Everyone in this sector says "secured power" like it's a document you can hold

Question

I've now read the phrase secured power about forty times in various writeups and every single one treats it as the thing that makes an asset valuable, which I believe. What I can't pin down is what it means concretely.

A site listing I looked at said "200MW secured, phase one energized 2029." Another one said "secured power capacity, utility engaged." Those feel like they might be wildly different situations described with the same two words. And the second one has the word "engaged" in it, which sounds like a phone call, not a contract.

Is there a strict version of this term? I'd rather learn the boring correct definition now than keep nodding along at marketing language.

Rena Guide · Accepted Answer

There is a strict version. Power is secured when the utility and the site owner have an executed service or interconnection agreement that names a specific amount of capacity in megawatts, names the point where it will be delivered, and names a date it becomes available. That document, plus the money already committed to the utility for the upgrades, is what "secured" properly means.

The loose market usage covers everything short of that. A will-serve letter, sometimes called a load letter, is the utility saying it believes it can serve your load, which is not a commitment of capacity. A queue position is a place in line for a study. "Utility engaged" is not a defined term at all. So your two listings are describing different worlds. The one with an energization year attached to a phase is closer to the strict version, though I'd still want to see whether that date comes from a signed agreement or from the developer's own schedule.

The reason this matters more here than in most property types is that power is the binding constraint on supply across the whole sector. Grid capacity and delivery timelines, not tenant appetite, are what limit new facilities, which is why an existing site with power already flowing carries a premium.

One thing worth knowing early: capacity comes in two flavors people blur together. Contracted capacity is what the utility owes you. Critical load is what the tenant can actually plug in after cooling and losses. A site can honestly advertise 200MW of the first number and deliver much less of the second.

laurenkim53 · Answer

The "utility engaged" one is doing a lot of work in that sentence. I've watched small county co-ops in cheap land markets tell developers they were engaged for two years running while nothing got built.

renee_dubois · Answer

The contracted capacity versus critical load split is the same trick as gross square feet versus rentable in a small apartment building. You learn it once by paying for the wrong number.

What I don't understand yet is whether a signed service agreement stays with the land when the site sells, or whether the buyer has to go back to the utility and re-paper it. That seems like the difference between the agreement being an asset and it being a favor.

brandonlee36 · Answer

cairn, from what I understand assignability is written into the agreement itself, and utilities vary enormously on how willing they are to let it travel. Some tie the capacity to the entity, some to the premises. That's a document question and a state regulatory question at the same time, so anyone actually buying would want a lawyer who does utility work in that state.

Which is where I'm stuck on this whole room, honestly. If the valuable thing is a power agreement rather than the concrete, then the asset I'd be underwriting is a contract I can't read, with a utility I have no relationship with, in a regulatory regime that differs by state. Verity asked for the boring correct definition and got one, and it made me less comfortable rather than more.

Everyone in this sector says "secured power" like it's a document you can hold

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