⚠ Queues Clear, and Reform Is Explicitly the GoalModerate threat
Vistra (VST) — threat to the moat
A data centre that cannot get grid power builds its own, and one that has built its own does not come back.
The interconnection backlog exists because a study process designed for a slow-growth industry met a demand surge. It is not a law of nature, it is a bottleneck, and every market operator and regulator in the country is working on it.
When it clears, or even substantially improves, the advantage of already being connected diminishes. What is left is a fleet of conventional plants competing against newer, more efficient conventional plants owned by well-capitalised rivals — the ordinary condition of merchant generation, which produced the return-on-capital record on the parent page.
The response most likely to arrive first is not another merchant generator. It is behind-the-meter generation built by the load itself. Vistra's own risk disclosure names it: large-scale cryptocurrency mining and AI data centres in markets including ERCOT are increasingly "behind-the-meter"1, and emerging technologies including distributed generation, storage, fuel cells, small modular reactors and linear generators could affect prices and make parts of the system obsolete2.
That is the scenario the queue currently prevents and the one it will stop preventing. A data centre developer who cannot get grid power builds its own, and a developer who has built its own does not come back.
The signal is the interconnection reform dockets in ERCOT and PJM, and the proportion of announced data centre projects that are grid-connected rather than self-supplied.
- ReportedVistra's own risk disclosure names it: large-scale cryptocurrency mining and AI data centres in markets including ERCOT are increasingly "behind-the-meter", and emerging technologies including distributed generation, storage,...Vistra Corp. Form 10-K, FY2025, risk factors and business outlook — "If electricity demand does not grow at the rate expected, or if we are unable to execute on large load offtake opportunities, including under long-term power purchase or offtake agreements that we have entered into, our financial performance, growth opportunities, and stock price could be adversely impacted"; "Multiple demand drivers such as emergence of large load data centers, including in response to transformations in technologies like artificial intelligence (AI) and electrification of oil field operations (specifically in the Permian Basin of west Texas), have accelerated, and are expected to continue to accelerate, load growth in the geographic regions we serve"; "large-scale cryptocurrency mining, AI data centers, and increased industrial electrification are becoming increasingly prevalent in certain markets, including ERCOT, and many of these facilities are behind-the-meter"; emerging technologies including "distributed renewable energy technologies, energy efficiency, electric vehicles, distributed generation, energy storage devices, fuel cells, nuclear small modular reactors, and linear generators could have a significant impact on the energy industry" and "could make portions of our electric system power supply and transmission and/or distribution facilities obsolete prior to the end of their useful lives"; "we hedge the expected needs of our wholesale and retail customers, but unexpected changes due to weather, natural disasters, consumer behavior, market constraints or other factors could cause us to purchase electricity to meet unexpected demand in periods of high wholesale market prices or resell excess electricity into the wholesale market in periods of low prices"; long-term offtake agreements "enhance the stability and predictability of our cash flows" and "underwrite higher base profitability in the future" — FY2025 · publ. February 2026 · source ↗
- ReportedVistra's own risk disclosure names it: large-scale cryptocurrency mining and AI data centres in markets including ERCOT are increasingly "behind-the-meter", and emerging technologies including distributed generation, storage,...Vistra Corp. Form 10-K, FY2025, risk factors and business outlook — "If electricity demand does not grow at the rate expected, or if we are unable to execute on large load offtake opportunities, including under long-term power purchase or offtake agreements that we have entered into, our financial performance, growth opportunities, and stock price could be adversely impacted"; "Multiple demand drivers such as emergence of large load data centers, including in response to transformations in technologies like artificial intelligence (AI) and electrification of oil field operations (specifically in the Permian Basin of west Texas), have accelerated, and are expected to continue to accelerate, load growth in the geographic regions we serve"; "large-scale cryptocurrency mining, AI data centers, and increased industrial electrification are becoming increasingly prevalent in certain markets, including ERCOT, and many of these facilities are behind-the-meter"; emerging technologies including "distributed renewable energy technologies, energy efficiency, electric vehicles, distributed generation, energy storage devices, fuel cells, nuclear small modular reactors, and linear generators could have a significant impact on the energy industry" and "could make portions of our electric system power supply and transmission and/or distribution facilities obsolete prior to the end of their useful lives"; "we hedge the expected needs of our wholesale and retail customers, but unexpected changes due to weather, natural disasters, consumer behavior, market constraints or other factors could cause us to purchase electricity to meet unexpected demand in periods of high wholesale market prices or resell excess electricity into the wholesale market in periods of low prices"; long-term offtake agreements "enhance the stability and predictability of our cash flows" and "underwrite higher base profitability in the future" — FY2025 · publ. February 2026 · source ↗