Load Factor

Load factor is the ratio of average power drawn over a period to the peak power drawn in the same period, expressed as a percentage. A data center that peaks at 40 MW and averages 30 MW has a load factor of 75 percent. The metric matters because utilities and landlords size grid connections, substations and generators to peak demand, while revenue and energy cost follow average consumption. Flat, always-on AI training clusters tend to run at high load factors, whereas enterprise colocation halls often average well below their contracted peak. Low load factors raise the effective cost per delivered kilowatt-hour when tariffs include capacity or demand charges. Operators and investors compare it with contracted capacity and utilization to judge how much of a power allocation is actually being used.