The best and worst states for AI data centers

Here's how two key states are encouraging — and slowing — the buildout.

It's no wonder that Texas, with its low electricity prices and abundance of land, is drawing a wave of data center investment.

• Texas has 212 operating data centers as of 2024 and 651 have been announced, according to data firm Aterio. Another 157 are under construction, beating Virginia.
• The state also offers one of the most generous tax incentives in the nation, worth more than $1 billion annually.
• Some state legislators are rethinking whether that tax break is appropriate, but Rep. Beth Van Duyne (R-Texas) said at a recent Axios event in Dallas that the incentives keep projects and jobs in the U.S. instead of abroad, noting companies already pay significant taxes.

Yes, but: While Texas may be optimal for industry, residents are concerned over water demands in a state experiencing drought and electricity demands that could lead to higher bills.

• Jobs and economic development — the main benefits politicians and companies point to — could be short-lived unless local governments secure longer-term gains for local communities.
• "Texas is at a different point because we do have leadership that has been looking at this for over 11 years. The idea of data centers is not something that just happened," Van Duyne said.

Maine is moving in the opposite direction.

• The nation's first statewide moratorium on new data center construction is headed to Gov. Janet Mills' desk. It's unclear whether she'll sign it, allow it to pass without her signature or veto it.
• The temporary ban would give a state council 18 months to evaluate projections of electric load growth, come up with strategies to protect ratepayers, and review how current financial tools and state programs can be applied to data centers.

"This is good for business, for the environment and for those who have concerns about AI writ large," state Rep. Melanie Sachs told Axios, pushing back against industry claims that this bill would signal to companies that Maine is closed for business.

• "The point for me was to make sure that we had that regulatory certainty for any developer and not shift halfway through," added Sachs, the bill's sponsor.

• "I think one-size-fits-all policies in which an entire state is shut off is extraordinarily misguided, because for every community that may not want a data center, you could have a community that says this really fits our needs," Dan Diorio, vice president of state policy for the Data Center Coalition, told Axios.

The big picture: While Maine is the closest to making a moratorium reality, it's among at least 11 other states considering pauses.

• At the federal level, Sen. Bernie Sanders (I-Vt.) and Rep. Alexandria Ocasio-Cortez (D-N.Y.) have introduced legislation to pause all new data center construction nationwide.

Texas is far from being an outlier in embracing AI investments.

• Virginia remains the country's most established ecosystem of data centers with a long-running tax exemption.
• But it's one of several states considering repealing tax breaks, and political pressure for a moratorium is mounting in Virginia, too.
• Still, new deals are flowing in.

The bottom line: No state is fully for or against AI data centers. Communities across the country are attempting to strike a balance between economic opportunity and people's rising concerns over water use, energy demand and costs.

Ashley Gold contributed to this story.