Should You Oppose Your Local Data Center? - DTNS WEEKEND

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2:25Welcome to a DTNS special weekend edition. I'm Tom Merritt and it's just me today. This is a new thing that I want to try from time to time. So let me know what you think about it. feedback at dailytechnewsshow.com. I'm going to do a deep dive into data centers today. This is just going to try to arm you with things that you might not have heard just looking at the cigarette tobacco that is social media out there. Try to organize all the things that I could find that are reliable to know about data centers. And this is all following a Gallup survey that was published this past week that found that opposition to data centers being built near your house in the U.S.

3:09was at 70 % this year. Now, you compare that to a poll from Ipsos that was taken toward the end of last year, the opposition was 47%. It's not fair to compare these directly. I wouldn't go so far as to say opposition has risen from 47 % last year to 70 % this year because you have two different polls with two different methodologies, but it is enough of a gap. It's enough of a change to, I think, comfortably say opposition is on the rise and probably legitimate to say the majority of people in the U.S. don't want a data center near their house. So let's look into why that is, what people believe, what you can know is a legitimate reason to oppose these, which there are many.

3:57And what are some of the things that companies are trying to do to counter that opposition, both for good and ill? Some of them are good. Some of them are ill. Obviously, the big one and the most legitimate one is electricity price rises. A Bloomberg study back in September found that price rises over the past five years. So they looked at prices of electricity five years ago, prices of electricity today, in areas near significant data center activity were quite a bit more significant than areas not near significant data center activity. So you'll see the headlines say some crazy 200 % figure.

4:42That's one place where they could say, oh, in this one particular area, it was 200%. But overall, it's still big. So probably the thing to think about for your own decision-making process are numbers like in Baltimore, it was 125%, again, over five years. In Columbus, Ohio, home of our dear friend Rob Dunwood, up 110%. Tulsa, Oklahoma, up 108%. So these are not California, New York situations. These are places where they are building data centers, and you're seeing the price of electricity also rise. This is correlative, okay? But what Bloomberg found is you see these rices more often in areas near places with high data center activity.

5:29You are seeing price declines in Texas, Oklahoma, Kansas, Nebraska, South Dakota, and Iowa. That is a part of the story that doesn't get reported as much. In these areas, you are seeing an overabundance of electricity. So that points to an issue with grid transportation. If you could get the cheap electricity into the areas with the expensive electricity, you can balance that out. And some people argue that that's why you're seeing these crazy numbers is it takes time for the system to work that sort of thing out and bring down the prices elsewhere. But one thing that Bloomberg put out that I think is worth thinking about, 70 % of the nodes recording price increases in 2025 were within 50 miles of data center activity.

6:15So what I would say personally is obviously when data centers are in your area, there is at least a short-term price rise, a price effect on electricity. You're going to see a little more of an electricity rise. You did see that. I should put that in the past tense because there are things happening that I think might change that. And the other thing I'm going to repeat a few times is we haven't even seen the AI effect on data centers yet. So everybody looks at this and says, see, the AI data centers are the ones causing the price increases. A lot of this is data centers that were already in creation to do cloud computing and all the things that you do on the internet.

6:56This is the rise of the use in the internet causing a rise in data centers that is accelerating. Some of this is from AI, but we haven't seen the bulk of that yet. It's also not just the United States. It's worth pointing out that power auction prices hit an all-time high in Japan last year because of data center demand. Malaysia raised its rates on data centers because they were starting to pull so much electricity around. And it's happening in other areas as well. In the United States, all of the electricity operators are projecting a huge surge in electricity. And some of them and some outside analysts are saying this could end up being the biggest surge in demand since air conditioners became popular in the 1960s.

7:42There was a huge surge in electricity demand and we had to deal with adding capacity because people said, wow, it's really nice to not have to sweat inside your house. And air conditioning went crazy in the 1960s. One of the electrical utilities you will hear talked about the most is PJM Interconnection. They are the operator of the largest U.S. electric grid, covering mostly the northeast of the country. PJM warned that rapidly growing power demand from data centers is contributing to major grid stress and rising capacity costs across the Mid-Atlantic. Cost for consumers from Illinois to Washington, D.C.

