The Lake County Board on Tuesday moved to impose a temporary moratorium on new data centers in unincorporated parts of the county.
In that same county, the Grayslake Village Board recently approved a massive data-center complex, igniting a firestorm within the normally quiet exurb. Opponents are preparing a lawsuit to reverse Grayslake’s approval.
About 200 miles south, in staunchly Republican Logan County, just north of Springfield, the county board last month approved a 12-month moratorium on new data centers, halting for now a proposal by Miami-based Hut 8 Corp. to construct a 50-acre, $5 billion data center. The company says it’s determining whether to continue to seek approval in light of the setback.
These are just a few of the data-center debates raging throughout Illinois. Local officials are finding that many of their constituents are deeply suspicious of these projects, even though they promise to generate potentially transformative property-tax revenues.
The opposition is bipartisan. Red and blue counties alike that are entertaining these proposals are encountering the same buzz saw.
Data centers are necessary infrastructure in a digital age, but the status quo isn’t working. For it’s not only the counties and municipalities that data center developers are targeting that are affected. Data centers consume outsize amounts of electricity, and growth expectations for the sector alone already have driven up the cost of power. Commonwealth Edison customers, as well as consumers all over the country, are seeing the effects in their higher electric bills.
We met recently with ComEd CEO Gil Quiniones, and he told us the utility has received about 100 data center applications. If all were built, they alone would consume considerably more power than ComEd’s peak record delivery of 24,000 megawatts throughout its service area on a sweltering summer’s day.
Get your head around that.
Of course, they won’t all be realized, but the magnitude of the problem is clear. Northern Illinois long has been blessed with more power generated within its borders than it needs. That appears poised to change dramatically.
Given substantial increases in demand, fueled in large part by data centers, as well as the closure of existing fossil fuel-fired power plants, the region will become a net importer of electricity as soon as 2030, according to state projections.
So what exactly are data centers? They are essentially sprawling storage structures, housing servers and other similar equipment powering the digital needs of the modern economy as well as — controversially — the fast-growing demands of artificial intelligence. They’re not all the same.
As Quiniones explained to us, there are essentially three types. One group is made up of enterprise/cloud facilities that back the needs of a single digital company. Another is comprised of multi-tenant centers that provide the same service for more than one outfit. And then there are so-called hyperscale facilities critical to development of AI products and services. That last group is far and away the most energy-intensive.
Atlanta-based T5 Data Centers’ approved Grayslake facility, for example, is a hyperscaler, designed (once fully built out) to house 18 buildings and consume up to 1,600 megawatts of electricity. To put that in perspective, that’s nearly 70% of the output of the Byron nuclear power station some 75 miles to the west, which generates up to 2,347 megawatts, enough to serve more than 1.7 million homes.
Right now, Illinois is the Wild West when it comes to accommodating the data-center industry. Municipalities and counties have widely varying approaches and are in far different negotiating positions. Many are in such fiscal distress that they may well be tempted to host data centers for the potential property-tax bonanza that could bail them out in one fell swoop.
That’s no way to regulate an industry that by its very nature imposes heavily on the region even if it can be a game-changing boon to individual localities.
Bills were introduced in Springfield over the spring to impose ground rules on data center development. None went anywhere, as legislative leaders deemed them not ready for prime time.
But there are expectations that state lawmakers will act on the issue during the fall veto session. In the meantime, Gov. JB Pritzker has announced that the state’s tax incentives for data centers, created back when the industry’s public standing was far more positive, will be put on hold for two years.
Trade unions in a position to benefit from data center construction jobs blocked Pritzker’s request that lawmakers suspend the tax credits and are crying foul now that he’s doing so unilaterally.
At the end of the day, though, the tax credit is a sideshow. We need statewide rules governing data center construction that ensures the industry won’t soak up power supplies keeping the lights on in the state. That means the industry will need to take more responsibility for building or financing new power generation in Illinois to serve its needs. Too many developers right now are taking the position that their primary obligation is to pay for connecting their projects to the existing grid and then availing themselves of existing power supplies.
Pritzker needs to take a hands-on approach, gathering all the stakeholders well in advance of the November veto session and hammering out a workable regimen, to ensure lawmakers have something on which to vote.
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