States rethink data centers as 'electricity hogs' strain the grid

In South Carolina, lawmakers have started to question whether these massive power users should continue to receive tax breaks and preferential electric rates.

In Virginia, home to the world’s largest concentration of data centers, a legislative study is underway to learn more about how those operations are affecting electric reliability and affordability.

And Georgia lawmakers just passed legislation that would halt the state’s tax incentives for new data centers for two years. Georgia is home to more than 50 data centers, including those supporting AT&T, Google and UPS, according to the state commerce department.

Georgia Republican state Sen. John Albers, a sponsor of the Senate bill, said the significant growth of data centers in his state has helped communities and schools by boosting property tax revenues. But, considering factors such as water and electric use, he said the return on the state’s investment “is not there” and that “initial findings do not support credits from the state level.”

Nationwide, data center subsidies were costing state and local governments about $2 million per job created, according to a 2016 study by Good Jobs First, a nonprofit watchdog group that tracks economic development incentives. That figure has certainly ballooned in recent years, said Kasia Tarczynska, the organization’s senior research analyst, who authored the report.

The Georgia bill now sits on the desk of Republican Gov. Brian Kemp, whose office did not respond to a request for comment.

The Data Center Coalition, a trade group representing tech giants including Amazon, Google and Meta, is urging a veto.

Josh Levi, president of the organization, said data center companies are investing billions in new Georgia data centers, making metro Atlanta one of the nation’s biggest industry hubs.

Levi noted that lawmakers in 2022 extended the state’s tax credit program through 2031.

“The abrupt suspension of an incentive that not only has been on the books, but that was extended two years ago, I think signals tremendous uncertainty, not just for the data center industry, but more broadly,” he said.

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