In Southwest Memphis, residents of a historically Black neighborhood now live in the shadow of one of the largest computers ever built. Elon Musk’s xAI has erected a sprawling supercomputing campus there — anchored by data centers it calls “Colossus” and “Colossus II” — and the community’s response has been anything but grateful. People who have spent generations fighting to keep their air clean and their bills affordable see a familiar pattern: an industrial behemoth dropped in their midst, that the project’s environmental and power costs will ultimately be borne by their community.
That scene would have been unthinkable a few years ago, when data centers were a political winner. Low-profile infrastructure projects that promised jobs, tax base growth, and a sheen of technological progress, they went up quietly on the edge of town, drew little public attention, and gave elected officials of both parties something easy to point to as an economic development win.
That era is over.
The explosive growth of artificial intelligence has transformed data centers from invisible infrastructure into one of the most combustible issues in politics. Today’s facilities are massive industrial operations that can consume as much electricity as a small city. And they are clustering most aggressively across the South and Sun Belt — Virginia, Texas, Georgia — where land is plentiful, regulation is lighter, and demand for power is surging.
My firm’s new report, Accelerating South — the first political-risk analysis of the nine-state American South — maps the buildout at ground level. Voters are alarmed, and often with good reason. Rising electric bills, new transmission lines cutting across communities, mounting concerns about water usage, and a deepening distrust of AI are all top of mind.
This issue’s refusal to break cleanly along partisan lines is what makes this issue so potent. And yet, neither party has figured out how to talk about data centers in a way that matches the growing intensity of voter concern. The political high ground is still very much up for grabs.
The leaders who navigate this successfully will be the ones who stop adopting postures — “community input,” and “fair deals” — and start naming mechanisms. Here are four rules that can separate the states who are writing durable rules from ending up with negative headlines and frustrated residents.
Put data centers in their own rate class. This is the fight that decides everything else, and it’s why Virginia’s legislature spent a session on two unglamorous bills about tariff design. A dedicated rate class — with minimum-bill and take-or-pay provisions — means the company that ordered the capacity pays for it whether or not it ends up using it. Without one, households amortize a hyperscaler’s bet: a dedicated class ensures unusually large users pay the costs associated with the generation, transmission and capacity they require, rather than shifting those costs to residential customers. A politician who can’t say “separate rate class” doesn’t yet have a data center position; they have a press release.
Price the exit, not just the entry. Every incentive negotiation obsesses over the ribbon-cutting. The harder question is the one no one asks out loud: if AI demand disappoints after the generation is built, who owns the surplus? North Carolina learned this lesson the expensive way when VinFast’s 7,500 promised jobs became roughly 1,400 — and the state discovered it held clawback rights it never expected to need. Write the data center version now: capacity commitments that survive cancellation, clawbacks that trigger automatically, and no exposure to stranded plants for the ratepayers who never voted for them.
Trade speed for standards, not subsidies. Here is the negotiating leverage most officials don’t realize they hold: what hyperscalers maximize isn’t tax abatement — it’s time-to-power. A jurisdiction that can deliver a permitted, pre-zoned, grid-ready site on a certain timeline is selling the scarcest commodity in the AI economy, and it can charge for that certainty in standards — water recycling, noise buffers, local hiring, community benefits agreements priced like procurement rather than charity — instead of paying for the privilege with its tax base.
Sunset the secrecy. The power and water terms of these deals are routinely locked behind nondisclosure agreements until after the approval vote. Flip the sequence: disclosure before the vote, as a condition of the incentive. Communities learn about projects only after the key decisions are made — that’s the practice fueling the backlash — and it’s also now bad politics. A deal that can’t survive daylight won’t survive an election.
Data centers aren’t going anywhere. They’re the backbone of the next economy, and the South is perfectly positioned to play host to an outsized network of them. But the politicians who treat that inevitability as license to cut deals behind closed doors are about to learn what the Georgia Public Service Commission already discovered: voters will notice who paid for the power, and exact their price at the ballot box.
The third rail was never the data center. It was the leader who reached for the easy win and forgot whose backyard it landed in.
Howard Franklin is founder and CEO of Ohio River South, a government affairs and political-risk firm with clients across the South, and the author of Accelerating South: Risks, Rewards & The Road Ahead.
