When contracted data-center megawatts are not yet billable
This article works through a 40-megawatt development whose customer contract remains intact while utility delivery and integrated commissioning reduce Year 1 billable capacity by 140 MW-months. It shows how the phase schedule removes $15.3 million of Year 1 NOI while infrastructure changes add $29 million of required equity.
A megawatt can be contracted, committed by the utility, energized, commissioned or billable. Those statuses can refer to the same future capacity on different dates. Applying the commercial rate to the first 40 MW found in the deal folder produces a revenue schedule without establishing when the customer is obligated to pay it.
That is the issue here. The contract contains a 15 MW first phase and a 25 MW second phase. The initial model starts Phase 1 on January 1 and Phase 2 on April 1. The current utility and commissioning files start 15 MW on March 1, another 10 MW on June 1 and the final 15 MW on October 1.
The following case is illustrative rather than client data. The recurring service charge is $125 per kW per month, excluding separately passed-through power. The original project cost is $420 million. The construction loan commitment is $273 million, or 65% of the original cost, and does not automatically increase for later infrastructure changes.
The development case before the commissioning schedule
The contract schedule produces 405 billable MW-months in Year 1: 15 MW for twelve months and the incremental 25 MW for nine months. At $125 per kW per month, recurring service revenue is $50.625 million. Facility operating expense excluding the power pass-through is $12.4 million, producing $38.225 million of Year 1 NOI.
The current case replaces the target dates with the utility-capacity ramp, equipment delivery, permanent-power sequence, integrated-system tests and phase-commencement conditions. Contracted capacity remains 40 MW. Billable capacity falls to 265 MW-months.
Infrastructure cost also increases. Utility and interconnection work, electrical distribution, UPS, generation, cooling, controls and commissioning add $29 million. The fixed loan commitment leaves that increase to equity.
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| Underwriting line | Contract schedule | Commissioning schedule | Movement |
|---|---|---|---|
| Contracted IT load | 40 MW | 40 MW | — |
| Year 1 billable capacity | 405 MW-months | 265 MW-months | −140 MW-months |
| Year 1 recurring service revenue | $50.625M | $33.125M | −$17.500M |
| Year 1 NOI | $38.225M | $22.925M | −$15.300M |
| Total funded project cost | $420.000M | $449.000M | +$29.000M |
| Required equity | $147.000M | $176.000M | +$29.000M |
Resolving capacity status before applying the contract rate
The 40 MW customer commitment establishes the eventual service obligation. The utility agreement contains a separate committed-capacity ramp. The facility can energize equipment for testing before the applicable power modules pass the integrated test required by the customer agreement.
Early access and energization therefore remain separate from recurring charges. The customer may install equipment and pay for consumed test power before the phase service charge begins. The billable date follows the phase commencement certificate after the delivery conditions are met.
The capacity file retains each status by module. Phase 2 has 10 MW commissioned on June 1 and 15 MW on October 1. It is not treated as a single 25 MW block on either the utility delivery date or the date of the first successful Phase 2 test.
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| Capacity status | Phase 1 | Phase 2 | Underwriting treatment |
|---|---|---|---|
| Contracted IT load | 15 MW | 25 MW | Customer commitment; not yet service revenue |
| Utility committed capacity | 15 MW | 25 MW ramp | Utility obligation subject to facility and interconnection milestones |
| Energized critical capacity | 15 MW | 10 MW, then 15 MW | Available for testing; not automatically billable |
| Commissioned capacity | 15 MW on March 1 | 10 MW June 1; 15 MW October 1 | Capacity that has passed the applicable integrated test |
| Billable capacity | 15 MW on March 1 | 10 MW June 1; 15 MW October 1 | Recurring charge begins under phase commencement certificate |
Rebuilding Year 1 capacity by commissioned phase
Phase 1 contributes no billable capacity in January or February, then 15 MW from March through December. Phase 2 adds 10 MW from June through September and the remaining 15 MW from October through December.
The revised schedule produces 45 MW-months from March through May, 100 from June through September and 120 from October through December. The total is 265 MW-months, 140 below the contract-date schedule.
The schedule also controls the anniversary for contractual escalation by phase. A Phase 1 escalator begins from its March commencement anniversary; the two Phase 2 blocks follow their respective commencement treatment. The model does not escalate all 40 MW from contract execution.
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| Year 1 period | Contract-schedule MW | Billable MW | Months | Revised MW-months | Controlling condition |
|---|---|---|---|---|---|
| January–February | 15 MW | — | 2 | — | Phase 1 integrated test incomplete |
| March–May | 15 MW; 40 MW from April | 15 MW | 3 | 45 | Phase 1 commissioned; Phase 2 utility work continues |
| June–September | 40 MW | 25 MW | 4 | 100 | First 10 MW of Phase 2 commissioned |
| October–December | 40 MW | 40 MW | 3 | 120 | Remaining Phase 2 capacity commissioned |
| Year 1 total | 405 MW-months | 265 MW-months | 12 | 265 | 140 MW-months below contract schedule |
Carrying billable MW-months into Year 1 NOI
At $125 per kW per month, 265 MW-months produce $33.125 million of recurring service revenue. Actual power consumption and the related customer reimbursement remain outside this service revenue and NOI bridge. Test power is recorded in the period consumed even when recurring charges have not started.
