Data Center Boom Divides Rural America

The construction of data centers has become a divisive topic in rural America, with developers finding opposition from both sides of the political aisle.

Microsoft, Alphabet, Meta and Amazon will collectively spend over a trillion dollars in data center construction by the end of 2026.

The data storage industry believes that data demand per year will quadruple over the next five years.

Brad Tietz, Data Center Coalition “The average household today has 21 connected devices in it. We're going to use twice the amount of data in the next five years that we've used in the last ten years. So, again, everything we do online, it's not just not just AI, it's not just entertainment. It's your health care records. It's your banking record. It's government and school data, telehealth, remote work, you know, kind of our modern way of life is powered and processed through data centers.

Data centers have historically been limited to a floor of an office building, or a non-descript structure in a metropolitan area. But the computing demands of AI require structures that are measured in acres rather than square feet.

Michael Greif, Midwest Environmental Advocates  “Since 2022 and 2023, when a lot of private investment into artificial intelligence came around, that we started to see these facilities get bigger and bigger and bigger and much more prominent across the country.”

Industry spokespeople say while current data center capacity meets demand, the industry is late on constructing new data centers, putting them behind the demand curve for computing capacity.

Brad Tietz, Data Center Coalition “Only 25% of the workloads occurring today in today's data centers are AI related. About 55% of that is for cloud. And the rest of that is for traditional storage practices.”

But the majority of data center growth over the next five years will be to manage the shift from training AI models to AI inference compute.

According to data from Aterio, a business information company, there are 2,000 active data centers in the United States, with another 799 under construction, and an additional 3,700 that have been proposed.

A JP Morgan study from May of 2026 estimates that 60% of data center capacity slated to open in 2027 has yet to break ground. 

Brad Tietz, Data Center Coalition “I think it's important to point out too, though, you know, there is a lot of speculation in the market right now. Not all of these data centers are being proposed are going to come to fruition.” 

One struggle in the race to bring data centers online are delays in connecting new data centers to the local power grid. Some centers use as much electricity as cities of 80,000 people, so a connection can dramatically increase electricity demands for a utility.

Michael Greif, Midwest Environmental Advocates   “To the extent that, you know, it's forecasted that electricity use by data centers is going to triple in just a few years. And here in Wisconsin, we're seeing utilities nearly double their electrical demand just from the addition of a few data center customers.” 

Analysts estimate that data centers represented less than 1 percent of national electrical demand in 2020, but will drive over 11 percent of demand in 2030. Almost all of the electricity demand growth in the next five years will be to serve AI.

Data center buildout may be an opportunity for utilities to modernize their distribution systems.

Brad Tietz, Data Center Coalition “You know, if you think about it, the grid has been, you know, we have not seen significant investment with the kind of investments that's needed for the last several decades. So our industry can help modernize the grid, and, you know, support a bunch of new kinds of innovations in the energy space.” 

Communities are concerned that the data center developers will avoid paying the cost of the infrastructure the data centers will require.

Michael Greif, Midwest Environmental Advocates  “And that is paid for typically, through this tax increment financing deals. Under those deals, what often happens is the data center developer will sort of pay the city to build the infrastructure upfront. And then over time, the city will reimburse the data center developer through the tax increment financing deal. So it's essentially a city forgoing tax revenue from that data center developer in order to finance that initial water infrastructure buildout.”

Critics of the AI industry point to mounting losses by AI companies, and suggest that a financial bubble is being created. So far, more than 26 states have declared moratoriums on data center construction.

As most operational data centers employ fewer than 100 workers, communities may decide that the upside of increased property taxes fails to outweigh the downsides of hosting a hyperscale data center.

Grief says local authorities who approve and decline economic development projects are often tempted to accept a data center project for the property taxes that will be generated. 

Michael Greif, Midwest Environmental Advocates  “So the best course of action is to engage with your, your local, city council, your local mayor. And, if you can persuade those people that this is not in the interests of the community, that that goes a long way to stopping a project or or making sure it gets built in a way that, you know, respects the community's interests and is ultimately in the interest of of the people who are going to live near it.”

Brad Tietz, Data Center Coalition “I think in five years you're going to see some communities wishing they hadn't kind of had this reaction to this industry. And looking at other communities who, you know, were open to a conversation, and then all of a sudden there's there's things like new schools and new parks, all these things that the property tax benefits can bring.  So it's our hope to get there. We'll get through this kind of, the heat of the moment and, and move forward from there as a country.”

For Market to Market, I'm Peter Tubbs