment and jobs. Incentives are often debated at the same hearings as zoning.

Terms Spezia uses

How Spezia's own analyses use a few words, so that a number in one post means the same thing in another.

Planned capacity

Planned capacity is the size a developer plans at full build-out, in megawatts. It is not power drawn today. Spezia counts it for projects not yet operating that report a size, after merging records of the same project.

Project stage

Stage is how far a project has come according to its sources: announced, approved, under construction, operating, or blocked or paused. Announced is the earliest stage and the cheapest to claim, so Spezia reports capacity by stage.

Main constraint

A project's main constraint is the one thing most likely to hold it back, as read from its sources by Spezia's model: power, permits, financing, opposition, equipment, labor, or nothing. It is published only for groups of 25 projects or more.

Event

An event is one thing that happened, however many outlets reported it. Spezia groups reports of the same story and counts the event once, so a wire story does not look bigger than a local decision.

Where to go next

The terms above are the vocabulary behind the U.S. AI data center pipeline and the gigawatt power wall. To check a single project with them, use the ten questions for vetting a data center project.