Data Centers: Incentives vs. Reality

With the rise of mobile connectivity, much of our daily lives now reside on the digital cloud. While the cloud may seem invisible to the average user, the thousands of data centers and physical servers that power it across the U.S. are not. These facilities process, manage and store millions of terabytes daily. Across Atlanta, dozens of massive data centers already support the cloud, with more on the way.

Metro Atlanta is home to one of the nation’s top ten data center markets. With over 50 facilities across Georgia, the last six years have seen substantial growth in companies investing in Georgia-based centers. Atlanta currently has the largest amount of megawatts under construction in the country. Today, 1,289.1 megawatts are under construction, and over 800 more are in the prelease stage.

Since the enactment of House Bill 696 in 2018, tax breaks have created strong incentives for companies looking to build new data centers across Georgia. However, the bill overlooked a need for increased electric grid capacity, an infrastructure Georgia does not have. These data centers have put intense strain on the power grid and our water supply. 

The Public Service Commission voted in August to allow Georgia Power to build a new fossil fuel-powered plant to meet increased levels of demand. Steve Hewitson, a lawyer for Georgia Power, told commissioners, “We need to build these units and we need to build them now.” Opponents of gas are wary of the project after the expansion of Plant Vogtle. The similar project had $20 billion in cost overrun resulting in consumer rate hikes.

Data from real estate firm CBRE revealed that 310 megawatts of data centers in Georgia were currently online as of June 2024. Further, the Georgia Water Coalition’s 2024 Dirty Dozen reported that some of these data centers’ power consumption could fuel 80,000 homes across Georgia. 

Additionally, data centers use extensive amounts of water to fuel and cool their servers. In Douglas County, Georgia, Google’s data center uses 305 million gallons annually. With little data or research on the water consumption of data centers in Georgia, the Georgia Water Coalition recommends required energy and water usage reporting to enforce minimum water efficiency standards. 

The same Google data center in Douglas County is working to reduce its impact on the water supply. While many data centers require as much as 500 million gallons of water annually, Google has reduced this number to reduce the plant’s impact on the environment. The center redirects 30% of the county’s wastewater to reuse it. 

Using wastewater is one way data centers can reduce their impact on the water supply. However, the center removes millions of gallons of water that would otherwise flow into the Chattahoochee River. For context, that’s 7% of the water authorities’ daily drinking water. 

In the 2024 Georgia Legislative Session, House Bill 1192 outlined a plan to halt tax exemptions for data centers through 2026. The bill also proposed a Special Commission on Data Center Energy Planning and outlined the two-year suspension as the timeline for creating a report analyzing the current grid supply. 

The report aimed to propose new legislation and suggest where future data centers should be built. Although the bill passed both chambers, Governor Kemp vetoed it. Lawmakers must wait until the next legislative session in 2025 before proposing a new solution. 

This bill would have provided the Georgia power grid with much-needed relief while supporting consumers and saving the state millions. Pausing the tax exemption could increase tax revenue by $5.5 million in 2025. Additionally, a new power plant could cost roughly $1.5 billion. 

If Georgia Power continues building new fossil fuel plants, the cost burden will likely fall on consumers. Georgians are no strangers to increased rates. On average, customers will pay 12% more in 2025 than in 2022. Future plans must work to minimize the impact on consumers’ wallets. 

In 2023, California became the first state to mandate solar systems and energy storage on residential and commercial buildings. Similarly, under the 2022 Building Energy Efficiency Standards, solar became a requirement for most new buildings in California, helping reduce the demand on the electric grid. 

Reducing electric grid pressure will also reduce water usage, increasing supply in areas surrounding data centers. If Georgia implemented a plan to mandate solar panels for data center roof spaces, the state could significantly reduce the center’s impact. 

As Georgia turns to new solutions to solve the energy and water crisis across the state, it is crucial to keep water and electric supply at the forefront. When strains on the electric grid occur, the state’s reliance on fossil fuels increases. Introducing the necessary infrastructure to support the growing data center market across Georgia is critical. 

Lorelai Ashley is a third-year student at the University of Georgia studying political science and a member of our environment policy group.