Skip to main content
Marsh logo

Expertise

Data center capital and contracts advisory

PPAs, SLAs, and construction contracts decide whether a data center is financeable. Marsh’s risk analytics and advice help protect projects and move capital.
Download the report

The right contractual decisions today can secure data center success tomorrow.

Whether you’re structuring a data center financing deal, negotiating contracts like service-level agreements (SLAs) or power purchase agreements (PPAs), or assessing the financial returns of a data center project, you need to be aware that contract structure is one of the most consequential determinants of success across the whole data center lifecycle. From planning, financing, and building, to powering and operations, risk and insurance decisions made at the very first contract stage can determine how far and fast your capital moves later.

Marsh can help you turn these very first uncertain steps into a financially viable project with returns through our expert contract advisory services and market-leading risk analysis.

Why contract structure decides data center outcomes

Data centers are a central piece in the digital infrastructure puzzle, which is delivered by an interdependent web of entities. Challenges for any one participant or stakeholder can affect the delivery and long-term profitability of the entire project. So, structuring a contract is about allocating risk.

At the investment stage, for example, construction, PPAs, and financing agreements often lock in dates for commercial operation and uptime commitments, with penalties for delay in start‑up or downtime. If agreements for factors like equipment supply, cloud hosting and, above all, utility and interconnection do not impose the same obligations, each party can leave itself exposed. In other words, businesses across the data center ecosystem could potentially face liquidated damages and reputational hits when delays or outages occur.

These risks can be difficult to forecast, anticipate, and prepare for, which means contractual decisions are difficult to make, and even more difficult to unwind once made. And yet, it is absolutely crucial to get them right before these risks materialize, and before it is time to make a claim.

Making projects financeable: PML and delay-in-startup analytics

In the early stages of a data center project, it might seem difficult to determine exactly how much coverage you actually need — especially without an in-house risk advisory team. This is where Marsh comes in. With our unique capabilities in risk analysis, Marsh’s specialists can help you translate risk and contract decisions into financeable projects.

Using probable maximum loss (PML) and delay-in-startup analytics, Marsh aligns investors, lenders, and operators, and converts open-ended SLA exposure into more predictable proceeds. With a clear, defensible PML, you can move through financing faster and set your data center project up for success down the line.

Turning SLA exposure into more predictable proceeds

Data centers come with a host of accelerated and interconnected risks. Uptime-guarantee penalties, service credits, rent abatements, termination payouts, and other contractual considerations can create open-ended risks that could significantly affect project finance. And as portfolios grow, these exposures can aggregate and compound.

To build resilience into data center projects, owners, developers, and operators should consider a lifecycle approach that pairs clear analysis with pragmatic capital tools to close the gaps in traditional coverage. Solutions like trade credit insurance, subcontractor default insurance, or surety bonds, among others, can help turn volatility and uncertainty into more predictable proceeds.

LEARN MORE

Build a more resilient data center risk strategy

Specialist guidance can help you map your exposures, pressure-test your current program, and identify strategies to strengthen protection across the data center lifecycle. Contact us to learn more more about how to better assess data center exposures, right-size coverage, and strengthen resilience from construction through operations.

Contact us

Power purchase agreements and credit risk

Data centers cannot operate without reliable and uninterrupted power. This is why PPAs are absolutely critical at the planning and financing stage of the data center lifecycle.

But PPAs don’t just carry operational exposure such as generation shortfalls, grid access failures, and supply-demand mismatches. There are significant credit risks to consider as well. Marsh can help investors, developers, and owners determine what exactly their credit risk looks like, and how best to mitigate it.

Capital tools across the build and beyond

The construction of data center projects forces developers and operators to navigate a specialized risk and insurance landscape for their projects to succeed — both during and after the build.

Marsh’s Nimbus program is designed specifically for the unique challenges of data center projects. It helps streamline insurance coverage for every stage of the project lifecycle in one single policy, from planning and construction to completion and handover.

But the competitive data center market also demands certainty of contractual promises, a constant focus on cost reduction, and increased working capital. Marsh’s dedicated team of global surety specialists can help preserve liquidity throughout the build and develop unique surety solutions to release credit capacity and mitigate financial risks beyond.

Outsourced and supplemental risk management

It can be hard to attract lenders when risk remains unowned, yet over 80% of buyers in the data center ecosystem lack a dedicated risk management team.

For data center owners, developers, and operators, managing risk starts by understanding where exposure sits across the asset, the operations, and the contracts that support it. The focus may then turn to reducing exposures through design, planning, and governance. Finally, a tailored insurance program can help organizations further protect their assets, revenue, and obligations that remain exposed. This can be a heavy lift and could require additional capacity and expertise, even for the best-equipped teams.

Marsh’s data center specialists can supplement your internal capacity or take on the risk management function of your project outright. This doesn’t just streamline operations, speed things up, and build resiliency into your project; it can have a significant impact on financing now and in the future.

How Marsh helps you meet your finance goals

Marsh’s ARC (asset, revenue, contract) lifecycle management approach addresses the complex interplay between asset lifecycles, revenue streams, and contractual obligations in the digital infrastructure industry. This is especially critical for large, multi-site portfolios where equipment refresh cycles, tenant churn, contract renewals, and refinancing events occur continuously and must be managed in tandem rather than in isolation.

