As the number of data centers across the U.S. continues to increase, so does public opposition to them.
That has some Arizona leaders looking for new standards for what acceptable data center development could look like.
That public sentiment against data centers was highlighted at a recent protest in Phoenix, where resident Nile Bunger showed up to tell the Arizona Corporation Commission, which regulates state’s utilities, that it should not approve a 14% hike in electricity rates being requested by APS.
“The public are going to have to be at the brunt of making sure these corporations, these shareholders are getting profits,” Bunger said.
The power company says it needs to increase prices because their costs have increased, and they’re investing to meet the unprecedented demand.
The company says it’s also asking to raise rates for larger users — predominantly data centers — by 45%
In late July, it saw record demand 400 megawatts higher than last year’s record. An analysis of early information shows data centers made up half of that growth.
William Carter was among the dozens lobbying the utility regulator.
“I definitely think the data centers and large users should bear their own costs for whatever they want to do,” Carter said.
A pew research report shows Arizona is one of the country’s top data center hubs with over 180 either operating or in development.
Now, cities here are re-evaluating the standards they have to meet.
For years, many city industrial development standards have been based on those established by a trade group called the American Society of Heating, Refrigerating and Air-Conditioning Engineers, or ASHRAE.
Marcus Hassen, chair of the ASHRAE data center committee says their standards for data centers specifically are about 10 years old and needed updating.
“It wasn't obsolete. It was still a go-to standard, and it was applicable,” Hassen said.
But with data center development accelerating, ASHRAE published a new standard last year. And now it’s creating an addendum to address overall water and energy use.
“You could be consuming little water at the site, but the electricity you consume-that's being produced at a power plant somewhere, right? And the generation of electricity, depending on your geography, that can be very water intensive,” Hassen said.
While Phoenix incorporates some of ASHRAE’s data center standards in its building codes, it uses recommendations from 2022.
Mayor Kate Gallego says the recent boom in data center demand means the city needs to go further.
“We want data centers to care about our local communities and invest in a way that creates benefits locally,” Gallego said.
Gallego recently signed onto a pact with about 40 other cities around the world encouraging more stringent data center standards.
Those would make sure the buildings aren’t built too close to residents, don’t cause pollution, and that fossil fuels aren’t used to power them.
“We want sustainable, clean energy to power it, and we want data centers to consider and protect our water supplies,” Gallego said.
And, beyond resource concerns, Gallego says lack of transparency has also led to community outrage.
“It's now pretty widely acknowledged that the data center community needs to do better about being a good neighbor,” Gallego said.
And protesters like Nile Bunger want regulators to take action to protect the public as data center development continues.
“Individuals are going to have higher electricity bills,” Bunger said.
The Arizona Corporation Commission is expected to decide on how much the state’s biggest power company can raise rates by the end of the year.
Meanwhile, in June, state lawmakers voted to pause tax incentives for new data centers for the next three years. But the state saw 113 new applications for developments in the weeks before the pause went into effect.
An industry trade group, the Arizona Technology Council says data centers are a big driver of the state’s $35-billion tech industry. The council’s President Steve Zylstra said in a statement that he doesn’t want to see the state abandon data centers.
But he acknowledged the moratorium could be a way for Arizona to figure out how to accommodate the tech buildings more responsibly.
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