On-Site Power and the Transition Away from Utility Dependency

Setting the Scene

The behind-the-meter (BTM) market has, until recently, been discussed primarily in the context of residential solar and small commercial installations. What is now emerging is something of a different order — a large-scale industrial movement in which data centres, manufacturing campuses, and other high-consumption facilities are actively decoupling from the utility grid as a matter of operational necessity rather than environmental preference.

The proximate cause is grid congestion. In major U.S. and European markets, utility interconnection queues now extend between four and eight years. For a data centre developer operating in a capital environment that demands rapid deployment, that timeline is simply not compatible with the pace of build-out required by AI infrastructure investment. On-site generation — behind the meter, independent of the grid — has become the pragmatic response.

The scale of the transition is now measurable. BloombergNEF reports over 23 gigawatts of data centre capacity under construction globally as of early 2026, with a significant proportion actively exploring on-site power generation to avoid interconnection delays.

The Shift in Procurement Structure

Alongside the physical transition to on-site generation, a parallel shift is occurring in how energy infrastructure is being financed and contracted. The power purchase agreement — long the dominant instrument through which large energy consumers engaged with clean energy — is being supplemented, and in the industrial segment increasingly displaced, by direct equipment ownership.

In one notable recent transaction, a major technology operator elected to purchase fuel cell generation equipment as a capital expenditure, taking direct ownership of the generation asset rather than contracting for power as a service. In EMEA, projects structured around private-wire BTM transmission are reporting electricity cost reductions of up to 40% against standard retail grid tariffs.

A Structural Question for Power Generation Manufacturers

The established model has operated as follows: a developer or independent energy company purchases generation equipment, builds the asset, and contracts to supply power to the end customer. The developer occupies the customer-facing position in the value chain — holding the power supply contract, capturing the recurring revenue, and maintaining the long-term customer relationship. The equipment manufacturer sits upstream, executing a transactional hardware sale, and structurally excluded from the economics of the power supply arrangement that their equipment makes possible.

The commercial model that captures this opportunity is not simply the sale of more hardware. It is the bundling of equipment with a defined, guaranteed power output — a solution in which the customer is contracting for power, and the manufacturer is the provider of it.

Financing the Transition

If manufacturers are to move from hardware transactions into power supply solutions — holding the customer contract, owning or financing the generation asset, and recovering value over the duration of a supply arrangement — how is that model funded? Specialist capital providers, including Monard, are actively designing financing solutions that recognise the BTM industrial trend and are built to make the manufacturer-as-power-provider model commercially viable.

The Technology Landscape

Regional Context

North America currently leads the industrial BTM market with a 38% share, driven by the concentration of AI data centre construction in Northern Virginia and the Arizona–New Mexico corridor. Asia-Pacific is the fastest-growing region, with an expected CAGR of 14.6% through 2034.