When lawmakers in Washington State set out to expand a lucrative tax break for the state’s data center industry in 2022, they incorporated a provision to study the energy-hungry industry’s impact on the state’s electrical grid. However, Governor Jay Inslee vetoed that provision while allowing the tax break to move forward. As The Seattle Times and ProPublica have reported, the industry has expanded significantly, now posing challenges to Washington’s goal of eliminating carbon emissions from electricity generation.
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Washington’s situation mirrors issues faced in other states where the data center industry has rapidly grown, often incentivized by tax breaks. For instance, Virginia, which has the nation’s largest data center market, once debated using carbon-emitting diesel generators during power shortages to maintain operations. Amid public pushback from environmental groups, the utility serving most of Virginia’s data centers, Dominion Energy, is exploring alternatives but has stated that meeting state requirements to decarbonize the grid by 2045 will be more challenging due to rising electricity demands driven by data centers.
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In Virginia, legislative efforts to tie data center tax breaks to energy efficiency and renewable resource usage failed, but the state has authorized a study to assess how these tax incentives impact the grid. Similarly, Georgia lawmakers passed a bill to halt the state’s data center tax break until the industry’s power usage could be analyzed. Nonetheless, Governor Brian Kemp vetoed the tax break pause in May, even as the state’s largest utility indicated a reliance on fossil fuels to address energy shortfalls partly caused by data centers.
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Lawmakers in Connecticut and South Carolina have also debated policies to manage data center power consumption. South Carolina’s Senate Majority Leader Shane Massey expressed the need to weigh the benefits and drawbacks of inviting more data centers, as reported by the South Carolina Daily Gazette.
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Internationally, countries like Ireland, Singapore, and the Netherlands have occasionally halted data center construction to alleviate grid strain. A report by the Tony Blair Institute for Global Change recommended that the private sector invest directly in renewables to mitigate energy use.
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Sajjad Moazeni, a University of Washington professor specializing in artificial intelligence and data center power consumption, underscored the importance of considering electricity impacts in legislation. Moazeni pointed out that just one day of ChatGPT use, a popular AI tool, consumed as much energy as 33,000 U.S. households do annually. “A policy can help both push companies to make these data centers more efficient and preserve a cleaner, better environment for us,” Moazeni stated.
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This article was produced for ProPublica’s Local Reporting Network in partnership with The Seattle Times. Read the full report.