How government leaders can balance the pros and cons of data center development
Construction of Microsoft Azure data center campus in Leesburg, Virginia, on Oct. 19, 2024. Gerville via Getty Images
Policy and partnerships with tech companies can give state and local leaders a lever to ensure data centers are developed responsibly and sustainable, experts said during a recent webinar.
The demand for data centers continues to grow as government and tech leaders turn to artificial intelligence to improve daily operations and services.
But how data centers are developed in communities can significantly impact residents’ lives and policymakers must consider how to responsibly support their expansion, experts warned.
With the data center industry projected to reach $7 trillion in global investments by 2030, governments and businesses are prioritizing where to allocate resources for data center development efficiently, Kate Stoll, project director at the American Association for the Advancement of Science’s Center for Scientific Evidence in Public Issues, said during a webinar hosted this week by the Brookings Institution.
While the data center boom may seem promising for the tech industry and governments, leaders must also consider the facilities’ long-term effects, she said.
Data centers will have major impacts on local workforce and economic development, the environment and resident well-being across the U.S., said Nicol Turner Lee, director of the Brookings Institution’s Center for Technology Innovation. Balancing the potential harms and benefits of these facilities will be critical to ensure equitable and sustainable data center development, she said.
Tax incentives are one “area where states and counties can be thoughtful about how they’re negotiating … ways they want to bring community benefits in exchange for the tax abatements,” Stoll said.
In Iowa, for instance, the Cedar Rapids City Council approved a tax deal with Quality Technology Services in January to build a data center campus in the city. Under the agreement, the $750 million project is not only projected to create more than 500 construction jobs over the next decade, but also generate $18 million that the company will pay to Cedar Rapids to help fund city improvement projects and nonprofit agencies over the next 20 years.
Government leaders should also consider how the introduction of data centers can help boost tech workforce development, said Darrell West, a senior fellow in Brookings’ Center for Technology Innovation.
The U.S. is experiencing a shortage of electricians, construction workers and other trade professionals needed to build and maintain data centers, but government leaders can leverage those projects to help fill those gaps, he said.
In Janesville, Wisconsin, for example, city officials are considering a company’s proposal to purchase a brownfield site to build a data center campus, the GazetteXtra reported. The company’s letter of intent includes a commitment to partner with a local technical college to develop workforce training programs aimed at building a pipeline of students to enter the data center industry. The Janesville City Council approved the letter of intent last week.
Leaders can also address environmental concerns about data centers through policy, such as states’ efforts to integrate the development of data centers and clean energy sources, West said.
He pointed to the Nevada Public Utilities Commission as an example. The PUC approved a “clean transition tariff” in May that enables large energy users, such as data centers, to pay a premium for energy generated from more sustainable sources like geothermal. The tariff is an agreement among Google, NV Energy and Fervo.
Such initiatives can help address concerns about data centers’ negative impacts on public utility usage and ensure that “data centers pay their fair share for the infrastructure upgrades that are required to operate data centers,” West said.