Google recently courted the township of Franklin, Ind., so that it could construct a giant campus to house the computer hardware that powers its internet business. But the company needed to rezone more than 450 acres in the Indianapolis suburb, and residents weren't having it.
Many were concerned the facility would consume huge amounts of water and electricity while delivering few local benefits. When a lawyer representing Google confirmed at a September public meeting that the company was pulling its data center proposal, cheers erupted from sign-waving residents.
Similar fights are happening around the United States. On one side are companies pouring billions of dollars into data centers, which increasingly are being built to support artificial intelligence models that promise to transform how people live and work. On the other side are residents who worry the construction spree will have dire consequences for the environment, power prices and surrounding communities.
How tech companies and government officials handle those concerns will shape the industry's future in the U.S. and the country's competitiveness, according to analysts and academics who track the AI industry.
Local opposition "slowing down the development of the industry or distributing it in sort of weird regional patterns is probably the most overlooked potential outcome in this conversation," says Joseph Majkut, director of the energy security and climate change program at the Center for Strategic and International Studies.
Here's what you need to know about the data center and AI boom — and what's at stake.
What are data centers?
Data centers are big buildings that house computer hardware to store and process digital information. They essentially function as the backbone of the internet. Some of the largest cover more than a million square feet — the size of more than 17 football fields.
When you read this story, or send an email or transfer money from your bank account online, you're relying on data centers scattered around the world.
And that computing power has a big environmental footprint. A typical AI data center uses as much electricity as 100,000 households, and the largest under development will consume 20 times more, according to the International Energy Agency (IEA). They also suck up billions of gallons of water for systems to keep all that computer hardware cool.
Why am I hearing so much about data centers right now?
Data centers have been around for decades. But there's an investment frenzy around AI right now that's fueling a construction boom.
That growth is being driven by AI investors seeking enormous profits, thanks to the rising interest in AI from individual consumers and businesses. Within two years of ChatGPT's launch in 2022, for example, around 40% of households in the U.S. and United Kingdom reported using AI chatbots, according to the IEA. Roughly the same share of large companies were using AI last year, up from around 15% in 2020, the agency said.
Tech companies are spending hundreds of billions of dollars on data centers and AI computer chips. They're betting that more people and businesses will use the technology in the future. By 2027, AI is expected to account for 28% of the global data center market, according to Goldman Sachs, more than double its current share.
Where are data centers being built?
With money flooding in, developers are flocking to areas where a lot of data centers are already, like Northern Virginia's Data Center Alley and parts of Texas, according to the IEA. But the agency said there are also signs that development is spreading into other markets, like Las Vegas, that offer affordable land, cheap electricity from renewable power plants and industry tax incentives.
The Federal Reserve Bank of Minneapolis said this month that "a potential data center boom is just getting started" in its district, which covers Minnesota, Montana, North Dakota, South Dakota and parts of Michigan and Wisconsin.
"It definitely feels like we are starting to see the rollout of what these massive investments in data centers are potentially going to start to look like on the ground," says Melissa Scanlan, director of the Center for Water Policy at the University of Wisconsin-Milwaukee.
What are the benefits of AI?
Artificial intelligence generally refers to computer systems that learn to carry out tasks that traditionally required human intelligence, like reasoning and decision-making, according to NASA.
Some AI is being used to make images and videos online. The IEA says it's also being deployed in the medical field, to rapidly map protein structures for drug development; in the energy industry to quickly detect pipeline leaks and manage electricity networks; and in weather forecasting, to produce more accurate outlooks.
To remain competitive, the U.S. needs to be able to respond to what the market demands, whether it's "more AI in the form of robotics, or we want much more in the form of digital services to make professionals more productive," says Majkut of the Center for Strategic and International Studies. "Then there's a variety of applications in the national security, cybersecurity realm where the U.S. having a strong lead in the best [AI] models, the best chips, I think, is also something we want to pursue."
Does it matter if the data centers that train and run those AI models are located in the U.S.? There are certainly potential economic benefits, like construction jobs and local tax revenue. But some localities are giving up a portion of those payments by offering tax breaks to lure project developers.
