The buildout raising your electric bill is sized to demand that is mostly speculative — and the regulator built to stop exactly this kind of cost-shift has been reduced to signing off on it.
So what is the solution? It should be illegal to price utilities based on projection. Why are we allowing monopolies? Would publicly owned utilities serve us better?
It does seem as if at least some data centers harm the environment. Dani Smart has a piece about a data center built in Mississippi that is causing some serious air pollution downwind in Memphis. If she is correct, that is a public health hazard. https://danismart.substack.com/p/memphis-and-the-price-of-someone
"How they’re going to “suck up every drop of water” (not true).
Bryan, this is the only point in the entire post I disagree with you on. I've been following water issues nationwide for many years and we are nearing a crisis point even without data centers. They are just the straw that might break the camels back. Between climate change decreasing snowpack in the West, aquifer depletion nationwide and billionaires and private equity quietly buying up water rights all over the country, we are in trouble. And data centers will just accelerate that.
But the idea that a query on ChatGPT kills the planet because it turns potable water into toxic sludge is incorrect.
Now, I will say that I find municipalities, again, willing to sell this water, resulting in a tax on their citizens (and the rest of us indirectly), because ultimately, demand for potable water is no different from the demand for reliable electricity.
In places like Colorado, both are challenging, and it begs the question of why allow data centers to be built there.
I discuss that in the piece.
As for the water question…
Water "scarcity" in the Colorado River basin is real at the system level, but it's allocated, not auctioned. Cities, farms, and industry hold rights under a century-old compact, and ag uses ~70-80% of it, growing low-value crops (alfalfa, much of it exported). So when a state says "we have no water" and then approves a datacenter, what's actually happening is a reallocation: water that was legally locked into cheap agricultural use is being freed up — by buyout, by lease, by municipal supply deals — and moved to a buyer who'll pay vastly more per acre-foot. The datacenter isn't drinking water that doesn't exist; it's outbidding a farmer who was using more.
Also worth noting: not every data center is water-hungry in the same way. Newer designs use closed-loop or air cooling and burn electricity instead of water, which just relocates the resource problem to the grid (and the water used to generate that power elsewhere).
But of course, who profits: the local government gets a tax base and a press release about "tech jobs" (datacenters employ almost nobody after construction — dozens of permanent staff for hundreds of millions in capex). Utilities get a massive new ratepayer. Landowners and water-rights holders get a liquidity event. Hyperscalers get cheap-ish land, cold-ish climate, and a regulatory regime that doesn't make them disclose much. The cost — drawdown, higher rates, evaporative loss — gets socialized across everyone else's bill and the watershed.
Data-center or no data-center, that water is getting sold. All that’s happening is that everyone pays more, and farmers are cashing out in favor of letting “Grok” make pedophile Nazi pictures, or whatever it does.
That’s not a great outcome, I’ll admit. But the water is going to get sold either way.
I’m confident this is correct. As utilities lose revenue to solar panels and battery systems they have to beef up income in a way that looks plausible. With so much money being offered to build data centers why wouldn’t they jump on board?
So what is the solution? It should be illegal to price utilities based on projection. Why are we allowing monopolies? Would publicly owned utilities serve us better?
It does seem as if at least some data centers harm the environment. Dani Smart has a piece about a data center built in Mississippi that is causing some serious air pollution downwind in Memphis. If she is correct, that is a public health hazard. https://danismart.substack.com/p/memphis-and-the-price-of-someone
"How they’re going to “suck up every drop of water” (not true).
Bryan, this is the only point in the entire post I disagree with you on. I've been following water issues nationwide for many years and we are nearing a crisis point even without data centers. They are just the straw that might break the camels back. Between climate change decreasing snowpack in the West, aquifer depletion nationwide and billionaires and private equity quietly buying up water rights all over the country, we are in trouble. And data centers will just accelerate that.
Water issues are dire in some parts of the US.
I won’t deny that.
But the idea that a query on ChatGPT kills the planet because it turns potable water into toxic sludge is incorrect.
Now, I will say that I find municipalities, again, willing to sell this water, resulting in a tax on their citizens (and the rest of us indirectly), because ultimately, demand for potable water is no different from the demand for reliable electricity.
In places like Colorado, both are challenging, and it begs the question of why allow data centers to be built there.
I discuss that in the piece.
As for the water question…
Water "scarcity" in the Colorado River basin is real at the system level, but it's allocated, not auctioned. Cities, farms, and industry hold rights under a century-old compact, and ag uses ~70-80% of it, growing low-value crops (alfalfa, much of it exported). So when a state says "we have no water" and then approves a datacenter, what's actually happening is a reallocation: water that was legally locked into cheap agricultural use is being freed up — by buyout, by lease, by municipal supply deals — and moved to a buyer who'll pay vastly more per acre-foot. The datacenter isn't drinking water that doesn't exist; it's outbidding a farmer who was using more.
Also worth noting: not every data center is water-hungry in the same way. Newer designs use closed-loop or air cooling and burn electricity instead of water, which just relocates the resource problem to the grid (and the water used to generate that power elsewhere).
But of course, who profits: the local government gets a tax base and a press release about "tech jobs" (datacenters employ almost nobody after construction — dozens of permanent staff for hundreds of millions in capex). Utilities get a massive new ratepayer. Landowners and water-rights holders get a liquidity event. Hyperscalers get cheap-ish land, cold-ish climate, and a regulatory regime that doesn't make them disclose much. The cost — drawdown, higher rates, evaporative loss — gets socialized across everyone else's bill and the watershed.
Data-center or no data-center, that water is getting sold. All that’s happening is that everyone pays more, and farmers are cashing out in favor of letting “Grok” make pedophile Nazi pictures, or whatever it does.
That’s not a great outcome, I’ll admit. But the water is going to get sold either way.
I’m confident this is correct. As utilities lose revenue to solar panels and battery systems they have to beef up income in a way that looks plausible. With so much money being offered to build data centers why wouldn’t they jump on board?