The controversial Project Blue data center project near Tucson will likely get the go-ahead, even though it has faced intense backlash from the community and was voted down by the Tucson City Council earlier this year.
The project seemed dead at that point, but now it’s back after the Arizona Corporation Commission voted last week to approve a plan to let Tucson Electric Power power the project.
Longtime Arizona Daily Star environmental reporter Tony Davis broke the story that Project Blue’s original operator — Amazon Web Services — pulled out of the plan.
He joined The Show to talk more about the latest developments.
Full conversation
TONY DAVIS: It definitely looks like it might happen. The Corporation Commission approved an energy sale agreement between them and Tucson Electric Power, the local public utility down here. And that gives the utility the legal right to sell them power, sell them energy to power the huge network of servers that they’re going to have to have for these data centers.
And it was very controversial. Like everything involving Project Blue, there was dozens of speakers who testified against it, who don’t trust Project Blue to keep their promises and who don’t think there’s enough strength in the agreement to protect ratepayers in the event AI collapses and Project Blue falls apart.
Now I will add, on the side of Project Blue is that they insist that they’re not doing an AI set of data centers down there. It’s going to be all for cloud computing. But the distrust is still there.
And it was a 4-1 vote. There was one dissident (Commissioner Rachel Walden), and it was kind of a surprise because she’s a very conservative person philosophically, but she was grilling them and grilling the TEP people and the Project Blue people with questions, and she wouldn’t let go.
LAUREN GILGER: So let’s back up then and talk about how we got here. Because this Project Blue thing has been so controversial in Tucson, and it seemed like not that long ago it had basically been killed because of opposition, so many people speaking out against it at public meetings, etc. The City Council eventually voted not to allow this data center to use the city’s water.
How have they changed the plan so that it might happen now?
DAVIS: Well, first of all, they started out with Project Blue by getting approval from the Pima County Board of Supervisors to sell them 290 acres of land that the county owns to put the data centers. And the County Board of Supervisors also approved the zoning. And the thinking was, and what the supporters were saying, is it’ll be an easy ride for them to get annexed and to get water delivered to them by the city.
And as you noticed, the City Council turned them down — not just turn them down, but turn them down unanimously. But that didn’t kill the approval that the county had made for the land sale or for the zoning. So they still have the formal right to build there. And so what they did is they did change their plans.
Instead of using a data center set that was heavily dependent on water cooling, they switched to air cooling, which doesn’t use nearly as much water. It uses a lot more electricity. But for that, they said they’ll just have less computing power for their data centers. So they don’t have to get any more energy than what they were already going to get from TEP.
So they kind of skated through it.
GILGER: So this change of plans, Tony, also has to do with why Amazon, which was all along assumed to be or is supposed to be the operator of this big data center, has pulled out. This was Amazon Web Services.
You reported they’re not going to be the operator involved anymore. Why?
DAVIS: Well, the story that I heard was that Amazon is not comfortable with this air cooling thing. That that’s just not something they do when they do data centers. And they never talked to me, and I don’t know exactly what their thinking was, but that’s what several sources told me — the same sources who told me they were pulling out.
It’s important to note that Project Blue has never actually confirmed that Amazon was going to be their operating partner. And they never confirmed that Amazon pulled out. But at the Corporation Commission hearing, the Project Blue people — they have a company that’s getting the development done called Beale Infrastructure — they were asked about this and all they would say is we’re confident we’ll have an operator to run the data centers by the time they’re ready to go online in 2027.
And you know that what that means is what it seems like right now, they don’t have anyone because if they had somebody, I think they would have said it.
GILGER: So where does this leave the project? You’re reporting now that they’re looking for a new operator, and that Meta might be interested. Those are unnamed sources telling you that as well. What would be their interest in this?
DAVIS: Well, Meta is big on renewable energy, they say they are and I think they like the air cooled data centers because they don’t use as much water. But at the hearing at the Corporation Commission, a number of speakers got up and said they’d heard that Meta has already pulled out. Now Meta did not return my emails asking about this, but I heard the same thing from a couple county supervisors.
The tenor and the tone of the conversation at the Corporation Commission meeting is that Project Blue still does not have someone to operate the place, and they’re going to have to hunt. Now the opponents are all saying, “Well, we scared them away. We raised so many important questions about this that nobody’s gonna want to come and do this.”
That’s totally unproven, but it’s not completely unreasonable.
GILGER: OK, so let me ask you lastly about the renewable energy part of this. The Corporation Commission, when they approved this, did pledge to match 100% of the energy used by Project Blue with renewable energy. And as you said, both Beale and, you know, if Meta’s potentially interested, they’ve all said that they want to use renewable energy sources for this kind of thing.
What does that kind of scheme look like? How would that function?
DAVIS: I still don’t fully know, but TEP had already agreed to build a bunch of renewable energy projects that are just slowly starting to go online now. So I first thought that that’s where Beale was going to get a lot of its renewable energy from.
But I think that some of that stuff is pledged to other uses and Beale is going to have to do something called buying renewable energy credits, which means that you pay somebody else to do renewable energy somewhere else and you can credit that against the nonrenewable energy used here.
And exactly how that’s going to work, I don’t know because at the Corporation Commission, they didn’t discuss it. They didn’t say how this is gonna work. A lot of opponents are very suspicious of this, but we’ll just have to see.
GILGER: Let me ask you, Tony, before I let you go, about the large number of people who have been very angry about this in the Tucson area. I mean, what are they saying about the fact that even though they put up such a fight, it’s probably still gonna happen?
DAVIS: They’re very depressed and very disheartened by it. They feel like they wanted to get the county to cancel the land sale and the county said they can’t, it’s under contract. They fought the Corporation Commission, and they lost. They’re very discouraged, and they’re feeling they’re not being listened to. At some of the meetings in Tucson, as many as 1,000 people turned out right.
I’ve been covering meetings here off and on for 40 years, and I’ve never seen 1,000 people at anything or even heard of it since they tried to build a bunch of freeways here in the early ’70s. And 1,000 people turned out to fight that. But since then, nothing like that.
GILGER: Why do you think this has hit such a nerve?
DAVIS: It’s high tech. People are suspicious of high tech. People are nervous about artificial intelligence. They are nervous because of the Colorado River situation. Everybody here is nervous about their water supply, and they don’t want somebody else coming in and using a lot of it. There’s an anti-development attitude here in this city.
It’s always been there, but I’ve never seen it as strong and as articulate and so many people as for this.
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