Illinois mulls pros and cons of data centers
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The AI boom is reshaping Illinois, driving a wave of data center development that is straining energy systems, consuming millions of gallons of water for cooling and triggering legislation for transparency and sustainability.
Why it matters: While data centers can bring temporary jobs and property tax revenue, they also come with largely unreported energy and water demands and relatively few permanent jobs.
Case in point: Building a 250,000-square-foot data center employs up to 1,500 local employees for 12-18 months. But that declines to 50 full-time workers, half of them contracted, according to a 2023 state-commissioned report in Virginia, the country's data center hub.
The big picture: Data centers used 4.4% of U.S. electricity in 2023 and could consume up to 12% by 2028, per the U.S. Department of Energy.
- Construction of these facilities, which house computer systems, servers and storage infrastructure, is at an all-time high, increasing 69% year over year from 2023 to 2024, per CBRE, a commercial real estate firm.
- They can be "hypescalers" — serving the needs of one big client — or "colocation" centers that rent out space to several companies.
Zoom in: The Midwest, with its relatively cheap land, cooler temps and proximity to Great Lakes water, offers some big advantages over other parts of the country.
By the numbers: The Chicago metro area hosts 154 data centers, with 222 across the state, creating about 20,000 jobs and $3.5 billion in direct labor revenue in 2023, per a data center industry-commissioned report.
- The state's Data Centers Investment Program dispensed more than $650 million in tax incentives between 2020 and 2023, yielding $11 billion in total investments and 469 new permanent jobs, per a state report.
Yes, but: "We want a better sense of their water and energy usage and how it will impact costs, consumer prices and consumption," state Sen. Steve Stadelman, a Democrat, tells Axios. "There really hasn't been a lot of insight into this because it's still a relatively new trend."
- He's sponsoring Senate Bill 2181, which would require greater energy and water transparency. It's expected to be included in an omnibus energy package in Springfield next month along with another measure instituting "build your own new clean energy" provisions, or B-YONCE, for new data centers.
The other side: Laurance Lewis of Metro Edge Development Partners, which works with data center projects, tells Capitol News Illinois that the legislation could be "unduly burdensome" for collocation centers with multiple clients, "whose energy and water consumption may not be metered precisely."
Between the lines: Data center proponents say their growth is being driven by consumer demand, noting a Deloitte survey that shows the average U.S. household owned 21 digital devices in 2023.
- As companies build to meet that surging demand, energy is a "significant cost driver," so it's in their best interests to be efficient, Dan Diorio of the Data Center Coalition, tells Axios.
What's next: State measures on data centers should become clearer in late May as bills get consolidated and modified near the end of the legislative session.
What we're watching: Announcements for more data center projects.
- "I know that there are a number of entities that are exploring different locations in Chicago," Mayor Brandon Johnson tells Axios.
- "Those conversations have been relatively productive, and there's still a lot to learn to determine of ... not just the footprint, but the type of job opportunities that are provided. ... But, again, we're still looking to figure out what the footprint looks like and whether Chicago is the ultimate viable place for some of these locations."