The Insatiable Demand for Digital Power
In a vast stretch of Central Washington’s high desert, the farms and small towns of Grant County sit on nothing short of a gold mine. Grant County’s utility district owns two public dams on the colossal Columbia River, capable of powering more than 1.5 million homes. For decades, this sparsely populated county had enough clean hydroelectricity to meet its own power needs and sell the excess at a low cost across the Northwest.
Then, the data center industry arrived. Attracted by the cheap electricity, major tech companies built power-guzzling data centers – the warehouses filled with computer servers that back the modern internet. Local officials welcomed the industry’s economic potential, but the surging demand soon outpaced the county’s traditional hydropower supply.
The problem is so acute that Grant County is headed for a daunting choice in the next six years: violate a state green energy law limiting the use of fossil fuels or risk rolling blackouts in homes, factories, and hospitals. This dilemma has placed counties like Grant, despite their abundance of clean energy, in a difficult position of finding enough electricity to feed this power-hungry industry.
The Rise of Data Centers in Washington
Washington state lawmakers set the stage for this energy predicament. In 2019, they passed a measure to make the state’s utilities carbon-neutral by 2030. At the same time, in the name of bringing jobs to rural areas, they encouraged the explosive growth of the data center industry through a massive tax break.
The tax break, originally passed in 2010, gave data centers a sales tax exemption on computer equipment and installation costs, often amounting to millions of dollars in savings over time. This incentive, coupled with Washington’s cheap and abundant hydropower, drew a surge of data centers to the state. Today, Washington is home to at least 87 data centers, making it one of the top 10 largest data center markets in the country.
The impact has been profound in Grant County, where data centers now consume nearly 40% of the total electricity demand, about as much as 190,000 U.S. households. To meet this growing need, the county has had to rely increasingly on unspecified power sources, which are typically carbon-emitting fuels like natural gas, rather than its renewable hydropower.
Undermining the Clean Energy Transition
This dynamic has placed counties like Grant in a precarious position, as they struggle to reconcile the data center industry’s insatiable appetite for power with the state’s ambitious clean energy goals.
Despite the state’s efforts to boost renewable energy, the share of hydropower in Washington’s electricity supply has fallen from an annual average of two-thirds in the early 2000s to just 55% in the five years leading up to 2022. Meanwhile, the state’s reliance on natural gas and unspecified fuels has increased, accounting for about a quarter of the state’s electricity on average from 2018 through 2022.
The possibility that data centers would make it harder to phase out fossil fuels rarely came up when lawmakers created and expanded the tax break that encouraged data center development. Reuven Carlyle, a former lawmaker who spearheaded Washington’s clean energy law, said the “aggregation of demand today” from data centers has become a “serious concern.”
Lack of Transparency and Oversight
Lawmakers have twice rejected proposals to study the impact of data centers on the state’s power grid and clean energy transition, most recently in 2022 when Governor Jay Inslee vetoed a plan to understand the industry’s power usage.
Without a comprehensive understanding of the data center industry’s energy demands, policymakers have struggled to strike the right balance between supporting economic development and protecting the environment. The state’s tax break has also lacked meaningful oversight, with lawmakers failing to require detailed reporting on the jobs and economic benefits it has delivered.
“It doesn’t any longer seem like it’s a great idea to put a bunch of super energy-hungry data centers in the middle of the state using a lot of our clean electricity,” said state Sen. Jamie Pedersen, D-Seattle, a majority floor leader who voted for the tax break’s latest expansion.
The Need for Balanced Policymaking
As the draw on the grid from data centers undergoes explosive growth, states that offer tax exemptions to support the industry are considering whether their approach still makes sense. Virginia, home to the nation’s largest data center market, has contemplated making the industry improve energy efficiency and use more green power to qualify for tax breaks. Georgia lawmakers even went so far as to suspend their state’s tax breaks for data centers while officials completed a study on power impacts.
Washington, on the other hand, has taken a different path, continuing to expand its data center tax break without a clear understanding of the industry’s effects on the state’s clean energy transition. This approach risks undermining the state’s ambitious climate goals and placing an undue burden on local communities like Grant County, which are already grappling with the consequences of the data center boom.
Moving forward, policymakers in Washington and elsewhere must strike a careful balance between supporting economic development and protecting the environment. This may require conducting thorough, transparent assessments of the data center industry’s energy demands and the long-term impacts of tax incentives. It may also necessitate adjusting policies to ensure that the data center industry contributes meaningfully to the clean energy transition, rather than exacerbating the challenges.
As the world becomes increasingly reliant on digital technologies, the need to reconcile the energy-intensive demands of the data center industry with the urgent imperative of addressing climate change has never been more pressing. By taking a more balanced and evidence-based approach, policymakers can help ensure that the digital revolution does not come at the expense of a sustainable energy future.
Conclusion
The explosive growth of the data center industry in Washington state, fueled by generous tax breaks, has placed the state’s clean energy transition at risk. Counties like Grant, once flush with renewable hydropower, now struggle to meet the soaring demand from data centers, forcing them to rely on carbon-emitting energy sources.
Despite the clear challenges posed by this dynamic, Washington lawmakers have repeatedly failed to study the industry’s impact or adjust their policies accordingly. This lack of transparency and oversight has allowed the data center tax break to expand, potentially undermining the state’s ambitious climate goals.
As the digital age continues to transform our world, policymakers must find a way to balance economic development and environmental protection. By conducting thorough assessments, adjusting tax incentives, and ensuring the data center industry contributes to the clean energy transition, states like Washington can chart a path towards a sustainable digital future. The students and families of Stanley Park High School have a vested interest in this issue, and we encourage you to stay informed and engaged as these important discussions unfold.
For the latest updates on Washington’s clean energy efforts and the role of the data center industry, be sure to visit https://www.stanleyparkhigh.co.uk/.