This article was originally published by RealClearEnergy and made available via RealClearWire.
Traditional energy intensive heavy industry has always provided for its own power requirement. Grid connections are only for emergency back-up or to export surplus power. They do not depend on grid power.
Now that data centers have evolved into a comparably or even more energy intensive heavy industry, they ought to be expected to conform to the same rules.
Let them build their own power generation, or not be built at all.
There doesn’t need to be any special legislation about it. They aren’t going to waste money building one where power isn’t available.
In a lot of places they are building their own power. I talked with someone who works for a company building the power plants for data centers–mostly combined cycle facilities. They are as busy as can be.
My thought, too. It seems like the obvious fix.
I never heard of that.
I have built heavy industrial electrical systems and industrial co generation systems . I have never been in a steel mill or smelter that produced its own electricity.
Where did you get that idea? Maybe it has happened somewhere.
Pulp mills built generation long after the were first built.
I know of a corporation that built the public utility system and operated mines and a smelter. That was not common.
Heavy industry is the best customer for a utility as it provides consistent demand which can pay the capital cost. Residential customers require large capacity to be built but only use power for a quarter of the day.
Data centres are building their own generation now.
I’ve been building oil refineries etc. for over 40 years. All had on-site power generation.
Aluminum smelting moved to the northwest because of all the hydro power available there.
And then it moved overseas.
I have been building oil refineries for 49 years. They have all had co-generation facilities to make efficient use of their off-gases. None have been self sufficient
What is rarely mentioned is the fact that data centers get a bill for whatever electricity they use from the grid.
Would it be good if they built their own reliable power plants? Sure.
But they are not the ones driving up electric bills.
Remember Obama admitting that his plan would cause the price of electricity to skyrocket?
Blame those politicians that continued to implement his plan.
(War on coal, “renewables”, etc.)
The place appears to be about 1.5 miles from any house, and there are other facilities* around. This appears to be a shake-down of a rich guy.
*Nucor Steel, TVA Allen Combined Cycle, TE Maxson Wastewater, Container Management Corp, TVA Fossil Plant, and a U.S. Army Corps of Engineers facility.
Good article full of very good points. Just what I expect from WUWT.
This article makes excellent points! I especially like the first main idea, “Put data centers in their own rate class.”
There is no good reason not to do this. If you are familiar with your local utility’s separate tariffs for large users, small commercial, residential, etc. it is no big deal to add a new class of service with proper rate structures to handle these new loads that are unlike traditional factories and facilities.
From the article: “Voters are alarmed, and often with good reason. Rising electric bills, new transmission lines cutting across communities,”
Since these new Data Centers have not been built yet, how are they responsible for rising electric bills and new transmission lines cutting across communities?
Windmills and industrial Solar are the culprits for rising electric rates and new transmission lines cutting across communities. Don’t blame the future Data Centers.
Trump has said that Data Centers will provide their own electricity so as not to increase electricity prices for local electric customers, and all the major participants have agreed to do so and hold the public harmless.
Please keep up with the latest news.
That’s not what the risk is, Tom. There is a lot (heckuva lot!) of expense that sits outside the fence line of the DC, the tab for which is picked up by the local ratepayers. That is why, ON AVERAGE (in case Bob is reading this), rates increase when a DC moves to a rural town. Road maintenance, policing, EMS, water costs all increase — the tabs for which is also picked up by locals. Last time I checked, when the baker opened up his store, the mechanic opened his shop, or the telecommuter bought his house and obtained local internet services, his costs for doing so weren’t subsidized by the residents of the town. The abandoned dreams, if the businesses don’t work out, weren’t left to be cleaned up by the town either.
How exactly does a baker or mechanic pay for the enhancements needed to provide the power/gas/water/police/fire/etc. that is needed when their businesses open?
Looking around town, I see a number of empty stores/restaurants where the previous business went under.
Yep
“Orders for new natural gas fired power plants surged to 130GW in 2025, a 25 year high, with US data centre demand a major factor”
IEA ‘World Energy Investment 2026’ (May 2026)
Acknowledging the asserted source of that statement, it has no credibility when considering that some future data centers are said to require the total power output of a nuclear power plant, such as the case of the Microsoft data center planning to use the output of a restarted Three Mile Island Unit 1 reactor.
