Publisher’s Note: Today, Dr. Rick Franza reviews data referendums and the pros and cons of data centers across the U.S. Here are four local developments currently underway:
1) QTS Data Center – Haynes Station – 2.15 million sq. ft.
2) Project Eisenhower – Pecan Ct – 2.1 million sq. ft.
3) Nixon Technology Center – Mike Padgett – 3.34 million sq. ft. zoning hearing soon
4) Google – White Oak Technology Park – 8 million sq. ft.
There are three other proposals in Thomson, Harlem, and Appling. Augusta adopted a Data Center Zoning Ordinance in September.
The dominant story of last week’s midterm elections was the “Blue Tsunami,” which gave the Democratic Party control of both chambers (House and Senate) of the United States Congress and many state legislatures and governor positions. However, the second biggest story of the midterms is one that likely impacts business more directly, and that is the voters’ rebuffing of data centers. There were 41 data center-related ballot measures up for a vote in 10 states, and voters sided against data centers in each measure except one (in North Dakota). Each of the other 40 ballot measures (including 21 in Ohio) would place restrictions on the construction of data centers in different ways. In addition, many of the Democrats who won key races campaigned on pausing or regulating new data center projects. While there are certainly downsides to data centers, the campaign against data centers appeared to be very one-sided. Here are pros and cons of this dicey subject, beginning with the basics.
What is a Data Center and What do Data Centers Do?
A data center is a physical facility that runs large numbers of computers reliably, securely, and around the clock. It houses networked computers, servers, and storage systems to store, process, and distribute large amounts of digital data. In addition to the computer equipment, the data center must have Uninterruptible Power Supplies (UPS) and diesel generators to prevent outages, climate control systems to keep servers from overheating, and physical and digital security.
The key functions of data centers include:
- Hosting applications and websites that businesses rely on daily, such as customer relationship management (CRM) and enterprise resource planning (ERP) systems.
- Cloud computing that companies rely on by renting server space and computing power from major cloud providers (e.g., Amazon Web Services).
- Data backup and disaster recovery, as businesses replicate and store information across multiple geographic locations to always stay online.
Given those functions, many businesses have relied on data centers for decades. But the need for data centers has exploded primarily because the rise of artificial intelligence (AI) has dramatically increased computing requirements. Training AI models and running real-time AI inferences require massive supercomputer-class computations and specialized graphics processing units (GPUs) that require a data center environment.
Therefore, current and additional data centers are absolutely necessary because they are the physical foundation of the modern digital world. They are required for internet and cloud storage, daily digital services (e.g., online banking, digital payments, social media), and critical infrastructure for healthcare systems, emergency services, government operations, and utilities. Finally, AI is critically important not only for the future of business success, but also for our national security, as the United States and China are locked in a major geopolitical and technological competition for AI dominance.
So, we are facing an interesting situation in this country, as we have an ongoing and growing need for data centers, while many states and local communities have voted to slow down the data center expansion.
Potential pros:
- Economic and Tax Revenue: Data centers generate substantial property and local tax revenue. This can allow the community to better fund local public services such as schools and roads without raising other taxes.
- Job Creation: The construction of the data center typically provides thousands of shorter-term construction jobs and often over a hundred permanent, high-paying technical and operations positions.
- Digital Infrastructure: New data centers typically lead to local fiber-optic network expansions, faster internet access, and more modern digital capabilities to the area.
- Electric Grid Upgrades: New data centers often result in new dedicated electrical substations, transmission lines, and grid improvements that are funded by the data center developers and benefit the local region (hopefully offsetting the first downside below).
Potential downsides:
- Massive Energy Consumption: In particular, the AI-scale data centers use up significant amounts of electricity, straining regional power grids.
- High Water Usage: Data center cooling systems can use millions of gallons of water per day, potentially putting pressure on local aquifers and water treatment infrastructure.
- Noise and Air Pollution: Cooling fans generate continuous low-frequency hums, and diesel generators and gas turbines create air emissions.
While these downsides can be problematic, a community can choose to support a data center if appropriate information is provided, particularly about power and water usage. If addressed proactively, the community can negotiate with the developers in terms of providing appropriate infrastructure support for both power and water to ensure that residents do not end up paying for it. A clear cost-benefit analysis, which looks at both the financial and intangible considerations of the data center, can be performed prior to agreement. Data centers are clearly necessary, but there will have to be give-and-take between the developers and communities to create a win-win result.
