Hyperscaler Data Centers: The Neighbor Nobody Wants to Invite Over

Datacenters are a hot topic these days. And for good reason as they are currently responsible for the lion’s share of the capital expenditure in our economy. North Shore residents probably do not need to worry about the noise and localized pollution of gas turbines as zoning regulations make a new Hyperscaler Data Center in the North Shore about as likely as a new coal mine in Winnetka or a Golden Corral in downtown Glenview. 

Modern society does need data centers of course, how else are we going to stream and shop online. The ones making headlines though are hyperscaler data centers used for AI training that use mind boggling amounts of energy and water. In Illinois electricity bills have increased by 50% in 5 years and are going up by as much as 15% a year. This is undeniably mostly due to the data center thirst for energy.

Here is where realtors are supposed to beat-around-the-bush. I am not. Hyperscaler AI data centers do not seem to help communities where they are located. Generally a small number of stakeholders receive enormous unseen inducements to approve these projects while the projects themselves bring few long-term jobs – data centers do not require many employees and generate fairly small tax revenues compared to their physical footprint. The residents deal with noise, pollution, and critically often pay for long term infrastructure costs. No surprise then. It is often the poorer, more rural communities that get the power station and dirty chemical plants. Georgia Tech did a good report on this.

Illinois is actually the #3 state for data centers in the US. The Governor's office has been supportive of data centers and had a policy of tax breaks to attract them until recently when the political backlash forced a change. This has been a football in the current gubernatorial race.

You might think just going online and educating yourself is easy. You would be wrong as this topic is awash with interest groups. For example, in Illinois the Coalition for Responsible Datacenters is a Union and Business Lobbying group, a lot of Union labor goes into data center construction. While in Minnesota a body with the same name is a grass roots anti-data center development group. One website is slick and the other is probably made with a free template. Guess which one is a grass roots operation!

Joliet is a great example of how this can play out. The Planning Director of Joliet seems to have approved the sale and zoning of 800 acres of her family farmland to a Texas-based data center developer Hillwood. The planning permission required was about as onerous as a new warehouse yet this one facility is projected to use as much energy as Chicago! Nothing to see here. Reddit is a good place to take the community pulse on these projects.

There is hope though. Aurora (IL) has massively tightened their zoning requirements for data centers in the light of multiple newly planned sites.

We need somewhere to store nuclear waste and we also need data centers. Let’s hope we can make the process more transparent and fairer even if the North Shore is unlikely to experience many of the local detriments outside of the increased energy costs.