Few announcements for new data centers include funding for, and being co-located with, such a size of power plant, whether nuclear- or fossil fuel-based. One notable exception: SoftBank’s $33 billion announcement for a 10-gigawatt AI data center in Pike County, Ohio, powered by an on-site 9.2-gigawatt natural gas plant. But given typical ~33% thermal power plant efficiency, note that that data center/power plant must be located close to a major river in Pike County to dump its approximate 6+ GW of waste heat . . . KA-CHING!
Here in NC the politicians are blaming prospective AI data centers for electricity price hikes that have already happened, because of legislation that the politicians, themselves, voted for.
In 2021, House Bill 951 was entitled “Energy Solutions for North Carolina.” It should’ve been called “Green New Deal Lite,” or maybe, “Enriching Duke Energy and Chinese Solar Panel Manufacturers at Our Expense.”
https://www.ncleg.gov/BillLookup/2021/h951
It directed Duke Power to shut down clean, reliable, affordable coal power plants, and buy expensive, unreliable wind and solar generation capacity. Higher electricity prices were the known cost of implementing that. It’s both economically and environmentally destructive.
I testified against it, but I was nearly alone in doing so.
The climate / renewables industry lobbied for it because they make money from selling that junk.
Duke Power lobbied for it because higher costs mean higher prices and higher revenue. Their regulated rate of return means that their earnings increase in proportion to their costs.
Our Democratic Gov. (and next U.S. Senator) Roy Cooper signed HB-921 into law on 10/13/2021.
Our State AG, Jeff Jackson, who is now publicly shocked! shocked! by the price hikes, was in the NC Senate at the time, and he voted for it. So did most other Democrats AND most Republicans. Here’s the final Senate vote:
https://www.ncleg.gov/Legislation/Votes/RollCallVoteTranscript/2021/S/464
It had strong bipartisan support. “Pro-business” Republicans voted for it because Duke Power supported it. “Environmentalist” Democrats supported it because the climate and “renewables” industries supported it.
Large majorities of both parties voted for it, and now many of those same politicians are blaming data centers for our skyrocketing electricity prices.
There’s not as much difference as you might guess between how most Democrat politicians vote and how most Republican politicians vote. If Democrats wanted to raze the Smithsonian, Republicans would probably vote to phase in the demolition over five years, and use competitive bidding to do it 20% cheaper.
I’m reminded of the definition of bipartisanship:
“We have two parties here. One is the evil party, and the other is the stupid party. I’m a member of the stupid party. Occasionally, the two parties get together to do something that’s both evil and stupid. That’s called bipartisanship.”
– variously attributed to M. Stanton Evans, Sen. Alan Simpson, or Sen. Everett Dirksen
The State of Virginia has the highest number of Data Centers of any State currently operating (about 400 of them) and Virginia has some of the lowest electricity prices around which just demonstrates that Data Centers are not the problem when it comes to rising electric prices.
And new Data Centers are certainly not the problem since they don’t even exist yet.
The wind and solar people are trying to divert attention from themselves by blaming the high energy prices they caused on Data Centers.
From the article: “Sunset the secrecy. The power and water terms of these deals are routinely locked behind nondisclosure agreements until after the approval vote. Flip the sequence: disclosure before the vote, as a condition of the incentive. Communities learn about projects only after the key decisions are made — that’s the practice fueling the backlash — and it’s also now bad politics. A deal that can’t survive daylight won’t survive an election.”
Excellent points. And the heart of the matter/problem.
We have local communities all over the place trying to recall local politicians because they signed Data Center agreements behind closed doors.
The AI companies don’t have anything to hide really. I think they can make a good case to the public by assuring them their electric bills won’t go higher because of Data Centers. And their water use requirements and how they use it are nothing out of the ordinary.
The AI companies need to talk to the public and dispel some of the criticisms being leveled.
The secrecy is the part I object to. We have a Panasonic battery plant in our county, which is to joined by a data center and battery storage facility. Think you can find out anything about this extensive operation? Of course not. So far there have been two battery fires at the manufacturing facility, and no evidence of any emergency plans. The publicity surrounds the growth and new prosperity for the town the plant is in, but I suspect that we the county residents have paid for most of the new roads, etc.
