Data centers are suddenly everywhere — but some say "no thanks"

The big picture: Whenever you join a Zoom meeting, save photos to the cloud or stream videos online, you're depending on a data center.

• Data centers resemble windowless warehouses, and Microsoft, a major operator of the facilities, says each of theirs can employ as many as 50 people.
• Data center inventory across North America's largest markets — Northern Virginia, Silicon Valley, Dallas and Chicago — grew nearly 25% in Q1 2024 compared to the same period in 2023, per a June report from real estate group CBRE.

Driving the news: Data center builders often promise new jobs and other benefits — but there's rising bipartisan opposition on issues from aesthetics and noise to housing costs and national security.

• Atlanta's city council in September banned data centers near transit stations, with one member arguing that they conflict with housing, parks and other land use demands.
• Earlier this year, the White House ordered the Chinese owners of a Wyoming cryptomining data center near a U.S. nuclear missile base to shut down and sell the facility, citing national security.

Threat level: Data centers are also driving a surge in electricity demand — especially amid the rapid growth of new AI tools.

• Utilities now estimate data centers will need nearly 40 gigawatts of additional electricity by 2028, per a December 2023 report from consulting firm Grid Strategies — nearly double their prior guess.
• Barclays researchers see data centers accounting for at least 9% of overall electricity demand by 2030, up from 3.5% today.
• Demand is so high that at least one mothballed nuclear reactor, Pennsylvania's infamous Three Mile Island, might come back online to power them.

Between the lines: Building data centers close to end users often means lower latency — the amount of time it takes data to travel — and other benefits.

• Companies also place the centers away from areas prone to natural hazards — which is why New Orleans and Orlando have historically not attracted data centers, per consultancy datacenterHawk.

Friction point: Politicians are starting to act on data center skepticism.

• In Texas, where electricity consumption is growing fastest nationwide, Republican Lt. Gov. Dan Patrick has asked lawmakers to evaluate the state's ability to keep pace with the increasing demand.
• Data centers and cryptocurrency mining "produce very few jobs compared to the incredible demands they place on our grid," Patrick wrote after the Texas grid operator predicted electricity demand could nearly double in six years.
• "Texans will ultimately pay the price. ... We want data centers, but it can't be the Wild Wild West of data centers and crypto miners crashing our grid and turning the lights off."

Zoom in: In Northern Virginia, which houses the world's biggest collection of data centers, some residents are advocating for regulations on what they consider noisy eyesores gobbling up land and power.

• A contentious meeting last year to approve a huge data center complex in Virginia's Prince William County lasted 27 hours.
• Residents are suing to stop its construction.

What they're saying: Data centers are "driving up the price of land, and it's hard for anyone else to compete with them," says Deshundra Jefferson, chair of the Prince William Board of County Supervisors, who adds that data center pushback helped her get elected.

The latest: Virginia's Fairfax County recently greenlit regulations on data center development, requiring noise studies and that sites be located a certain distance from homes and transit stations.

• Nearby Loudoun County is considering similar restrictions.

Reality check: Data centers are still getting built left and right, often with cushy incentive packages.

• In Columbus, Ohio, Microsoft is getting a 100% property tax abatement on a $420 million data center investment for 15 years. It's also eligible for a sales tax credit on its hardware investment.
• Microsoft officials have said the center will create 30 jobs with a total payroll of roughly $50,000 per worker.
• At least 30 states have passed legislation providing tax incentives to attract data centers.

The other side: "While data centers do not directly create large employment opportunities, they do create a significant amount of high-end construction employment for a period that typically runs around 24 months," per researchers at investment firm CBRE.

• "Additionally, these assets, once built, are a key component of a company's overall operating environment and can create a long-term investment in a community."
• "Data centers are dedicated to being good neighbors in their communities," Dan Diorio, director of state policy at the Data Center Coalition, which represents data center operators, tells Axios.

The bottom line: America needs data centers — what's less clear is where to put them.