Navigating the Ever-Changing Landscape of Data Centers
Navigating the Ever-Changing Landscape of Data Centers
The landscape of the data center industry is evolving at a rapid pace. While the operational requirements of a data center remain consistent – available land, reliable and cheap power, water access, connectivity, and regulatory alignment – the relative importance of these factors varies significantly by market.
In Virginia, known as the “data center capital of the world” thanks to hosting more than 600 data centers throughout the state, power transmission remains a top priority. Utilities such as Dominion Energy often project timelines ranging from three to seven years to deliver new capacity, largely due to the need for transmission infrastructure expansion and associated state regulatory approvals. Rural environments typically fall on the shorter end of that timeline, while urban projects trend toward the longer range, said Stan Blackwell, Director of Data Center Development at Dominion Energy.
In Wichita Falls, Texas, northwest of Fort Worth, water resource management is a leading priority. North Texas is not known for its wet seasons; therefore, water stewardship is essential. In partnership with a contracted developer for Wichita Falls’ first-to-market data center, the city established a requirement for a closed-loop system for recycling the water that cools the heat generated by IT equipment, thus significantly reducing or eliminating the water evaporation. Today, the city has several sites under contract for data centers and collaborates exclusively with data center operators that utilize closed-loop cooling systems.
Available land is fueling a data center boom in sparsely populated north Louisiana, infusing money and jobs into an area where those things seemed to dry up as major employers moved operations elsewhere. Names like Amazon and Meta are replacing them, creating much needed job opportunities and an influx of new tax dollars into community coffers.
“These investments are not isolated wins; they activate local supply chains, create new opportunities for Louisiana vendors, and open doors for our people to access high-wage careers,” said Louisiana Economic Development Secretary Susan B. Bourgeois. “With each project, our foundation grows stronger, delivering lasting opportunity for businesses and families across Louisiana.”
Starting with the basics
Across the country, utilities are an early priority for any developer.
“In our case, almost all developers call the utility before they call the state economic development group,” Blackwell remarked about the process in Virginia. “It’s very different than most other types of businesses you try to attract.”
James Chavez, President and CEO of South Carolina Power Team, emphasized a similar importance on utility engagement in South Carolina. “Their very first call should be to the utility provider because they can have all the water, they can have the right acreage, everything else can be perfect, but if they don’t have access to power, they’re never going to be able to develop that site.”
Moriah Williams, President & CEO of Forward Wichita Falls, also emphasized early coordination during site selection. If an electric utility is unable to serve the site at the capacity it needs, there is no point in moving forward with other aspects of the project, she said.
In Louisiana, Amazon has worked with the local utility, Southwestern Electric Power Company (SWEPCO), to ensure the company pays 100% of the costs associated with the new data center campus in Louisiana. This includes covering all expenses for new energy infrastructure and upgrades required to serve the data centers, which also strengthens overall grid reliability for all SWEPCO customers.
The right land
Successfully attracting data center investment requires utilities, water supply, government regulatory alignment, and not just land, but the right land.
Blackwell suggested local governments and economic development organizations find an area near existing transmission infrastructure that is “fairly rural,” then designate the area as a technology park to attract data centers. Blackwell also encouraged prospective communities to identify an area that will not upset residents.
To mitigate friction, Blackwell recommended aligning zoning frameworks “where they want development to occur,” cautioning that mixed-use zoning may present complications due to data center requirements for more resources and a perceived lack of proportional economic benefits.
Williams said, “Before [Wichita Falls] ever approached a data company, we spent about 12 weeks researching, ‘How big can we go?’, ‘Is it even the right fit?’, ‘Are we the right location?’”
Aligning with the community
With the evolving data center industry, everyone from site selectors to potential host communities must understand the industry. For example, Wichita Falls identified a need for “high investment that created jobs that paid our people well”. Data center development emerged as strongly aligned with those objectives. The facility currently in development is projected to create approximately 500 jobs while delivering substantial long-term tax base expansion. Likewise, the newest Amazon data center project in Caddo and Bossier parishes in Louisiana is expected to create 540 new on-site jobs in addition to supporting up to 1,500 construction jobs during the buildout.
In return for these expected job opportunities and economic growth, site selectors are looking for sites that lack much organized opposition to data centers, which can slow a project’s speed to market.
Some communities are drawing up Community Benefits Agreements – contracts between the community and the prospective data center – to reach a deal in which residents can clearly see the benefits of the data center on the community while the site selectors and data center operators recognize they will be welcome in the area if they are good neighbors. These agreements may include required worker job training, putting a floor on salaries, even the data center setting aside funds for community projects such as parks and infrastructure.
Louisiana is a case in point. Alongside its $12 billion investment, Amazon is launching a series of community and infrastructure initiatives in northwest Louisiana. Upgrades are planned for public water systems, the energy grid (including the addition of solar), and roads. Additionally, the company is establishing a Northwest Louisiana Community Fund, which is a $250,000 commitment to provide grants up to $10,000 for local projects, and is partnering with local schools to create career awareness and workforce training programs.
Wichita Falls is likewise expecting significant benefits from its data center campuses: more opportunities for local families, a stronger tax base to support city services, and continued momentum for the local economy. Wichita Falls Mayor Tim Short posted on social media “This is about creating careers our residents don't have to leave town to find. It's about growth that strengthens our foundation and builds long-term stability.”
Williams is equally enthusiastic about the data center impacts on Wichita Falls. “Our tax base will likely triple over the next 10 or 12 years, give or take,” she said. “What we have found is these companies, the developers and the tenants both, their goal is to enhance communities, and to become one with the community, and become great partners, and their vision for their site is to be a productive member of that society.”