8:24rose by more than$9.3 billion starting in June of 2024 to June of 2025. So, again, not all of that is related to AI, but a lot of it is. And a lot of it is related to increasing cloud computing use as well. And it is causing PJM Interconnect to have to raise its rates. A lot of people are criticizing the way PGM Interconnection conducts its wholesale auctions. I would refer you to SemiAnalysis, an excellent newsletter on Substack, and I'll put that in the show notes as well. They do a great job of showing how PJM and ERCOT, another very large utility aggregator, conduct things differently and have different results.

9:15And a lot of the arguments are that this will be a temporary thing. I don't think a price rise is ever temporary. So I'm going to push back a little on that, but that it won't continue to rise, that they'll work this sort of thing out. And sometimes you do see prices decline in the electricity market, as I pointed out, in that central corridor of states in the middle of the United States. Another thing to look at is I mentioned Texas had some areas with a decline in electricity costs. Texas is also a place where people are building a lot of data centers. You've got OpenAI, you've got Google DeepMind, you've got Anthropic, all building massive facilities in Texas.

9:53And the power futures in Texas have only gone up a couple of percent. There are some areas where the prices have declined. There are some areas where the prices are increasing in Texas too. And overall power futures are just a little bit up versus the futures that you see from PGM Interconnection, which are significantly up. So it doesn't have to cause a concern of price rises. It depends on how that wholesale market is conducted. And I would say for me as a citizen, that's something I want to look at and say, what is ERCOT doing? What are they doing in Texas that is different? Can I lobby my local electric utility to do the same thing?

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13:46Also, worth pointing out that data centers aren't the only reason that electricity is rising. So you can see correlation between data centers and rising electric rates. But you will also see people in bad faith attributing all the rise in an electric rate to a data center. And that's not fair. Electric vehicles are causing a huge uptick in electricity use, especially in certain areas where they're popular. Cryptocurrency mining has caused a lot of electric use to continue to rise. It's not as much of a factor as it used to be, but it still exists and it still is something that uses a lot of electricity.

14:27New factories. We are building more factories in the United States than we have in the past. And factories use a lot of electricity and need a lot of electricity and need a lot of capacity to be added to them. Also, just climate change and the fact that you have a rise in home heating needs has raised demand. There's a little bit of a rise in air conditioning as well, but mostly it's home heating in cold winters that is causing a rise in demand, too. So remember, when you see that eye-watering rate, it's probably not as bad as it looks because there are also these other factors here. That doesn't make the problem go away.

15:02We still need more electricity for these other things as well. The highest projected data center electricity consumption is expected to happen in the following states. If you are in these states, this is where you need to pay the most attention. Virginia, Oregon, Iowa, Nevada, and Utah. Okay, that's the electricity situation with data centers, which is they do cause a rise in a need for electricity capacity. They do have tended to cause a rise in rates. And we'll talk a little bit about what companies are doing and what utilities are doing to keep that from becoming a problem for you as the rate payer.

15:42But it has caused a rise in rates in some areas, not everywhere. All right. The other objection is air pollution from additional power sources. Some of these data centers, especially third-party ones, you hear a lot of good things from the first parties like Anthropic and Google, et cetera. But you also have third-party data center providers that Anthropic and Google and others don't have direct control over. and those data center operators will often put in either coal-fired power or natural gas, and you have air pollution from those power sources. So that's another thing to look at if a data center is coming into your area.

16:19How are they going to power it? Are they going to have on-site power? And if they are, what kind of on-site power? Is that going to add air pollution to your area? Water abuse is another, I believe, somewhat exaggerated concern because new designs can recycle water, but not all data centers used that design when they were created. And I've got a good example of another water use problem that clouds the water, as you might say. Quality Technology Services in Fayetteville, Georgia drew in 29 million gallons of water unmetered, causing low water pressure in the community. this data center uses a closed loop system.

17:06This is ripe for you to misunderstand. It is ripe for someone to try to make you misunderstand by saying they're using a closed loop system and they stole 29 million gallons of water. Now there's a whole story, Tom's Hardware does a good job of covering this about the fact that it was unmetered and whether they're gonna get fined, which it doesn't look like they are. But why, I ask, just wanting to look at the technology side of this, was a closed loop system using so much water? And the answer is it wasn't built yet. They used the water during construction activities, concrete work, dust control, site preparation.

