Opposition to data centers has become an increasingly bipartisan cause. But efforts to slow or block their development risk undermining the very innovation that can address concerns about energy costs, water use, and infrastructure.
In a new commentary in RealClearMarkets, Market Institute Senior Fellow Norm Singleton explains that data centers are hardly a new phenomenon. They have long provided the physical infrastructure behind cloud computing, digital storage, apps, and countless other services Americans use every day. The growth of artificial intelligence is increasing demand for larger facilities, but that does not make data centers themselves the problem.
One of the biggest concerns is electricity. Residential power prices have risen substantially in recent years, leading critics to blame growing demand from AI data centers. But Singleton notes that data centers also contribute significantly to utilities’ fixed costs, while major technology companies are taking steps to ensure consumers are not stuck with the bill.
Microsoft and Anthropic, for example, have pledged to cover increased electricity costs associated with their AI infrastructure. Other technology companies have joined President Trump’s Ratepayer Protection Pledge, committing to protect households from higher costs resulting from new data center development.
Meanwhile, companies are looking for new ways to reduce their demands on existing infrastructure. Amazon Web Services and Microsoft are using recycled water to reduce freshwater consumption. Technology firms are investing in new sources of energy and exploring increasingly ambitious solutions for where and how data centers can operate.
Microsoft has even tested underwater data centers. Its Project Natick experiment placed a data center containing 864 servers on the seafloor near Scotland’s Orkney Islands. After two years underwater, Microsoft reported that the servers experienced roughly one-eighth the failure rate of comparable servers on land.
That kind of experimentation illustrates why policymakers should be cautious about treating growing data center demand as a problem government needs to solve through restrictions.
America needs more electricity generation, more transmission, and more investment in the infrastructure required by a growing digital economy. Data centers can help finance that expansion, while competition and technological innovation can reduce their impact on surrounding communities.
The better approach is straightforward: make companies responsible for the costs their facilities impose, then give them room to innovate.
As Singleton writes, government should focus on ensuring Americans are compensated for genuine harms—not standing in the way of the investment and innovation needed to build the next generation of digital infrastructure.
Read more at RealClearMarkets by clicking here.
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