As the digital revolution accelerates, the demand for data centers is skyrocketing, driven largely by the exponential growth in artificial intelligence (AI) applications. While the global demand for new data centers is evident, siting them is becoming increasingly complex. Issues such as noise, traffic, and visual aesthetics are complicating the development process.
You can’t open a newspaper (on your phone) without seeing news about new AI technologies, the growing demand for data centers and the inevitable energy generation cliff we face. In the last month, Open.AI, Google and Meta have all made major announcements about their AI products and how they will support our everyday activities.
From AI to everyday appliances, the influence of data centers is pervasive. Almost every modern convenience, from the photos we take to the groceries we buy, relies on cloud storage. This critical infrastructure allows us to share medical records and process payroll. The ubiquitous use of the cloud is a significant driver of the expanding data center market.
However, the development of this critical infrastructure is increasingly hampered by local opposition and a surge in Not-In-My-Backyard (NIMBY) sentiment. There must be more than the promise of millions of dollars in future tax revenue. To navigate this challenging landscape, data centers must localize the benefits and foster grassroots support to decrease local opposition.
Once Welcoming, Communities and States are Reversing
In the last decade, communities and states have welcomed and actively recruited data centers and their millions of dollars in new tax revenue. They are ready to tout their community as leading the next technological revolution. Virginia has by-right zoning for data centers. Georgia, Illinois, Indiana and 24 other states have tax incentives or economic development policies to recruit data centers.
The growing negative sentiment has led communities to reverse their previous policies of incentivizing data center development. In Virginia, Prince William County is looking to increase taxes on data centers. In the data center capital of the world, Loudoun County, Virginia, the county is looking to end by-right zoning for data centers, and the City of Leesburg (in Loudoun County) already ended it. County residents have even called for a data center moratorium. The Georgia State Legislature recently passed legislation that would place a two-year moratorium on tax incentives allotted to the data center industry (even though the Governor ultimately vetoed it). And Arizona, Illinois and Arkansas have passed laws to suspend data center development or further restrict where they can be built.
Intensifying Land Use Debates
The conversation around land use is becoming increasingly contentious as the number of proposed data center projects rises. Historically, data centers have occupied a small fraction of land in areas and were able to take advantage of existing energy infrastructure. The growing number of projects is pushing data centers closer to residential housing and increasing the need for new transmission lines, which increases the impact of data centers. Two weeks ago, a $1.3 billion data center proposal was pulled from an Indiana town after city council members announced their opposition.
A rise in warehouse construction, data center expansion (and accompanying electric transmission lines), renewable energy and mega-site developments for manufacturing is further coalescing opposition. This convergence of factors is fueling local resistance to all forms of development – only increasing the pressures new data center development faces.
Growing Protectionism
Many communities across America feel left out of the economic benefits typically associated with the 21st century’s digital and technological advancements. As data centers require substantial land, power, and other resources, local residents often perceive these developments as disruptive intrusions that alter the landscape without providing proportional benefits. This sense of exclusion feeds into a broader trend of local protectionism, where communities resist change that does not serve their immediate interests. According to Gallup, confidence in large technology companies is at an all-time low of 26%, which, in the context of data centers, manifests as opposition to development perceived as projects of “big, faceless” entities that do not adequately consider local needs or impacts.
What’s the Solution?
Today, it appears many developers assume that if they are unsuccessful in building in one community, they can simply move on to another. While that may have once been the case, it’s no longer. Just look at the difficulties wind and solar developers face when siting up new projects. Failure to do the needed due diligence invites a divided community and local acrimony (and additional costs to the developer), leading to resentment that bodes poorly for the project, regardless of whether it receives its local approvals.
To address these concerns, companies must think strategically about siting decisions and localize the benefits of development. They need to minimize risk and prepare appropriately:
1) Know Before You Go: Do the research and understand the environment you are walking into. Know what projects have succeeded and which have failed. Did a solar project proposal fail? Did a local opposition group stop a new commercial development a decade ago? Look broadly at the region and learn who is foe and who is friend. Knowing local history and culture can tell you much about future success or failure.
2) Localize the Development: Data Centers need to be better understood by the general public, especially in the communities they seek to locate. It’s not a big box that stores “data,” but rather is the technological backbone that ensures your memories with friends and family are always preserved; it’s the infrastructure that powers the combines and oversees the planting and harvest; and it’s the technology that provides instant intelligence for national defense and keeps first-responders safe.
3) Engage Early and Often: Relationships are not boxes to be checked; they must be nurtured and developed over time. Knowing what to say and what not to say is as important as whom to say it (or not say it) to. Listening to the community, developing allies and influencers, and ultimately, establishing yourself as a positive community member is vital.
Data Centers Must Adapt to Ensure Long-term Success
The development of data centers faces significant challenges from rising local opposition and NIMBY sentiments. Companies must prioritize research, grassroots support, and community engagement to overcome these obstacles. Data Center growth might be inevitable, but will they be revered or reviled?
This piece was co-authored by Jefferson Freeman, with the Hawthorn Group