"Because much of the upfront investment is about physical infrastructure, having that investment here is hugely beneficial to the American economy," says Andrew Chien, a professor of computer science at the University of Chicago and a senior scientist at Argonne National Laboratory. The challenge for communities is figuring out how to turn those initial investments into long-term benefits, Chien adds, like high-paying jobs.
Since it doesn't take many people to operate a data center, once they're built, the facilities don't usually support many permanent jobs.
What's driving the local pushback against data centers?
Some people don't want huge industrial facilities — and all the noise and light that comes with them — changing the character of their community.
But people are also concerned about data centers depleting local water supplies for their cooling systems, driving up electricity bills and worsening climate change if the facilities rely on fossil fuel power plants for the electricity they need. The IEA says climate pollution from the power plants that run data centers could more than double by 2035.
Consider what's happening around the Great Lakes, where Scanlan of the University of Wisconsin-Milwaukee says there's a flurry of data center activity. The Great Lakes can be thought of as "a giant pitcher of water with straws going into it" from water utilities, business and power plants in eight states and two Canadian provinces, Scanlan says. The question is, how much more water can the lakes provide for data centers and the power plants needed to run them in the coming years?
In Georgia, some residents reported problems getting drinking water from their wells after a data center was built nearby. And in Arizona, some cities have restricted water deliveries to facilities that use a lot of water, including data centers.
Dan Diorio, vice president of state policy at the Data Center Coalition, an industry group, says companies have been working to reduce how much water their facilities consume. While some data centers use evaporative cooling systems in which water is lost as steam, others rely on closed-loop systems that use less water. A Google data center in Georgia uses treated wastewater for cooling and then returns it to the Chattahoochee River, Diorio said. And there's a push for waterless cooling systems.
"It's a balance between water and electricity," Diorio says. "If you use more electricity to cool, you're going to use less water. If you use more water, you'll use less electricity."
Rising electricity bills are also a major concern as data centers spike power demand in certain areas. An analysis by the Union of Concerned Scientists recently found that in 2024, homes and businesses in Illinois, Maryland, New Jersey, Ohio, Pennsylvania, Virginia and West Virginia faced $4.3 billion in additional costs from transmission projects that were needed to deliver power to data centers.
Diorio says the data center industry "is fully committed to paying its full cost of service for electricity."
Data centers aren't the only source of new power demand. The construction of factories and increased sales of electric vehicles and home appliances like electric stoves are also increasing the country's electricity needs.
Compounding the concerns of data centers' environmental and economic impacts is frustration that tech companies aren't forthcoming about their operations. Without more transparency around water and energy consumption, Scanlan says the public doesn't have the information it needs to make informed decisions about data center development.
Diorio says data center companies are trying to be "responsible partners" in the communities where they operate. But they sometimes worry that sharing information about their water and energy use could give rivals a competitive edge.
Are there other challenges to data center development?
The big challenge is having enough electricity to meet rising demand.
The Trump administration has been taking steps to limit development of renewable energy projects. Industry executives and analysts say renewables are crucial to boost power supplies because the projects can be built quickly, and they generate electricity that is relatively cheap.
Pavan Venkatakrishnan, an infrastructure fellow at the Institute for Progress, says there's a "clear conflict" between the administration's position on renewables and its desire to accelerate data center construction.
A White House spokesperson, Kush Desai, said in a statement that AI "cannot be beholden to unreliable sources of energy that must be heavily subsidized to be economical. The Trump administration is focused on unleashing the forms of energy — from natural gas to nuclear — that do work and that do not need consistent government subsidies to power the next Golden Age for America."
Solar and wind power coupled with large batteries to store electricity are reliable power sources. There's also widespread agreement among energy analysts and executives that natural gas and nuclear will play an important role in meeting new electricity demand. But they say those technologies can't be deployed quickly enough at scale right now to meet the country's immediate needs.
Note: Google is a financial supporter of NPR.
Copyright 2025 NPR