Amazon Web Services (AWS) really wants local governments to buy into the idea that data center development is not just good for its business but also good for communities. However, a slew of recent ordinances limiting new data center construction in key markets show not everyone is onboard with the idea.
In addition to noise and aesthetic concerns, word is out that data centers are huge energy hogs – and not all communities are willing to share their limited water and electricity resources.
Indeed, a hyperscaler’s data center can use as much power as 80,000 households, according to a January report by McKinsey & Co. “Pressure to make data centers sustainable is therefore high, and some regulators and governments are imposing sustainability standards on newly built data centers,” the report noted.
During its public sector summit in Washington, DC, last week, AWS pitched its vision of data center development to the press during a panel which included a local official from Prince William County, Virginia, a George Mason University professor, the CEO of the Ohio Business Roundtable and the EVP of steel construction specialist SteelFab. Together, these experts argued data centers boost tax revenue and jobs without straining local highway and school infrastructure and create a skilled workforce that is in high demand.
On the tax front, Victor Angry, a member of the Prince William County Board of Supervisors, noted that the county was recently able to keep residential taxes flat thanks in large part to the commercial revenue it is raking in from data centers. He added those data center tax dollars are also contributing to the improvement of the county’s schools and better pay for teachers, police and other municipal officials.
Angry pointed out that across Virginia as a whole, AWS paid $334 million in business taxes in 2022.
Patrick Tiberi, CEO of the Ohio Business Roundtable, seconded the tax point. He noted that in Ohio, communities are now actively trying to woo data center builders to help keep taxes low for residents.
Prince William county is located in the data center hotspot of Northern Virginia, and Ohio is seeing increasing data center growth, particularly in the area of New Albany outside Columbus.
Addressing questions about just how many jobs data centers create and how long those last, SteelFab EVP Chris Gregory noted that construction of a data center can require many contractors – sometimes up to 30 – each of which can have tens or even hundreds of workers on site. Beyond steel, he pointed to the need for skilled laborers like electricians to install data center infrastructure.
Additionally, George Mason University professor Terry Clower argued that data center jobs are actually durable over the long term. That’s because while other infrastructure such as that used in telecom has a longer lifespan, the guts of a data center have a three to five-year refresh rate. That means someone will have to be employed to install the new kit, even at existing sites.
Data center crackdown
Perhaps the reason AWS is so desperate to paint a rosy picture is because local governments have begun cracking down on data center development.
The city of Chandler, Arizona, for instance, passed an ordinance in December 2022 which restricts new data center construction to specific development zones and imposes noise restrictions and sound mitigation requirements on them. That ordinance went into effect in January. The move in Chandler is notable given its location in the Phoenix metro area, a data center hotspot.
Loudoun County in Virginia – the data center capital of the country if not the world – also adopted new restrictions on data center development late last year. The changes prohibit building data centers in areas zoned for suburban mixed use or residential neighborhoods. Loudoun currently has more than 25 million square feet of operational data center space with another 4 million square feet in development, according to its website.
And last month, the Board of Supervisors in neighboring Fairfax County approved a motion to undertake a study looking at what sort of zoning and environmental regulations should apply to data centers.
It is unclear how many more localities might follow suit. AWS seems to be trying to head off such changes, which could certainly hamper its expansion plans.
At the same time, though, data center demand is not showing any signs of slowing. In fact, McKinsey says that demand is expected to grow 10% per year until 2030.
Demand coupled with sustainability concerns has led many hyperscalers to set plans to achieve carbon neutral status. According to McKinsey, “Thanks to carbon offsets, Apple, Google, and Meta, for example, were all carbon neutral by 2020. They and other hyperscalers have committed themselves to using only carbon-free energy by 2030. Co-location companies are also under pressure, not least from some of their customers, to meet sustainability goals.”