Data centers are growing rapidly across the United States. As Alabama looks to attract high-tech investments in new data centers, which require enormous amounts of water and electricity, we must confront an essential question: How do we grow data center development without burdening everyday Alabamians with higher electricity costs and more environmental impact?
Done right, data centers could be a catalyst for clean energy growth and local economic development. Done wrong, they risk locking us into expensive and outdated infrastructure that hurts working families.
Data centers can be transformative for local economies, primarily through their substantial contributions to the local tax base. According to the U.S. Chamber of Commerce, a single data center can generate tens of millions of dollars in property tax revenue over its lifetime, providing stable funding for schools, rural hospitals, and infrastructure. In rural communities where tax bases have eroded due to the decline of manufacturing and other traditional industries, this kind of long-term investment can help strengthen local budgets and improve quality of life.
But there is no denying the strain data centers can place on the electric grid. A single large facility typically demands around 100 megawatts, enough to power over 10,000 homes. Now, projects many times that size are being proposed. For example, in Bessemer, developers are considering a 1.2-gigawatt data center, nearly one twelfth of Alabama Power’s entire generating capacity of about 15 gigawatts. This scale of demand could reshape the state’s energy mix overnight and force costly new infrastructure, often at the expense of everyday ratepayers, unless appropriate protections are put in place.
Around the country, some states are acting to protect consumers. In Indiana, a recent settlement ensures that large new electricity users, like data centers, pay their fair share by requiring upfront collateral, long-term contracts, and higher demand charges. These protections make sure infrastructure costs aren’t pushed onto regular customers. Alabama should adopt a similar approach.
Nationwide, data centers used about 176 terawatt-hours of electricity in 2023, or 4.4% of US electricity demand in 2023. Alabama already ranks third in the nation for the highest monthly utility costs, with an average of around $575 a month. This accounts for approximately 11.38% of the average Alabamian income. Regular people cannot afford to pay more to subsidize data centers.
Other states have learned this the hard way. In Virginia, data centers have become the state’s largest electricity users, driving Dominion Energy to propose dozens of new, expensive, natural gas units to meet demand. In Georgia, Coweta County imposed a 180-day moratorium on new data center proposals after community concerns about inadequate zoning, strain on energy infrastructure, and the need for better standards.
When data centers first started to expand, there was optimism they would become a driving force for clean energy. Tech companies like Meta and Amazon have publicly committed to matching 100% of their data center electricity with renewable energy. But in practice, many companies have let this promise slip away. For example, Meta has faced scrutiny for securing tax breaks in Louisiana while ultimately sourcing much of its power from new, expensive fossil fuel generation. We must not let that happen in Alabama.
Instead of investing in large-scale solar or wind paired with energy storage to keep electricity affordable and reliable, some tech companies have turned to building their own on-site gas plants to meet around-the-clock demand. This approach risks driving up infrastructure costs and locking Alabama into older, less competitive technologies, while other Southeastern states modernize their grids to attract investment and keep power bills cheaper for their citizens.
Alabama has the chance to show the rest of the country what “energy dominance” truly means. Let’s use our natural abundance of renewable energy like solar, create resilient infrastructure, and build an economy that works for everyone. We can get it right the first time.
