The Benefits and Trade-Offs of Co-Locating Facilities with Energy Infrastructure

As electricity demand continues to grow across industries, access to reliable power is becoming a critical consideration in facility planning. Data centers, semiconductor fabs, battery manufacturers, and other energy-intensive operations are consuming more electricity than ever before, while utilities in many regions face transmission constraints and lengthy interconnection queues. As a result, organizations are rethinking how and where they build new facilities.

One strategy receiving increased attention is co-locating facilities with existing energy infrastructure. Instead of selecting a site first and waiting for new grid connections to be developed, companies may choose locations near power plants, renewable energy projects, substations, or transmission infrastructure that can already support large electrical loads. This approach has the potential to accelerate project timelines, improve access to electricity, and support long-term operational goals. However, it also presents challenges that organizations should carefully evaluate before making investment decisions.

What Is Co-Location with Energy Infrastructure?

Co-location refers to developing a facility close to existing energy assets so that it can take advantage of available electrical infrastructure. While the concept has gained visibility through renewable energy projects such as wind and solar farms, it extends far beyond renewable generation.

Facilities may be located near:

• Utility substations with available capacity
• Existing transmission corridors
• Renewable energy generation projects
• Conventional power plants
• Industrial parks with established electrical infrastructure

This strategy is particularly relevant for industries with high and continuous electricity demand. Data centers often require tens or even hundreds of megawatts of power to support computing workloads. Semiconductor manufacturing relies on uninterrupted electricity for precision production processes, while battery manufacturing and other advanced industrial operations also require significant electrical capacity. In these cases, the availability of energy infrastructure can become as important as traditional site selection factors such as labor availability, transportation access, and land costs.

As electrification continues across manufacturing, transportation, and commercial buildings, more organizations are recognizing that energy infrastructure should be evaluated during the earliest stages of project planning rather than after a site has already been selected.

The Benefits of Building Near Existing Energy Infrastructure

Co-locating with energy infrastructure can provide several operational and financial advantages, particularly for facilities with substantial electricity requirements.

One of the most significant benefits is faster project development. Constructing new transmission lines or upgrading grid infrastructure can take several years because of permitting requirements, engineering work, and construction schedules. By selecting a location where electrical capacity already exists, organizations may reduce the time required to bring a new facility online.

Another advantage is the potential to reduce infrastructure investment. Existing substations and transmission assets may require fewer upgrades than entirely new connections, helping organizations manage capital expenditures while simplifying project execution.

Facilities located near renewable energy projects may also have greater opportunities to source renewable electricity through power purchase agreements or other procurement strategies. Although proximity alone does not guarantee access to renewable power, it can create additional options for organizations seeking to diversify their energy portfolios or support corporate sustainability objectives.

Operational resilience can also improve when facilities are planned with energy infrastructure in mind. Reliable access to electricity supports production continuity, reduces the risk of unexpected power constraints, and provides greater confidence when planning future expansion. For businesses where downtime can result in significant financial losses, the value of dependable electrical infrastructure extends well beyond utility costs.

The Trade-Offs Organizations Should Consider

Despite its advantages, co-location is not the ideal solution for every project. Site selection remains a complex process that balances numerous operational, financial, and regulatory factors.

One challenge is reduced location flexibility. The most suitable energy infrastructure may not be located near customers, suppliers, transportation hubs, or available workforce. Organizations may need to weigh energy availability against broader business priorities.

Facilities located near renewable generation also need to recognize that wind and solar output varies with weather conditions. While grid connections and energy markets help balance supply and demand, organizations should understand how local generation characteristics align with their operational requirements.

Future expansion is another consideration. Existing infrastructure may support a facility’s initial electricity demand but offer limited capacity for future growth. As facilities expand production or install additional equipment, they may still require grid upgrades or new interconnection agreements.

Regulatory requirements also differ by region. Utility policies, permitting processes, and electricity market structures can influence how quickly projects move forward and whether existing infrastructure can be shared among multiple users. Organizations should work closely with utilities and local stakeholders to understand these requirements before committing to a site.

Ultimately, co-location should be viewed as one component of a comprehensive site selection strategy rather than a universal solution.

Energy Infrastructure Is Only the Starting Point

Choosing a location with strong energy infrastructure provides an important foundation, but long-term success depends on how efficiently energy is managed after operations begin.

Even facilities with abundant electrical capacity can experience unnecessary energy waste through inefficient HVAC systems, equipment operating outside production hours, excessive peak demand, or changing operational schedules. Over time, these factors can increase operating costs and reduce overall facility performance.

Continuous energy monitoring helps organizations understand how electricity, natural gas, and water are consumed across their operations. Rather than relying solely on monthly utility bills, facility teams can identify abnormal consumption patterns, compare performance across multiple sites, monitor energy intensity, and evaluate opportunities for operational improvements.

This visibility also supports better planning as facilities evolve. Expanding production lines, introducing new equipment, or changing operating schedules all affect energy consumption. Access to accurate, real-time data allows organizations to make informed decisions that improve efficiency while supporting future growth.

As demand for electricity continues to rise, energy infrastructure will play an increasingly important role in determining where large facilities are built. Co-locating with existing infrastructure can shorten development timelines, improve access to electrical capacity, and strengthen operational resilience. However, every project involves trade-offs related to location, future expansion, regulatory requirements, and business objectives.

Selecting the right site is only the first step. Long-term facility performance depends on how effectively energy is managed throughout daily operations. Organizations that combine thoughtful site selection with continuous energy management will be better positioned to control operating costs, improve efficiency, and maximize the value of their energy infrastructure investments.