Can’t buy me love: U.S. public opinion turns against data centers – What’s next?

The structure rises up from the tract homes, cow pastures and speedy interstates of the Dallas-Ft. Worth outskirts. It is huge even for a place where, as they say, everything is bigger: more than 2.5 million square feet of interior space covering more than 170 acres. Completed less than three years ago, the bright white exterior gleams in the blazing sun of the late August Texas afternoon. The noise from within is not grating, but rather a constant low whirring, like living next to a multi-lane highway that never empties. There is no external signage on the five massive, inscrutable buildings, save a humble address marker near the entrance: 4500 Like Way. Nor are there any signs of people, just a lone private security guard circling the facility by car.

Meta Platforms’ $1.5 billion Fort Worth, Texas data center seems an unlikely ground zero for the biggest policy debate currently playing out in America today. But the fate of tens if not hundreds of billions of dollars in economic activity; trillions in equity market capitalization of some the world’s largest companies; and the future of America’s energy markets depends on whether buildings like these five can be built across the United States over the next few years in the name of prosperity and innovation. Countering this push is rising public anger over the centers’ pressure on local electricity and water supplies; impact on local communities’ quality of life; and the AI boom’s impact on jobs and society, leading to real questions about the path forward for data-center development.

Given its combination of advanced technological infrastructure and vast open spaces, the U.S. has become a leader in global data-center development. The U.S. contains more than 4,000 data centers, 37% of the world’s total, together consuming more than 4% of all the electricity in the country. Until recently, many residents who lived near proposed data-center sites felt the expected tax revenue and jobs created outweighed pressure on public resources and disruptions to the local environment.

However, public opinion has shifted dramatically as the scale and number of data-center requests has ramped up, while “Not in My Back Yard” (NIMBY) concerns have hit a tipping point. Electric Choice, an electricity marketplace, estimates that 480 new data centers are planned across the U.S. and that electricity used by the industry is expected to double by 2028. A May poll by Heatmap, a news outlet, found that 71% of Americans opposed a data center being built near their home, up from 42% just nine months earlier. Importantly, a majority of those Heatmap polled in May said they supported a nationwide moratorium on new data-center construction.

State governors have scrambled to respond to their constituents’ concerns. The actions span regions and political ideology. In May, Utah’s Republican Governor Spencer Cox signed an executive order directing state agencies to apply tougher scrutiny to proposed data-center projects. Arizona Governor Katie Hobbs, a Democrat, approved a state budget in June that paused new data-center tax incentives for three years. Even Republican Governor Greg Abbott of Texas, which boasts of its pro-growth, low-regulation approach, in August suspended new access to Texas’ electricity grid while the state regulator works through requests from data centers totaling more than five times the state’s current daily power output. Numerous cities and towns have also passed data-center moratoria or bans.

President Trump has weighed in on the tech industry’s side, arguing that the construction of data centers is key to the U.S. winning the AI race against China, and reminding local residents of the benefits the facilities bring to local tax coffers and job markets. In March, Trump signed an executive order directing data-center developers to ensure that their projects do not raise local residents’ electricity rates either by building power plants not connected to the public grid or by making separate investments in impacted local communities – but not restricting data centers.

Where is the debate going, and what does it mean for U.S.-focused investors and corporates?

From following the data-center debate for a number of investor and corporate clients, we believe the following two principles will make a difference in determining which centers in a crowded field are approved and which are not:

1) Resource self-sufficiency.

To date, nearly all U.S. data centers have connected to public power and water networks, though many have their own backup power systems. This is almost certain to change as states and even the pro-AI White House move to protect individual ratepayers. Cleanview, a research firm, calculated in April that 59 planned data centers totaling 90 gigawatts of power are planning to use their own power. This is well less than 1% of the power used by U.S. data centers today, but provides interesting case studies of what subsectors can benefit from the shift. Mobile gas generators, smaller turbines (similar to those built for aircraft or ships), and companies that can repurpose turbines from other industrial uses to meet the data-center demands will all benefit, Cleanview estimates. On the water side, companies and investors are finding ways to use more recycled or reclaimed water, as well as desalination, a practice that is already helping to power data centers in Singapore and Australia, according to Equinix, a global infrastructure-management firm.

2) Take local stakeholder concerns seriously.

Big Tech firms, developers and  investors must go back to the drawing board to respond more carefully and thoughtfully to local concerns about the next round of data-center construction. Money will be necessary but not sufficient. Rather than trying to jam approvals through, developers will have to engage in a more constructive and methodical way to respond to residents’ concerns. Such conversations with local stakeholders take time and patience – not the tech sector’s strength. But giving such conversations time to yield meaningful compromise will pay dividends over the long term. And while perhaps unnerving, the data centers have advantages relative to the manufacturing plants, refineries and other industrial sites that are commonplace in many of the areas where they are planned today: little traffic from workers commuting to and fro; less risk of chemicals leaking into nearby lands and waterways; and lower exposure to the swings in commodity and agricultural prices that have caused many a bust in the American heartland over the centuries.

Data centers are not going away. The AI boom is central not just to the tech sector but to U.S. utilities and energy firms, whose businesses have received a jolt (no pun intended) from the increased power demand. Public anger over data centers is real, but is also being fanned by election dynamics, as many of the governors, state representatives and members of Congress weighing in on the issue are up for re-election in November.

American industry has dealt with NIMBY issues for decades: Public hearings will be held, accommodations made, and economic competition among states will resume. Those data-center developers that can stand more on their own in terms of power and water use, and pay more than lip service to local concerns, stand a better chance of making it to the finish line instead of getting stuck in the queue.