A typical data center financing package is strong on the things lenders know well: tenant credit, lease terms, construction contracts, sponsor track record. It is often thinner on three physical questions that now decide whether the asset is energised on time. When they go wrong, the loan is exposed long before anyone can call a default.
RISK 1: THE GRID CONNECTION IS NOT WHAT IT SEEMS
A connection "offer" is not a connection. In France, RTE had reserved close to 18 GW of capacity for around 80 data center projects by May 2026, and it acknowledges that part of that will never materialise. Capacity may be conditional on reinforcements elsewhere on the network, and the works schedule may slip independently of the project. Lenders should know exactly what has been signed, what capacity is firm, and which milestones the developer must meet to keep it.
RISK 2: THE EQUIPMENT ARRIVES AFTER THE GRID
A site can be connected and still not run if its own transformers are not delivered. Major manufacturers quote 48 to 60 months or more, and grid operators are locking in factory capacity through long-term framework agreements. The question is simple: is there a confirmed delivery slot before the energisation date, and what is the fallback if there is not?
RISK 3: THE PERMIT IS NOT FINAL
In France, a building permit is generally open to third-party challenge for two months after proper posting, and an urgent suspension order can stop a project within weeks, as happened at Alixan in July 2026. Environmental and classified-installation authorisations carry their own routes of challenge. A permit that is "granted" is not the same as a permit that is final.
THE RED FLAGS
No confirmed transformer delivery slot, or a single supplier
Equipment delivery scheduled after the grid energisation date
Authorisations still open to challenge, or posting not certified
Organised local opposition or exposure to an upcoming local election
CONDITIONS PRECEDENT THAT PROTECT LENDERS
Signed connection agreement with a firm capacity and date. Confirmed equipment delivery slot compatible with that date. Authorisations final and clear of challenge, or a documented risk assessment where they are not. Milestone-based drawdowns tied to grid works and equipment delivery. These are not unusual requests; they simply bring physical milestones into the credit structure.
We cover all three risks in our due diligence for lenders and funds. For the wider picture, read Compute ordered is not compute installed.
FREQUENTLY ASKED QUESTIONS
What physical risks should lenders check on an AI data center?
The grid connection (what is signed and how firm the capacity and date are), the high-voltage equipment supply (confirmed delivery slots) and the permits (whether they are final and clear of challenge).
Which conditions precedent protect a data center lender?
A signed connection agreement with firm capacity and date, a confirmed equipment delivery slot compatible with it, final authorisations, and drawdowns tied to physical milestones.
Is a granted building permit enough for financial close in France?
Not on its own. It remains open to third-party challenge for a period after posting, and other authorisations may still be challengeable.