A Google data center in Douglas County, Georgia.
This article was produced for ProPublica's Local Reporting Network in partnership with The Seattle Times. Sign up for Dispatches to receive stories like this as soon as they're published.
When Washington lawmakers sought to extend a lucrative tax break for the state’s data center industry in 2022, they included what some saw as a key provision: a study of the energy-guzzling industry’s impact on the state’s electric grid.
Gov. Jay Inslee vetoed that provision but allowed the tax break expansion to go forward. As The Seattle Times and ProPublica recently reported, the industry has continued to grow and now threatens Washington’s effort to eliminate carbon emissions from electricity generation.
Washington's experience in addressing data center power demand is similar to the challenges in other states around the country, where the sector has grown rapidly and tax incentives are playing a role.
Virginia, home to the nation’s largest data center market, once considered running data centers on carbon-spitting diesel generators during power shortages to keep the area’s electricity on. (That plan has faced fierce opposition from environmental groups, and a utility in the region is exploring other options.)
Dominion Energy, the utility that operates most of Virginia’s data centers, has said it plans to meet state requirements to decarbonize its grid by 2045, but that the task would be more challenging with rising demand largely driven by data centers, Inside Climate News reported. The utility has also said new natural gas plants will be needed.
Some Virginia lawmakers and the state's Republican governor have proposed rolling back or drastically changing clean energy goals.
A Northern Virginia lawmaker instead proposed putting conditions on the state’s data center tax credit. This year, he introduced legislation that would have made data centers eligible only if they maximized energy efficiency and found renewable sources. The bill died in the Virginia General Assembly. But the state did authorize a study of the industry and how the tax credits impact the grid.
“If we're going to have data centers, which we all know are huge consumers of electricity, let's require them to be as efficient as possible,” said Rep. Richard “Rip” Sullivan Jr., the Democrat who sponsored the original bill. “Let's require them to use as little energy as possible to do their job.”
Inslee's 2022 veto of a study similar to Virginia's cited the fact that Northwest power planners already include data centers in their estimates of regional demand. But supporters of the legislation said their goal was to get more precise answers about Washington's specific electricity needs.
Georgia lawmakers this year passed a bill to halt tax breaks for data centers in the state until data centers’ power usage can be analyzed. Meanwhile, according to media reports, the state’s largest utility said it would use fossil fuels to help fill an energy shortage caused in part by data centers. Georgia Gov. Brian Kemp subsequently vetoed the tax break in May.
Lawmakers in Connecticut and South Carolina have also debated policies over the past year to address data center energy use.
“We may want to entice more of them to come. I just want to make sure we understand the pros and cons before we do it,” South Carolina Senate Majority Leader Shane Massey said in May, according to the South Carolina Daily Gazette.
Countries including Ireland, Singapore and the Netherlands have at times forced data centres to halt construction to reduce pressure on the electricity grid, according to a report by the nonprofit Tony Blair Institute for Global Change. The report’s recommendations for tackling data centre power consumption include encouraging the private sector to invest directly in renewable energy sources.
Sajjad Moazeni, a University of Washington professor who studies artificial intelligence and data center power consumption, said states should consider the impact of electricity when drafting data center legislation. Moazeni’s recent research found that ChatGPT, a popular artificial intelligence tool, uses about as much power in just one day as 33,000 U.S. homes do in a year.
“Policy can help companies make these data centers more efficient and maintain a cleaner, better environment for us,” Moazeni said. “Policymakers need to consider a larger set of metrics around power consumption and efficiency.”
Eli Sanders contributed to the research while a student in the Technology, Law and Public Policy Clinic at the University of Washington School of Law.
