The burgeoning growth of data centers in the age of artificial intelligence is raising questions and spurring controversy elsewhere regarding sweet government tax deals, unrealistic job creation projections, and power and water consumption. But you don’t hear much talk about it in Nevada, the driest state in the nation.
Will that change once the Nevada Legislature convenes in February? I think it should. And Carson City is the ideal place to discuss the ongoing issues, successes and challenges as the state embraces an outsized role in a booming part of the information technology sector.
For years Nevada has been heralded as an ideal place to locate data centers, and for good reason. With a growing renewable energy portfolio that few states can rival, an extremely business-friendly embrace from current and former administrations, local and state tax breaks, a strategic economic location next to California and a generally stable geology, the Silver State’s up side is substantial.
But in the age of AI, there is a question whether even the most generous renewable energy strategy will be able to generate enough affordable electricity to power data centers that already use as much electricity as some cities. And the electricity usage is growing along with the size of the data centers. It’s leading some analysts to project increasing demands for coal, not exactly a clean renewable energy source.
The Department of Energy (DOE) is already studying the issue in a partnership with data industry players. In July, it released an advisory board report titled, Recommendations on Powering Artificial Intelligence and Data Center Infrastructure. At one level, its message is simple: The growing demands for power by data centers “are stretching the capacity of local grids to deliver and supply power at that pace. A significant factor today and in the medium-term (2030+) is expanding power demand of AI applications.”
The DOE, not exactly on the best of terms with Nevada due to the proposed nuclear waste repository at Yucca Mountain, assures skeptics it has every intention of playing a substantive part in the data center power issue. “With DOE’s leadership role in energy efficiency, clean energy deployment, innovative grid technologies, and AI-related energy consumption and research, the department can play a central role in helping the nation meet these new, strategic energy needs,” the report states.
In addition to increasing efficiency, protecting the existing grid and working toward “novel backup power strategies,” one of the report’s recommendations seems more than reasonable. And it turns out that lawmakers might be able to play a role: “Expand technical support of state energy planning departments to include analysis of infrastructure investments for data centers and other large, strategic loads, including assessments of their potential impacts on people and communities.”
The impact on people and communities. This seems like a topic worth noting at the Legislature, don’t you think?
It appears self-evident, but there should be clearly stated water consumption concerns in a land of drought and booming population growth. While some data center companies tout their ability to recirculate and even save water, data centers nationally are known for using millions of gallons of water per day to cool their computer systems.
This is also something environmentally conscious lawmakers, and even those just out to protect the state’s new AI-linked business interests, should chew on during the session.
Meanwhile, some data center-related companies are chewing on each other. An ongoing legal battle in Northern Nevada pitting Switch against land developer Tract Capital Management has gotten nasty with allegations that Switch and CEO Rob Roy “are notorious for harassing perceived rivals to deter any entrants who might seek to compete with them in the state of Nevada.” Switch has played a substantial role in the state’s growing data colocation center trade, but now there’s talk that parent investor DigitalBridge “could be acquired” if its latest fundraising strategy falls short.
Perhaps all that means is the market is booming, dynamic and competitive. But I think it’s also something for legislators to study and comment on publicly as Nevada rushes forward into a future that will power AI only with the proper planning.
This important conversation can begin in just a few weeks.
So how about it, Nevada?
John L. Smith is an author and longtime columnist. He was born in Henderson and his family’s Nevada roots go back to 1881. His stories have appeared in New Lines, Time, Readers Digest, Rolling Stone, The Daily Beast, Reuters and Desert Companion, among others.