17:42So that is something to look at when you're looking at water use. It's easy to get distracted on, they are going to use a lot of water. First thing to do is say, is this data center being built in my home area using a closed loop system? It should be. If it's not, ask why and ask what that water impact is going to be on your area. But if it's using a closed loop system, you can sort of say, okay, that shouldn't use much water during the course of its operation. How much water are you going to use during the construction? And what will the impact be on that? How are you going to pay for it? Because that's true of any factory.

18:14That's true of any construction. You're going to need a lot of water for the construction. So don't forget to look at that part of this. The good news is once they have finished constructing it, if it is a closed loop system, the water impact should be pretty minimal. There's also the noise pollution aspect of this. That's a bit of a NIMBY, not in my backyard, sort of concern. If you are not right near the data center, you shouldn't hear a lot of noise. But within a few hundred feet, it can reach 96 decibels all day, every day. So you don't want this right next to your house. You probably do want them to put it in rural areas, and we'll get to that in a little way, away from other occupied areas.

18:59And there's also something called infrasound, which are low frequencies, which can be felt but not heard. There are a lot of claims about the effects of infrasound. There are not a lot of evidence about what those effects are. And again, when I say there's not a lot of evidence, that's not me saying there isn't any effect. That is me saying literally there's not. We don't know if there is an effect from infrasound. But again, if you keep the data center far enough away from occupied areas, then you won't have to deal with whether there is an effect of infrasound or not, but you will hear that come up.

19:36So that's just something to know. It's vibrations in the ground, low enough frequencies that you don't hear it, but maybe you feel it. Now, here are some of the things that the companies are doing in order to ameliorate these problems. One is build on rural or unincorporated land. I was just talking about that. If you go and you build it away from populated areas, especially these noise issues become less of a problem. It also makes it easier for the data center to get approvals. If you don't have to go to the town's city council, if you can just go to the county board, then you get easier approvals because you have fewer people that you're impacting.

20:17Now, that means if you live in a county, especially if you live in a rural area, you want to pay attention to this and you want to make your voice heard because your voice will be heard even more in a rural area than it will in a city where there's a lot of people. Still waiting in line? Again? That's time you will never get back. Save time and money with Stamps.com. Over 4 million businesses have skipped the line with Stamps.com. Join them to save up to 90 % off carrier rates from your computer or phone right now. Print postage for certified mail, registered mail, and packages in seconds. Then schedule a pickup right from your home or office.

20:54For a limited time, go to Stamps.com and use code PODCAST for a free welcome gift. Taxes and fees apply. Security program on spreadsheets, new regulations piling up, and audit dread? It's time for Vanta. Vanta automates security and compliance, brings evidence into one place, and cuts audit prep by 82%. Less manual work, clearer visibility, faster deals. Zero chaos. Call it compliance or call it compliance. Get it? Join the 15 ,000 companies using Vanta to prove trust. Go to Vanta.com slash com.

21:33Utah has approved nine gigawatts worth of data centers. That doesn't mean there's going to be a nine gigawatt data center. That's a lot. Utah has said, we think we can accommodate over 10 years, nine gigawatts worth of data centers, but it has to be an unincorporated land in Box Elder County. So don't get too hung up on the amount. That's an eye-watering amount of data centers, but They're sort of saying, we give you lots of room to grow as long as you do it out in unincorporated land. Meta is building in a rural northern Louisiana area with its own natural gas power plant, something to keep an eye on for emissions.

22:13And they say that they will eventually build or could build up to seven gigawatts worth. But they're going to have their own power plant, so that shouldn't have an impact on Louisiana because it's out in the rural areas, shouldn't have sound impacts too much. and even the emissions won't at least impact people locally, although there are impacts on all of us when you have emissions. There's also promises to pay for added capacity. Microsoft did this on its own. Before anybody asked them, they put out like, we are going to make sure that we pay our way. If we need extra power to run our data centers, we will either add it ourselves, which they have done by contracting with Three Mile Island, or we will pay the electric utility to add that capacity.

