New data centers and other heavy power users may boost local taxes and create jobs but they also risk putting more upward pressure on retail electricity bills, draw heavily on water supplies, pollute the air with diesel fumes from backup generators, and subject residents to constant low-frequency noise.
Rifts in Delaware’s public debate over plans for the giant computer complexes were on display in recent hearings at the Public Service Commission and the state Legislature.
Defenders of plans to build such plants in Delaware say data centers are the inevitable and necessary result of the adoption of artificial intelligence (AI), and that to resist them would be economic folly that simply drives developers toward other states that are seen to be more friendly toward the giant plants.
But critics say electric ratepayers should not have to pay increases, even beyond recent spikes, as a result of huge new demand on the electric grid, at a time when overall electric use is expected to exceed supply in the next few years.
Foes also say communities should not have to live with threats to environmental quality as experienced by some residents of areas like northern Virginia where data center development is already advanced.
Data centers “should be held to the same standard that we are, which is to shoulder the burden of what we are asking of the system and our infrastructure,” said Michael Amos, a New Castle County resident who spoke at a PSC hearing on large-load customers on Feb. 25.
“Data centers are neither villains nor saviors – they’re infrastructure assets”Glenn Davis, former director of Virginia Dept. of Energy
Amos argued that the data center industry is not profitable, and may not be for some time, andstates like Delaware should not be expected to host them if their benefits to the state as a whole are unclear.
“They are anticipating that small states like ours will be throwing our doors open, hoping for some amount of economic benefit,” he said. But he argued that the state would have to pay a high price in transmission upgrades if it is to allow the centers to be built. “They are basically going to monopolize decision-making in infrastructure changes,” he said.
Amos also rejected arguments that data centers create jobs. “Data centers have an extremely low employment density,” he said. “Once construction is finished, they require minimal staffing to operate. What looks like an appealing economic boom at first quickly turns into a desert of opportunity.”
But Glenn Davis, former energy director for the Virginia Department of Energy, told Delaware lawmakers that the economic effects of data centers are “real and transformative.” He said Loudoun County in northern Virginia now gets a majority of its commercial tax base from data centers that contribute “billions” of dollars to local revenues.
Data center revenue there has funded school construction, transportation expansion and public-safety staffing, he told a joint session of the Delaware Senate’s Environment, Energy and Transportation Committee and the House Natural Resources and Energy Committee on how to respond to so-called large load additions to electric demand from industrial users.
Davis said data centers provide significant local revenue without major enrollment growth at local schools; put limited demands on public services compared with residential expansion, and help to pay for roads, schools and other public infrastructure.
In Delaware, data centers “can provide industrial-scale tax base without requiring a large initial workforce,” Davis told lawmakers.
He said Delaware should decide what size data centers it wants; whether they should be subject to large-load tariffs; whether siting decisions on things like noise, buffers or water use should be down to state or local governments, and how attractive the state wants to be for data center development.
“Data centers are neither villains nor saviors – they’re infrastructure assets,” Davis said.
The session was convened by State Sen. Stephanie Hansen (D-Middletown) who is trying to get lawmakers to pass her bill, SB205, which would empower the PSC to approve or deny an operating certificate to a large-load user such as a data center, based in part on its expected impact on retail ratepayers.
“Data center load growth is the primary reason for … total forecast load growth, the tight supply and demand balance, and high prices.”Jameson Tweedie, director of the state’s Division of the Public Advocate
The bill failed to advance from Hansen’s energy committee in January after criticism from trade unions and some lawmakers that too much regulation of data centers and other large load users would drive developers away from Delaware. Hansen says more changes may be needed if the bill is to be approved by the legislature.
The hearing included presentations from Delaware’s Division of Legislative Services, a legislature’s nonpartisan research arm, which said in January that planned data centers are forcing policymakers to seek a balance between economic gains and the wellbeing of communities, especially those concerned with environmental protection. Attendees also heard from Reliability First, a federally endorsed advocacy group that warned Delaware is part of a “high-risk” region where expected energy shortfalls will exceed resource adequacy targets.
In the House, another bill, HB233, would require the PSC to set a special tariff for large-load users. That bill clear a House committee in January, and is now headed for a vote by the full House.
State Sen. Eric Buckson, (R-Dover), said after the joint hearing that he wasn’t ready to vote for HB233, and needed more time to evaluate large-load tariffs.
