The future of data centers in the US
The 2026 midterm elections in the US overturned the political landscape. Not as dramatic as the Israeli Mahapecha of 1977, which installed Menachem Begin and began the ascendancy of Likud, the Democratic landslide, the “Blue Tsunami,” the largest since the post-Watergate election of 1974, set the stage for a major overhaul of public policies in the US. Not only did the party take iron control of both houses of Congress, the change wave overtook the states as well. Democrats will control a majority of governors’ mansions and both chambers of 23 state legislatures.
With a lower profile than corruption, tariffs and the war in Iran, Artificial Intelligence and the need to build data centers to run the computers behind AI loomed large in both the federal and state contests. Data centers technically encompass the mega-computers and their systems. However, the term also refers to the supporting power plants necessary to generate the required electricity, new transmission lines and facilities to get the electricity to the computers and water infrastructure to create a cooling system to prevent overheating. In addition, data centers, with their 24-hour operations, emit loud, continuous noise pollution.
Like most issues in the US, these matters involve federal and local governments. Getting permits for the necessary land, water use and power plants, let alone for opening a computer center, requires the agreement of state and local authorities. Expanding the transmission grid falls under federal control. The elections have made it tougher to sustain the status quo on data centers.
AI will not go away. Rather, Congress will enact regulation to overcome abuses. I am not an expert on how.
However, I am an expert when it comes to the data centers. In the main, three issues create problems: economic – rising electricity bills for surrounding communities as a result of paying for the huge increase in electricity consumption and building new power lines and related systems when expanding the grid; environmental – potential water shortage; and health – the effects of never-ending noise in the neighborhood.
Solutions lie in plain sight.
The problem of rising electricity prices has a simple solution. In the US, consumers used to pay a uniform system-wide rate for each kilowatt of electricity, regardless whether the power came from cheap hydroelectric power or expensive nuclear power. The states took the sum of a utility’s supply costs and divided them equally among all customers. In the early 1990s, businesses balked, as that type of pricing harmed their bottom lines. Most states responded by introducing retail choice, which allowed customers to buy from suppliers at individually tailored prices. That brought costs down.
However, the federal government, which regulates the transmission grid, left in place the “rolled in” method of charging existing customers for new facilities. The regulator claimed that new facilities “benefited” existing customers, who got along fine with the old grid. In no other industry in a capitalist economy does that happen. If a landlord remodels the space for a new tenant, the existing ones do not have their rents raised.
Each customer pays their own weight. That should happen here.
The water problem requires new technology, but it exists in the nuclear industry. Nuclear plants use a lot of water to cool white-hot reactors. Not only does that contribute to water shortages, but the hot water on the way out kills fish in the river into which the water flows. European nuclear plants pioneered using air cooling systems. In the US, Georgia Power, a Southern Company subsidiary, uses air cooling in its new Vogtle plant. The industry can adapt air cooling for data centers, too.
Finally, the noise problem has a no-brainer solution. For nearly a century, we have had airports near populated areas. Airplanes emit noise. Noise reduction can encompass limiting hours of operation, something impossible with data centers. However, requiring buffer zones works for data centers. Indeed, a proposed center in Utah includes a buffer zone with trees and untrammeled nature to absorb the noise and maintain the peace and quiet of nearby communities. Local zoning can require the same everywhere.
All sides in the debate must show goodwill.