Texas and Cape Town Regulate Data-Center Growth, Impacting Digital Realty and Equinix
Regulatory scrutiny is intensifying for data-center operators in Texas and South Africa. In August 2026, Texas ordered an audit of projects within the ERCOT interconnection queue due to concerns over power supply constraints. Meanwhile, a proposed hyperscale project near Cape Town International Airport linked to Equinix faces opposition from local campaigners. These developments highlight growing challenges for data-center expansion driven by AI demand—namely access to energy and political approval. Digital Realty Trust (DLR) has publicly aligned with Texas Governor Greg Abbott’s standards, potentially strengthening its position as new supply slows due to regulatory delays. Equinix (EQIX), while denying active plans in South Africa at the time of reporting, faces uncertainty over a contested project near Cape Town. Both companies are increasingly reliant on securing community and grid acceptance rather than just capital investment. Despite these hurdles, existing data-center assets may gain value due to scarcity as new projects face delays or cancellations. Hedge funds have increased their exposure to both DLR and EQIX in Q2 2026, suggesting confidence despite regulatory headwinds.
Topics: AI infrastructure corporate strategy data centers power supply constraints urban development