Facility operating expense falls from $12.4 million to $10.2 million because some maintenance, consumables and operating coverage phase with commissioned modules. Security, network operations, property tax, insurance and the core technical team remain before all 40 MW are billable.
Year 1 NOI falls from $38.225 million to $22.925 million. Stabilized recurring revenue remains $60 million and stabilized NOI remains $45 million after all 40 MW commence. The revised case changes the time and capital required to reach that run rate.
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| Model line | Contract schedule | Commissioning schedule | Movement |
|---|---|---|---|
| Billable capacity | 405 MW-months | 265 MW-months | −140 MW-months |
| Recurring service charge at $125 per kW-month | $50.625M | $33.125M | −$17.500M |
| Facility operating expense excluding power pass-through | ($12.400M) | ($10.200M) | +$2.200M |
| Year 1 NOI | $38.225M | $22.925M | −$15.300M |
| Stabilized recurring service revenue at 40 MW | $60.000M | $60.000M | — |
| Stabilized NOI | $45.000M | $45.000M | — |
Carrying the capacity ramp into project cost and equity
Utility and interconnection infrastructure increases by $14 million. Electrical distribution, UPS and generation add $8 million. Cooling and water systems add $4 million, and controls, testing and commissioning add $3 million. Total funded project cost increases to $449 million.
The $273 million construction commitment remains fixed. Required equity increases from $147 million to $176 million. Stabilized NOI of $45 million produces a 10.71% yield on the initial cost and a 10.02% yield on the revised cost.
Alternate cases address different levers. Accelerated testing spends more to commission Phase 2 earlier. A reservation-fee amendment compensates for reserved capacity before service commencement without changing the technical schedule. The utility downside moves the final 15 MW to December and adds carry.
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| Model line | Contract schedule | Commissioning schedule | Movement |
|---|---|---|---|
| Site, shell and data halls | $142.000M | $142.000M | — |
| Utility and interconnection infrastructure | $54.000M | $68.000M | +$14.000M |
| Electrical distribution, UPS and generation | $116.000M | $124.000M | +$8.000M |
| Cooling and water systems | $52.000M | $56.000M | +$4.000M |
| Controls, testing and commissioning | $18.000M | $21.000M | +$3.000M |
| Soft costs, interest and contingency | $38.000M | $38.000M | — |
| Total funded project cost | $420.000M | $449.000M | +$29.000M |
| Committed construction loan | ($273.000M) | ($273.000M) | — |
| Required equity | $147.000M | $176.000M | +$29.000M |
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| Delivery case | Treatment | Year 1 MW-months | Year 1 NOI | Funded cost | Equity |
|---|---|---|---|---|---|
| Commissioning base | Current utility, energization and integrated-test schedule | 265 | $22.925M | $449.000M | $176.000M |
| Accelerated testing | Second-shift commissioning and earlier turnover of Phase 2 modules | 310 | $27.850M | $456.000M | $183.000M |
| Reservation-fee amendment | Customer pays for reserved undelivered capacity before service commencement | 265 | $27.925M | $449.000M | $176.000M |
| Utility downside | Remaining 15 MW of Phase 2 commissions on December 1 | 235 | $19.625M | $455.000M | $182.000M |
Reworking the case in Cap Orbit
Cap Orbit can work across the customer agreement, phase exhibits, utility service and interconnection agreements, single-line diagrams, equipment schedules, contractor schedule, commissioning scripts, phase certificates, GMP, buyout log, change orders, loan agreement and existing development model in the same deal. Each MW can retain its current commercial and technical status.
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| Current source | Model treatment |
|---|---|
| Customer agreement and phase exhibits | Contracted IT load, rates, delivery conditions and phase commencement defined |
| Utility service and interconnection agreements | Committed-capacity ramp and utility milestones separated from billable service |
| Single-line diagrams and equipment schedules | Energized critical capacity rebuilt by module and redundancy configuration |
| Contractor schedule and commissioning scripts | Integrated testing and service-commencement dates assigned by phase |
| GMP, buyout log and change orders | Current infrastructure cost reconciled to the delivered MW schedule |
| Loan agreement and development model | MW-month revenue, NOI, cost, committed debt and equity updated together |
From there, you can have Cap Orbit rebuild billable MW-months by phase, apply the correct service rate and escalation date, separate power pass-through from service margin and update Year 1 NOI, stabilized yield, funded cost, committed debt and equity in the existing model.
The same deal record supports the delivery cases that matter here: earlier module turnover, reservation charges before commencement, a changed utility ramp or later integrated testing. Each case returns the same connected outputs—contracted MW, energized MW, commissioned MW, billable MW-months, service revenue, cost and equity.
The standard for AI on this asset class is a capacity case in which the customer contract, utility ramp, electrical infrastructure, commissioning record and capital stack resolve into the same billable phase schedule.