What’s more, unlike other brokers, Marsh has a distinct four-business advantage. Marsh is expertly placed to deliver market-leading support on risk analytics and insurance, reinsurance and capital solutions, alternative capital sourcing, and strategy to data center developers.

Across our comprehensive risk management and insurance solutions, Marsh is the integrated advisor that can help you translate risk and contract decisions into project finance today and profitability tomorrow.

FAQs

Data centers are financed through a combination of corporate balance sheets, public debt markets, and specialized project finance structures. Depending on the exact setup of a project's financing, investors, developers, and owners could be exposed to a number of risks, including cost overruns, unexpected delay penalties, cash flow squeezes, and restrictive lender covenants.

Data center service-level agreements (SLAs) are contracts that outline performance standards such as uptime, support response, and redundancy. For private equity firms investing in data centers, SLA compliance is critical for valuation and operational risk assessment.

SLA breaches due to power outages, cooling failures, cyber threats, and other service disruptions can lead to customer churn, severe penalties, and reputational damage. As it stands, there is no standardized solution for SLA contractual risk, so innovative and bespoke insurance coverage is key for resilience.

A power purchase agreement (PPA) is a contract that specifies the amount of energy to be generated by an asset and purchased by a buyer. Most PPAs run for 15 years, with some spanning for as long as 25 years. Data center tenant commitments are typically much shorter, as greater efficiency in data center technology could mean that future power requirements will be materially lower than currently projected.

In many cases, utilities and grid operators require financial guarantees when a data center connects to the grid or enters into a long-term PPA. Those protections can be particularly important during construction and in the early years of a PPA.

This question can be hard to answer, but it is absolutely crucial. It can be difficult to attract financing and lenders when risk remains unowned, so it is imperative to move beyond a broad exposure discussion into a conversation about right-sizing coverage. Under-insuring can expose stakeholders to significant financial losses, while over-insuring can strain already tight budgets.

Detailed loss studies, including probable maximum loss (PML) analysis, can help quantify exposures and forge a defensible coverage strategy based on estimates of the largest reasonably foreseeable loss for defined scenarios. This demonstrates to lenders and other funders that coverage decisions are grounded in analysis rather than guesswork.

A probable maximum loss (PML) study provides a financial estimate of the largest physical loss that can reasonably be expected from a single event. These events may include natural disasters such as fires, floods, earthquakes, sediment movement, or structural failures like building collapses.

A PML is pivotal in data center financing as it gives investors, lenders, and operators a shared, defensible number on how much coverage a data center project actually needs.

Delay in start-up (DSU) insurance (also known as advance business interruption or advance loss of profits) insures project owners for the financial consequences of a delay in project completion resulting from insured physical damage.

There are two key differences between DSU and business interruption. First, DSU considers future rather than current income streams, which are the subject matter of business interruption (BI). Second, DSU relates to the delay between the originally anticipated commercial operation date and the achieved date of commercial operation resulting from the insured physical loss; BI relates to interruption of operations from the date of loss.

Integrated risk advisors like Marsh can supplement in-house risk capacity or fully adopt that responsibility. 

Why Marsh

Marsh currently works with 75% of the top 25 companies engaged in data centers and are a partner to 10 of the largest global technology companies by revenue. Our dedicated digital infrastructure integrates our extensive experience with energy providers — including grid, nuclear, and renewables — and deep relationships with contractors, private equity investors, and technology suppliers into one seamless practice.

Explore data center expertise and solutions

If you are navigating the hurdles of contractual decisions and financing agreements for your data center project, you are ready to turn uncertainty into future profitability. Reach out to one of our specialists for a consultation today and download our Digital Infrastructure Risk Report to unlock the data center opportunity.

Related insights

Man looking at a tablet in a server room

Report

Data center operational risks

09/22/2026
Placeholder Image

Article

The new age of contractual risk allocation in data center development

09/17/2026
Rows of data storage units are present in a large facility at night. The lights from the units create a blue glow, showing the technology in use. The setting highlights the scale of storage.

Report

Data center risk across the lifecycle

09/09/2026
Server racks in server room cloud data center. Datacenter hardware cluster. Backup, hosting, mainframe, mining, farm and computer rack with storage information. 3D rendering. 3D illustration

Report

Data center planning and construction risks

09/02/2026
View more

Download the report

Unlocking the Digital Infrastructure Opportunity

Digital infrastructure powers today’s economy and tomorrow’s innovations—but with rapid growth comes accelerated risks.

Marsh’s digital infrastructure risk report outlines core risk management tools that stakeholders can leverage which may help better manage risk across the digital infrastructure lifecycle.

Our report includes:
  • Comprehensive insights across the digital infrastructure ecosystem, offering an end-to-end perspective on risk
  • Novel risk management solutions that enable you to free up your capital
  • Resilience- building strategies to support long-term success
  • Core tools to help protect your investments and enable growth across every phase of the digital infrastructure lifecycle

Fill out the form to download your copy of the report.