Many technology companies are facing more opposition to data center construction after the recent midterm elections. In 40 out of 41 local ballot initiatives, voters chose to limit or prevent new data center projects, according to the New York Times. Despite this backlash, analysts believe the overall impact on data center development may be small. Bernstein, an investment bank, estimates that only 2 to 4 percent of planned projects could be canceled. Susquehanna Financial Group predicts that more data centers for artificial intelligence (AI) will be built in 2027 and 2028 than in 2026.
Community Concerns
The growing resistance to data centers comes from environmental concerns, rising home energy costs, and quality of life issues for local residents, as noted by a Pew Research study. Professor Stavros Gadinis from UC Berkeley suggests that tech companies need to engage with local communities and stakeholders to address these issues. He advocates for a proactive approach, stating, "Concerned parties need to be given a stake in the development." This outreach could help reduce local opposition and support future projects.
Economic Implications
Despite the pushback, demand for data centers is expected to rise. McKinsey estimates that U.S. demand will nearly quadruple from 25 gigawatts (GW) to over 80 GW between 2024 and 2030. Goldman Sachs noted that AI-related spending added almost one percentage point to U.S. GDP growth last year. Austin Keyser, a regional official at the International Brotherhood of Electrical Workers, expressed optimism, stating, "We are not going to see a dramatic downturn" in data center construction.
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The backlash against data centers could lead to delays in construction timelines, affecting tech companies and their spending plans. This may impact sectors that rely on data infrastructure, such as cloud computing and AI development. Watch for upcoming local government decisions on data center proposals, which will be crucial for the future of these projects.
Based on reporting by: nytimes.com, fortune.com