22:59On March 4th, several companies signed a non-binding ratepayer protection pledge in the U.S. This doesn't do much to force them. If you're looking at it as like, how can I hold their feet to the fire? They signed the ratepayer protection pledge. You can just say, hey, you signed that. Did you not mean it? But there's no penalty for it. So on the one hand, it's not like legislation where you can take them to court. However, it is something that court of public opinion can use to say, your promises mean nothing, you are a liar, if they were to go against it. So I don't find these sorts of public things entirely useless.

23:36I think we tend to want to dismiss them of like, well, if I can't sue them, then it's useless. There is a psychological thing to saying something in public that makes you more likely to do that thing. So it's not entirely useless, but it's not as good as a actual binding pledge. However, the companies are doing a lot to work, like I said, with Microsoft to provide their own power. And Google, particularly, among others, is working to use less power as well. Their operations deliver six times the compute per kilowatt that it did five years ago. And they're continuing to work on efficiency. NVIDIA continues to try to make its equipment more efficient.

24:22That is something that you need to keep an eye on and hope continues to improve as well. The more efficient this kind of equipment gets, the less power that you have to use for the increasing demand. And some of those worst case estimates don't end up becoming worst case because we get better efficiency. Microsoft has agreed on tariffs with WeEnergy in Wisconsin. tariffs in this case doesn't mean like import tariffs. Tariffs just means charge fees that they're going to pay to WeEnergy in Wisconsin for a new data center complex. So the short version there is Microsoft has agreed to pay for the increased capacity needed for that complex.

25:01And some power companies have moved to require technology firms to put up more collateral or straight out pay for specific amounts of electricity, even if they end up using less. So electric company says, look, we're going to pay to add this capacity. You have to guarantee you're going to pay to use it. If you end up using less, that's not good. That sounds great, but it does disincentivize the efficiency. So if you're going to pay for the electricity anyway, then do you really need to use more efficient equipment? You probably do because it means that you're going to get more compute. But it does have a little bit of a downside there.

25:44In Oregon, lawmakers passed last June the Power Act, which is designed to help power utilities strike fair deals with data centers and crypto miners. It just eased up some of the rules about what they can say and what they can do and what they can ask for. And then there's the idea of adding electric capacity. I talked about Microsoft working to restart some nuclear power plants. There's that going on. AWS, Amazon's cloud computing operation, entered a$650 million deal in 2024 to purchase a data campus that is with a nuclear plant. So they hope to obtain zero carbon electricity by doing that. So look for those as well.

26:30Those are good signs where we are adding capacity that doesn't add emissions and powers the data center without impacting the electricity that you get. That's a lot. I know. And this is not me trying to say don't oppose a data center. This is me trying to say here are things you can reasonably understand to know whether you should oppose a data center in a particular instance. I worked with one listener, they know who they are, to try to help marshal some of these resources so they could be armed with facts when they go into these kinds of meetings. I know some of these meetings get headlines because there's fisticuffs or shouting or anything.

27:12But really, the better thing to do is go in armed with facts and go to your elected representatives and say, hey, we're not trying to say we don't want jobs. We're not trying to say we hate the Internet unless you don't want jobs or hate the Internet. but you can go in with a like, hey, I want everybody to win here. Is there a way for that to happen? And I think these kinds of pieces of information can help you do that. If you want the links, I will have that all in the show notes. So you can get directly to the sources that I used here. And I hope that this helps everybody to understand the issue.

27:49Even if you're not actively involved in some kind of negotiation or anything like that, at least you kind of have a better understanding of what the deal is. Why are people upset? And what are data centers trying to do to say, well, we need this compute. How could we do it responsibly? If you like this sort of thing, you can support us at patreon.com slash DTNS. That is where the show is entirely funded. Well, not entirely, mostly funded. It's the funding I pay attention to put it that way you can also support us on sub stack uh we are at dtns.substack.com thanks everybody for supporting the show who already do if you don't hey come on in and join we got lots of cool perks we got a discord going on all kinds of stuff and have a great weekend we'll be back with the regular news on monday talk to you then

28:53The DT &S family of podcasts. Helping each other understand. Diamond Club hopes you have enjoyed this program.

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