Data center late fees reach $5 million a day, says The Information

A late data center is now a bill of millions of dollars a day. Someone had to agree to pay it.

The Information reported on Friday that Marsh, the insurance broker, has written a new kind of policy. The policy covers data center late fees. Mike Mathews leads the firm's global digital infrastructure practice. He arranged a bespoke "delay-in-delivery" policy for a data center developer. The developer's tenant demanded $1 million a day in late fees. That was for the first phase of a new gigawatt-scale project.

The outlet reports that penalties in new deals have risen in a matter of months. Tenants are now asking for upwards of $5 million for each day a facility is late.

Why Marsh wrote the first one at all

The $5 million a day number is a price on late delivery. Someone had to be willing to pay it. Someone else had to be willing to collect it. That someone is a tenant whose own plans do not survive a slipped date.

A gigawatt is enough electricity to power roughly 750,000 US homes. A single large AI training run or inference cluster now sits at that scale. A tenant signing for a gigawatt of capacity has model work booked against it. This is not a company shopping for options.

An insurance policy exists when a risk is both large and routine. Marsh writing one for data center delays says that both are now true. The firm's work on the first policy was a special case. Writing one more for the next deal is a product.

The slip does not go away

The number named in a contract is the compute price. The number that moves is the date. A developer who buys GPUs through a cloud provider sees the capacity in a dashboard. A developer who signs a direct deal for racks is in a different place. So is a buyer of a reserved pool. In those deals delivery dates slip and someone writes a cheque.

Insurance absorbs the slip at the tenant's end. The slip itself does not go away. A product team planning a model release against reserved capacity still has to pick a date. The date the tenant was promised is not always the date the capacity exists.

The Information's reporting names one broker and one deal shape. It does not name the tenants or the developers. The pattern is what sits above the names: delivery risk is being priced, and the price is rising.

Source

Data Center Late Fees Hit $5 Million or More Per Day, Spawning New Insurance, The Information, by Ann Davis Vaughan.