Not so, Tom. Both water and electricity rates will, on average, increase. Water also has quality degradation effects with a long tail. That is one reason why they hide.
They also hide behind phasing. Then ramp from data center to hyper scale once ground is broken — but the county P&Z guys knew this all along.
So, there’s plenty to hide. However, open records requests or FOIA requests help expose this. Recalls are costly, but in the end, often necessary. Board members aren’t elected because they are data center SMEs or economic development SMEs — and yet they think they are somehow the blessed recipients of such knowledge simply by being elected. They have discretion to vote for whatever they want, even in the face of unanimous opposition, but that discretion must (by law) rest on something — as one court defined it, a “rational mental process.” Sadly, that rationality is nested (if at all) in a one-sided power point provided by the developer.
What many here don’t seem to realize is that these things, data centers, are not a partisan issue. It doesn’t break, at all, along party lines. I may or may not support them hypothetically — it depends on the details. It is an empirical point. And the empirics matter — and in most (nearly all) rural cases the data centers are a net-negative.
As Thomas Sowell once said about why he changed his mind about something: “Facts.”
The president says Data Centers will produce their own electricity and will not increase local electric prices. The AI promoters agree. So, let’s see if this happens or not.
‘The AI Data Center advocates say their water use is equivalent to what a public golf course uses. How many new public golf courses have been rejected by the public?
And the advocates say the water they use will be recycled and used over and over again, so will not require more water once a certain level is reached, kind of like the way an internal combustion-engined car’s radiator works. Once you fill the radiator with water, you don’t have to fill it again and it keeps the car engine cool enough to operate.
I think the secrecy is the main problem people are having with Data Centers. The AI advocates need to explain things better.
No, Tom — you still haven’t done your reading. ‘The president says’ is not the same thing as ‘in fact, here’s what is happening on the ground’. It’s like the sod-bollocking awful solar- and wind-farms (see the more recent article/video posted by Paul H). If the costs of back-up, grid-stabilization, infrastructure are not included in the calculation, then you don’t get the whole picture.
So, sure, let’s say Meta builds a hyper-scale in Montana’s prarieland. Let’s say it builds its own gas-fired power plant. From your perspective, this is a net positive. In reality, however: roads, grid stability, power infrastructure (think transmission lines), and water mains and water treatment — all happening outside the fence — are social costs (taxpayer paid) to support private benefit. (And, No, these facilities are not water neutral. Gold courses act as watersheds, helping to clean non-potable water by dispersion across the acres and natural filtering.)
Now, if Trump says, ‘data centers must be self-sufficient, disconnected from the grid, building and maintaining their own infrastructure, upgrading and maintaining all roads used to build the facilities, and post bonds sufficient to decommission sites and reclaim the land after closure — requirements that cannot be bucked off by the sale of the facility — then we might, you and I, be talking about the same thing. But that isn’t the reality. As community after community in this absurd FOMO game is finding out.
Maybe we will be on the same page. 🙂
We need to see the details of these future contracts.
The AI companies have not explained themselves very well.
“They’re the backbone of the next economy,”
That is possible, but not certain.
One can closely examine the introduction of personal computers, advent of cable TV, the internet, cell phones, social media, etc. to get a feel for cost-risk-benefits of so-called transformative technologies.
There are real security risk. There are real information concerns, too.
AI software hosted on new cray-like supercomputers is one thing.
Creating a protected “fortress” with those computers and massive data storage is another.
Quis custodiet ipsos custodes?
“…an industrial behemoth dropped in their midst,…”
Shit stirring hyperbole??
Hardly a steel mill, refinery or chemical plant.
More like a midwestern mega mall /truck stop.
That’s ignorance. Take a moment and read something about it. Here in Midwest, these things are behemoths who destroy local communities.
Which local community has been destroyed by an AI Data Center?
No, Tom — you aren’t listening, reading or thinking. I said ‘do some reading about this’ — but you didn’t. You just want to play a part, look clever, promote a poorly-thought-through chain of reasoning. This is why FOIAs and ORRs are critical to this: Because you aren’t unique, but very similar to Board members who make decisions without thinking it through.
But, because I value open discussion — which we don’t see on this topic on this site, BTW — let me give you an example or three.
