Politicians See Opportunity in Data Center Panic

Politicians generally operate within their partisan bubbles, as they stake out poll-tested positions that conform to the political lean of their districts and the priorities of their party. Once in a while, though, an issue so upsets the public that it transcends partisanship. Then all bets are off, as lawmakers try desperately to placate those proverbial “peasants with pitchforks.”

The latest example involves the construction of data centers. Voters, and hence politicians on the political left and right, are incensed about the construction of large facilities that house computers, networking equipment, servers, and storage systems that support the tech economy and the growth in Artificial Intelligence (AI). It’s hard to understand the level of upset given that these facilities are necessary to power industries that power our economy and fund state budgets.

I grew up in Pennsylvania in the 1970s, where the hulks of the industrial revolution—giant steel mills, oil refineries, and clanking, pollution-spewing factories—loomed over our communities. By contrast, these clean, low-slung and quiet facilities, although large, are generally tucked away in tidy industrial parks near freeways and away from our neighborhoods. If we want to have easy access to computer innovations, then we need to make peace with these less-intrusive facilities.

Yet a Gallup Poll from May found “53% of Americans say they oppose building a nuclear energy plant in their area, far less than the 71% opposed to data center construction.” I live near the cooling towers of Rancho Seco, which was shuttered in 1989 after a referendum. Protests against that nuclear plant started in the late 1970s following the Three Mile Island accident. I was sent home from a nearby Pennsylvania college after that fiasco, so it astounds me that people are more fearful of benign data centers than radioactive fallout.

But data-center concerns are so severe that they’ve affected Democratic primaries in the upper Midwest. In Texas—where pouring concrete to build freeways, constructing massive natural-gas pipelines and digging oil wells is a great source of local pride—Republican Gov. Greg Abbott last month ordered an audit of hundreds of proposed data centers, thus imposing new regulatory hurdles that will delay and perhaps stop some of them. It’s in response to angry residents, who have shown up in droves at city council and planning commission meetings.

In the San Francisco Bay Area, local governments have approved some of these centers with relatively little pushback because residents there understand their necessity for bolstering jobs and the economy. But the state Legislature passed Senate Bill 886, which “requires the California Public Utilities Commission (CPUC) to establish tariffs that address costs associated with transmission, distribution, generation, and interconnection services for data centers.” Supporters argue that it’s necessary to keep these centers from boosting rates for other consumers.

That’s a load of malarkey. The Electric Power Research Institute found data centers generally decrease retail power rates by 4 percent for a reason that should be obvious to anyone who follows the electrical-generation issue. Namely, electric utilities have massive fixed costs (electrical lines, generators, etc.) that are spread across the base of existing customers. As more customers leave the grid to install solar, that raises rates for remaining customers. Data centers assume a larger portion of those costs, which takes some pressure off of residential and commercial consumers.

Critics also worry about data-center water usage to cool the servers, but that, too, is misleading. Data centers can use as much water as a small city, but they increasingly rely on recycled water and closed-loop water systems that result in minimal water loss. Data centers withdraw around 0.4 percent of the nation’s water supplies, which is a pittance compared to agriculture. The best solution is for states to start doing what they’ve neglected: building the water infrastructure necessary to maintain a growing economy.

Construction of any new facilities can trigger siting and community issues, so data centers are no exception. But these are mostly local zoning matters. City councils have plenty of experience dealing with traffic, noise, and light issues. No one seemed to care, for instance, about a giant distribution facility and warehouse built in an industrial park in my city. A data center isn’t much different, so what’s going on here?

“It sure is easy raking in billions when you’re living in your own protected Bay Area bubble, where your physical business and employees are distant from the people/customers feeding you,” wrote Republican consultant Keith Naughton in The Hill this week. “It’s a whole different ballgame when you encounter the unwashed masses and need their approval.”

In other words, the data-center hysteria is channeling the public’s inchoate fears about the rapid expansion of AI and is a flash point for anger at tech moguls and billionaires. That seems silly. But if that is upsetting voters, then you can be sure politicians will eagerly take advantage of their angst.

This column was first published in The Orange County Register.