“The discussion during (the) joint hearing displayed how significant the impact of a large-load data center could be on both our state and local communities, both positive and negative,” he said in a statement. “The scale of infrastructure demands, particularly on our energy grid, combined with the current lack of a clear, comprehensive regulatory framework, makes it evident that the Delaware General Assembly needs to respond thoughtfully and in a bipartisan manner.”
After the hearing, Hansen said it had brought together a diverse range of stakeholders and Delaware lawmakers in the hope of forging a consensus on how to manage large-load users. She said she is still talking about how to move SB205 forward in the Legislature, and hopes it will go for the Governor’s signature by the time the legislative session ends on June 30.
“The impetus of SB205 was to enact guardrails that ensure grid stability and control costs that would otherwise be forced onto Delaware ratepayers — all while considering impacts to our economy, our energy reliability, our environment, and our public health,” Hansen said.
“As we learn more about data centers and what we need to ask and require of data center developers looking to build in Delaware, there may be additional changes to SB205 throughout the legislative process,” she said in a statement, without specifying possible changes.
Critics of Delaware’s biggest proposed data center, the 6 million square-foot Project Washington, cheered in February when state officials blocked the New Castle County plan on the grounds that it would violate the state’s Coastal Zone Act banning some industrial development in the coastal strip. The project’s developer, Starwood Digital Ventures, is appealing the denial by the Department of Natural Resources and Environmental Control.
Regardless of the appeal’s outcome, five other data centers are planned that would use a total of about 1 gigawatt of electricity, an enormous load that’s a little less than the 1.2 GW planned for Project Washington, and about half of what is now used by all of Delaware.
New Castle County Councilman Dave Carter said he had received about 1,000 emails on data centers, and estimated that at least 90 percent of them were in favor of his proposed ordinance that would set conditions for data centers.
In an interview with Delaware Public Media, Carter also blasted arguments by some trade unions and Republicans that regulating the data center industry would deter developers and hurt the state’s economy.
“That is the same worn-out story that the ineffective Chamber of Commerce and the business community of Delaware use for every single issue. They need to wake up and learn that if you don’t do it right, it will hurt businesses because the public is tired of it, and the public wants that balance, and the public wants their communities protected,” he said.
Carter said data centers have a “public relations issue” and if they were smart business people, they would understand that protecting the public from any negative effects is good for business.
Carter amended his ordinance a second time to reduce noise and light restrictions called for in earlier versions, and cut a proposed buffer zone between the plant and homes. On Tuesday, the council voted to adopt Carter’s ordinance, with and amendment that it would only apply to applications filed after it is enacted, exempting the Starwood proposal.
Starwood said some 1,000 New Castle County residents support the project, which would generate jobs and tax revenue.
“The reason New Castle County residents are demanding the approval of Project Washington is because it is a state-of-the-art campus, with the highest commitment to the environment and residential communities, and it will create over 3,500 jobs and provide nearly $60 million each year to the County’s public schools once completed,” said Jim Lamb, a spokesman for the company.
Statewide, the addition of data centers would mean higher electric bills, according to Jameson Tweedie, director of the state’s Division of the Public Advocate, at the legislative hearing.
The scale and speed of large data center development nationally is “unlike anything in decades”, Tweedie said. The PJM transmission area, which includes Delaware and 12 other states in the mid-Atlantic and Midwest, will need to add electric capacity equivalent to that of Texas or California in just the next five years if it is to meet anticipated demand – which is growing much faster than new generation is being built.
If a large data center is built in Delaware, it could affect the reliability of power supply if transmission and local generation don’t match demand, while transmission costs could rise because the local market would face more of the costs of upgrades to power lines, Tweedie said.
“Data center load growth is the primary reason for … total forecast load growth, the tight supply and demand balance, and high prices,” he said. Data center growth, both actual and forecast, is the main reason for the tight supply-demand conditions, Tweedie said.
At the PSC, public commenter Christopher Jamison urged regulators not to allow large-load users to dictate terms under which they would set up in Delaware.
“If you allow industry to try to govern itself, the only people that profit are the industry,” said Jamison, a resident of New Castle County. “They should have no say in it, neither should anybody else coming in and proposing a project that would fall under an AI energy tariff.
“They are going to propose something that is good for them and not great for the rest of us,” Jamison said. “PSC should be coming up with the tariff and telling the industry exactly what we expect of them. Any kind of upgrade, anything that’s added, must be on them in perpetuity.”
