Data centres: financial risk is decided before the term sheet

In Lombardy, the bankability of a data centre does not depend only on land, tenant and energy cost. It depends on the sequence in which grid connection, permits and local obligations are made bankable.

Regional Resolution XII/6814 of 28 September, published on 1 October, governs inter-municipal consultation for projects requesting a grid connection above 10 MW. Above 50 MW, or in other cases of regional competence, the conference is convened by the Region. The procedure sits within the main permitting process, without formally extending it, and sets criteria for territorial, environmental and infrastructure measures.

On 15 October Reuters reported that the Region is considering further amendments to the June law, with greater attention to land, water and energy use. These are proposed changes, not newly approved rules.

For capital, the distinction is concrete. A project with a connection request filed is not the same as one with capacity actually allocated. An advanced zoning plan is not the same as a definitively quantified permitting cost. And a commercial agreement with an end user does not neutralise the risk of a delayed delivery date.

In the financial model, these elements affect three variables: capital tied up before financial close, contingency for works and compensation, and capitalised interest in case of delay. They can therefore change sustainable LTC, required equity and the sponsor’s effective return, even without changing the asset’s stabilised value.

The answer is not to apply a higher spread to every project. It is to structure verifiable milestones, tranches aligned with permits and a liquidity buffer that survives a delay scenario.

In data centre lending, the first due diligence on capital is often a due diligence on the execution sequence.