Buying a Power Project? Here's How to Read the Seller's Data Room

Buying an existing power project used to be a shortcut. For a growing number of teams, it’s now the plan. With interconnection queue waits stretching four to five years in CAISO, MISO, and PJM, an approved queue position has become what FTI Consulting calls “the primary currency in the sector.”

That volume lands on every acquisitions desk. One director of acquisitions Paces works with received nearly 200 data rooms for various M&A opportunities in just three months. 

Whether you’re securing power for a data center campus or adding solar, storage, or distributed generation (DG) projects to your portfolio, the seller’s data room is where due diligence starts, and it’s organized to close a deal, not to surface risk.

It's up to you as the buyer to understand the data provided and identify what's missing to reach a decision on the site. This is where efficient and comprehensive M&A diligence becomes a necessity.

What Paces keeps finding in seller data rooms

Across the hundreds of data rooms Paces has reviewed this year, one pattern stands out. The most obvious claim is one we frequently see fall apart: that the seller controls the land.

In a recent review we conducted of a 12-parcel data center campus, the seller didn’t own any of the parcels, and there was no lease option or letter of intent (LOI) anywhere in the room. On paper, it looked ready to build. In reality, we uncovered that the seller hadn’t even secured the land it was selling.

That’s why the four questions below start with verification. 

Four questions to ask of every data room

Before committing capital, every buyer should ask four questions of a seller's data room: Can you verify the seller's claims? What's missing? What's expiring? And what's changed since the room was built?

Start by verifying that all information in the data room is accurate, complete, and fully up to date.

1. Can you verify the seller’s claims? 
First, check the claims the deal is priced on: acreage, buildable area, zoning, and the serving utility. Compare each against independent sources, not just the seller’s own documents: county parcel and zoning records for acreage and entitlements, FEMA flood maps, wetland and soil data for buildable area, service territory maps for the serving utility, and the independent system operator (ISO) base case or the utility’s hosting capacity map for available capacity. Keep in mind that published capacity doesn’t show what’s ahead of you in the queue. For a data center site, it comes down to two questions: is the power really there, and does the seller really control the land?

In a Paces M&A Diligence Report, each claim is included under contradictions: what the seller says, what the record shows, and the source. Where the data isn’t enough to confirm or rule out a claim, Paces flags it and lists what we would need to make our recommendation. 

2. What's missing?
What’s left out of a data room can matter as much as what’s included, and rooms vary widely, from a few dozen documents to several hundred. Start with the basics: final, signed versions of every lease and option, the surveys, studies, and documents the data room references, and any interconnection agreements it mentions. Then look for the risks that haven’t been covered. In our recent client reviews, we found substantial gaps, including: water risk left out of a data center confidential information memorandum (CIM), fiber redundancy too thin for a hyperscale tenant, and mineral rights complicating the title on a 25-landowner site.

Every Paces review records evidence (or its absence) for each checklist item. The resulting diligence request list tracks each one as provided – in full, in part, missing, or not applicable – with a severity rating and the action needed to resolve it.

3. What's expiring?
Key diligence documents expire, and they don't all expire at the same rate. Phase I environmental site assessments, title commitments, and good-standing certificates each have a shelf life, so Paces checks every document against its own rather than applying one blanket rule. It’s important to look for quieter issues too: a survey that’s unsigned or undated, or a study that was current when the data room was built but will lapse before you close.

Every Paces M&A Diligence Report confirms all assets are current and identifies documents that need to be revalidated, so you can build that work into your timeline (and your price).

4. What’s changed since the data room was built?
Even when every document is current, the conditions around the project may not be. With projects taking years to get from interconnection request to commercial operation, a capacity study or hosting capacity map from early in a project’s life may not reflect what’s been built, queued, or withdrawn nearby since. Check for new generation or large loads on the same substation, updates to the ISO base case, and changes in local zoning or permitting. 

For power-heavy sites, a Paces Power Flow Study answers the question a data room can’t: what does the grid look like today? 

In one recent review of a 1 GW data center site, the study showed that right-sizing the load to 600 MW would cut roughly $120 million in grid upgrades, and that changed the recommendation from “buy as is” to “proceed with conditions.” 

For community solar and other program-dependent projects, confirm the project still qualifies under current program rules, adders, and deadlines. 

Complicating the process further, not everything that’s changed is written down. When a broker call or a utility conversation updates the picture, Paces works that context into the review, so a verbal update isn’t lost behind an outdated document.

Turning data room findings into a go/no go decision

Once Paces has worked through the data room, every finding goes through the same analysis:

• Compare each seller claim with what the record shows, and name the source.
• Rank each risk by severity, with a path to resolve it.
• Identify the conditions precedent to negotiate before close.
• Name the gaps where the room is silent or the record is thin.

From there, you can make the call: proceed, proceed with conditions, or walk. On an early-stage site, focus on the ranked risks rather than the percentage completed, since many items simply can't exist yet.

How Paces approaches data room review

Paces built our M&A Diligence Reports for the buyers we kept hearing from. Some want a clear go/no-go call. Owners and asset managers have told us they need a risk register they can plug into their own diligence process. 

Every review starts with a scoping call on deal context to align our team with yours on strategy and prioritization. Using AI to parse data rooms, our team of energy and data center experts then verifies each finding against external research to deliver fully vetted results.

• 175+ diligence items per review
• 5 business days on average from data room access to findings
• 3 deliverables: executive summary, findings report, and diligence request list

You get a clear recommendation (proceed, proceed with conditions, or walk) and the work behind it: every risk ranked by severity, every gap named, and every open item tracked in a diligence request list you can send straight back to the seller.

We're transparent about the limits, too. Teams can run it two ways: send us the room and get findings back, or have Paces manage the process end to end, from broker calls and term negotiations to bringing opportunities from our network that fit your criteria.

See it live on November 12

If you're evaluating an acquisition, join us for Paces Accelerate: M&A Diligence, Live on Thursday, November 12 at 2 PM ET. Josh Brown will walk through a sample report, and our team will take your questions in the Q&A box. Can't make it live? Register anyway and we'll send the replay.