LIVE MARKETS-Blue wave could redraw US data-center footprint, UBS says

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BLUE WAVE COULD REDRAW US DATA-CENTER FOOTPRINT, UBS SAYS

UBS expects data centers to be built despite local opposition, but says state and local action could change where and how fast they're constructed.

"The US midterms have potential implications for the speed and location of the data center build-out, and with it the timeline for monetizing investment commitments," UBS Global Research said in a note on Thursday.

The new Congress could make cost allocation rules tougher, UBS said, thereby raising the bar for new constructions.

Data center build-out has faced public scrutiny due to its high energy and water demand and became a part of several campaigns on the Democrat side.

The bigger risk lies with state and local governments, where the new governors, legislatures and local officials have more direct control over the build-out, UBS said.

State utility commissions can make data centers pay more for power and grid upgrades or push them back in the connection queue, the brokerage said.

Scaling back state tax breaks on data center equipment could also shift where projects get built, UBS said.

"Taken together, state and local action is more likely to change where and how fast capacity is built than whether it is built at all," the brokerage said.

(Kanchana Chakravarty)

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