Applied Digital demands billions in power guarantees from Oracle, Meta
What's the deal? Applied Digital has asked its largest tenants, including Oracle and Meta, for multi-billion-dollar parent guarantees before signing new data-centre leases, Bloomberg reported. The backstops lock in power access before paperwork closes, and the data-centre operator has imposed them since at least last year.
Why now? Building AI capacity increasingly means building the grid to feed it. "With most new sites, you have to build the power and transmission lines yourself," Applied Digital president Jason Zhang told Bloomberg.
What's the endgame? Applied Digital wants a tenant mix of 70% investment-grade to 30% non-investment-grade, and has capped capacity for lower-rated firms like CoreWeave. It is also seeking case-by-case guarantees from Nvidia and Advanced Micro Devices to backstop utility interconnections.
The move reflects a wider shift in who pays for the grid. Utilities once funded new wires and plants, then recouped the cost through rate hikes; now they want the heaviest users to guarantee the bill if a project unravels. Independent developers, unable to carry those liabilities, pass the demand on to tenants.
What could go wrong? The obligations are large and already piling up. Oracle is carrying a $7 billion letter-of-credit obligation in Wisconsin after a utility raised its credit threshold, and Grid StrategiesDealroom has a profile for this one. Try Dealroom → estimates data centres could pay $35 billion more in transmission charges over the next decade.
The policy backdrop: More than half of US states have moved or considered making data centres carry more of the grid's costs. Bloomberg ties November's Democratic sweep to voter anger over rising electricity bills, with Oracle and Amazon now being called on to backstop infrastructure. "The 2026 midterm elections demonstrate that electricity has become a force in our new politics," said PowerLines founder Charles Hua.
The signal: Power access, and the credit support needed to secure it, is becoming the gate on who can lease AI capacity and how fast it gets built. The leverage has inverted: colocation builders now underwrite power by leaning on hyperscaler balance sheets, pushing grid liabilities onto their biggest customers.
Read more: Bloomberg
Image credit: "High voltage transmission lines" by SounderBruce, licensed under CC BY-SA 2.0 (https://creativecommons.org/licenses/by-sa/2.0/), via https://www.flickr.com/photos/70175722@N04/18778026578