Oregon — a crap-fest in govt by libtards, to be sure — hosts a google data center campus in The Dallas. Google receives 20-30 million dollars per year in abatements (multiple, overlapping 15yr agreements, to be specific). Google drains the local, heavily stressed watershed, affecting local well-water flows and quality. It drains off a scarce resource called ‘general fund’. Private benefit, social costs.
Northern VA experiences greater power instability because of data centers removing demand from the grid — externalizing costs. Watersheds across the country negatively impacted by blow-down pumped back into ground water, sanitary systems, local water ways. Habitat destroyed (ag land in my North Dakota, watersheds, forests) all for what? This is terabyte prospecting — not economic development and the consequences have long-lasting effects.
Voters maybe also should be aware of that data centres will be the backbone for any upcoming surveillance state…
They will also be the backbone of the technology that will block the surveillance state.
The only reason the neighbors’ panties are in a knot is the divisive, race baiting, fact free, fake news press.
Or, just maybe, this is a non-partisan issue because of lying shills for the developers? Take an interest — and read for yourself, don’t just go along with the knee-jerk ‘oh, it’s only the left libtards who are against manna from heaven’. These are not divisive because some people are stupid and some people are clever — they are not solar farms issues. These are tornadoes blowing through small towns — and leaving destruction in the wake.
Destruction?
Please describe this destruction. When and where?
Here’s one way to prove the point that politicians are flat-footed, Howard Franklin.
Get down out of your ivory tower and run for office!
Given:
a) the extremely low cost of electrons, as used storing and communicating TB/sec of data,
b) the extremely fast speed of today’s modern microprocessor and customized ASICs, in the peak range of 60 to 70 teraflops for standard FP32/FP64 core performance,
c) as of 2026, the global datasphere is estimated at over 220 zettabytes (220 billion terabytes), with active Web-accessible content accounting for a substantial multi-zettabyte share of that total,
these facts invite this question: Why does the world require more than one super-colossal data center that is ultra high-speed connected to the Web, plus perhaps a backup “twin” (or at most two such) located far apart and connected to separate grids?
After all, it’s not like today I’m twiddling my thumbs waiting more than a second or two for any of several AI bots to respond to any information request I put to one of them . . . and this is without the “benefit” of hundreds of new “data centers” existing.
I have also raised that point.
AI computers and Data Center definitions are conflated.
It remains my opinion that investors in data centers are expecting to make as much money, or more, from their sales of electricity to a power grid running short of capacity as they make from sales of AI data processing services to those who believe artificial intelligence will add something useful to their business productivity.
You may be right.
I see no harm in that.
But how would you feel, honestly, if such a “data center” was located near your back yard?
I wouldn’t like it.
I didn’t like it when a coal mining company decided to strip mine coal on the rural property next to mine, but I had to put up with it. They had the legal right.
That went on for a couple of years and then they shut it down.
They reclaimed the land afterwards and you could walk on it now and not realize that bulldozers had been there.
So I got lucky. 🙂
I am not as worried about data center footprints and strain on grids as I am solar farms and windmills. Clear cutting CO2 consuming land to put up a solar farm and windmills is stupid. Having to have multiple backup systems to provide reliability for them is economically ignorant. Paying the capital, investment, operating and environmental costs for the unreliables runs up our true costs. Data centers properly managed are less of a threat.
Now, giving government agencies access to all of our personal information is far scarier. The flock cameras for example. Actually have some positive outcomes; however, the potential for our government to misuse the data collected is grand. Go back to the Rosemary Collyer (former FISA lead judge before Boasberg) identifying 10s of thousands of illegal and improper searches of NSA data, and not one person was prosecuted. If that level of illegal activity goes unpunished, then I can’t trust any government organization (especially the FBI and IC) to police themselves. This becomes an argument for doing away with data surveillance and even data centers.
Mention of “waste heat” is concerning.
Humankind is living in all sort of environments from deserts to snowfields.
This story is about the south of the US which is closest to the equator, and the locale is almost guaranteed to have water poverty and citizens who need cooling air-conditioning for comfortable living.
Is no Federal attention being given to the siting of these large data centres adjacent to cities or large town which could use the heat to warm the inhabited space?
I seem to have heard that this is being done in northern western Europe.