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Data centers can bring investment, tax revenue and construction work, but they can also require major electricity and water capacity and change conditions for nearby residents. The balance depends on the facility, its cooling and backup systems, the local grid and water supply, and the terms the community negotiates—not on one national average.
Why impacts vary from one community to another
A data center is not a standard-size building with a standard resource footprint. The State of Michigan’s data-center guidance notes that facilities vary in size, design, purpose, computing capacity, cooling technology, water use and electricity demand. A proposal’s effects therefore depend on its expected workload, location, equipment and utility arrangements, as well as local rules and any enforceable agreements.
National estimates can show why communities are paying attention, but they cannot predict a particular project’s effects. The Lawrence Berkeley National Laboratory (Berkeley Lab) reports that U.S. data-center electricity load growth tripled over the prior decade and could double or triple again by 2028. That is a national estimate and projection, not a forecast for an individual utility territory or a guarantee of what will happen.
How a data center can affect electricity and bills
Electricity demand is often one of the largest community concerns. A facility’s load may require utility work such as new generation, transmission, substations or local distribution upgrades. Whether those projects are needed, how large they are and who pays are matters for the utility’s service plans, regulatory rules and project agreements.
Residents do not directly pay the data center’s electricity bill simply because it is nearby. Fairfax County’s guidance makes that distinction while noting that residents may bear a portion of infrastructure improvement costs. The size and allocation of any such costs depend on the utility and local arrangements; a statewide growth projection does not establish what customers in a particular service area will pay.
For a specific proposal, ask the utility and regulators to identify:
- The facility’s expected peak load and annual electricity use, and when service is needed.
- Any generation, transmission, substation or distribution work required to serve it.
- Which customers or parties would pay for each upgrade, and how that allocation is set.
- Whether the project changes local reliability plans or requires new generation.
How water use works—and why the source matters
Water impacts can occur at the facility and beyond it. Some cooling systems use water on site; electricity generation can also consume water elsewhere. The UN Conference on Trade and Development (UNCTAD) emphasizes that data-center water effects are primarily local and that indirect water use tied to power can be significant.
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Repair Windows errors before they cause bigger problemsFix Now →Fix the driver behind crashes, sound loss and screen glitchesFind Drivers →Clear out junk files and repair common Windows errorsFree Scan →Cooling choices can shift burdens: a design that reduces direct water use may have different electricity requirements. A single annual water figure, without the assumptions behind it, can therefore obscure important trade-offs. Ask for the facility’s cooling approach and its expected annual and peak water demand, not just a broad estimate.
For a proposal, seek the following information from the operator and water provider:
- Where the water will come from, including whether it is potable, reclaimed or another supply.
- Annual use and peak-season demand, with the assumptions used to calculate each.
- How cooling water is discharged or otherwise handled.
- What happens during drought, heat or water-system constraints.
- What power-supply assumptions underlie estimates of indirect water use.
The Michigan guidance and UNCTAD analysis describe substantial variation among facilities and locations; they do not establish a universal, representative per-facility water-use figure. Use project disclosures and local water-provider records rather than applying a number from an unrelated facility.
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What neighbors may notice: noise, land use and backup systems
Construction, a large building’s visual presence, lighting, noise and backup generation can affect nearby quality of life. State and county guidance identify noise and local quality of life as review issues, while UNCTAD also flags noise near facilities. These concerns need site-specific review: do not infer a health outcome from a noise complaint or report without an appropriate study.
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Review materials should make clear how a project would address:
- Noise at nearby homes and other sensitive locations, including at night and from low-frequency sources.
- Enforceable noise limits, monitoring locations, reporting and responses to exceedances.
- Lighting, building placement, screening and visual design.
- Construction duration, traffic or other temporary disruption identified in local review.
- Backup generators: fuel, permitted operation, testing assumptions and emissions controls.
Emergency backup equipment and routine testing are not the same as continuous operation. Generator permits and operating assumptions can show what use is authorized, but residents should check whether the permit limits match the activity described in project materials.
Jobs, tax revenue and other potential benefits
Data centers may bring property and business tax revenue, construction and related work, technical employment, and investment in infrastructure. Those benefits should be measured for the proposed facility and compared with tax concessions, public-service costs and infrastructure commitments. Statewide industry totals are not a project-level jobs or revenue forecast.
Virginia’s Joint Legislative Audit and Review Commission (JLARC), in a 2025 publication of its December 9, 2024 report, estimated the annual statewide contribution of Virginia’s data-center industry as follows:
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|---|---|
| Jobs | 74,000 |
| Labor income | $5.5 billion |
| GDP | $9.1 billion annually |
These are statewide industry estimates, not the direct jobs or tax receipts from one facility. The Associated Press has reported examples in which direct job counts were smaller than indirect construction and related employment, and where local tax receipts were shaped by tax concessions and agreements. For a named project, distinguish temporary construction jobs, permanent direct jobs, contracted work and indirect estimates; then compare local public revenue after incentives and service costs.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Who sets the rules—and what can be required
Authority is divided differently across jurisdictions. Michigan’s state guidance describes a division in which state environmental laws regulate water use and emissions, utility regulators protect ratepayers, and local governments retain authority over additional concerns such as noise and community benefits. That is Michigan’s description, not a nationwide map of authority. For a particular project, identify the agencies and local bodies responsible for each permit, rate decision, zoning condition or agreement.
Recent state approaches also illustrate why local law must be checked rather than assumed. Massachusetts Executive Order 658 (2026) directs that permits for projects with peak demand above 25 MW require conformance with the state’s responsible-development framework and a community benefits agreement. New Jersey’s 2026 plan describes energy and water reporting, infrastructure investment and community benefit standards addressing light, noise and pollution. These are examples of state policy approaches, not requirements that automatically apply elsewhere; verify current implementation and the rules governing the specific project.
A community benefits agreement is useful only to the extent that its commitments can be checked and enforced. Look for measurable obligations, deadlines, monitoring and remedies, rather than broad statements of intent.
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1Repair Windows errors before they cause bigger problems2Scan for outdated or missing drivers - takes under a minute3Clear out junk files and repair common Windows errorsHow to compare two data-center proposals
Use the same questions for each proposal so that headline promises do not crowd out costs or risks. Obtain the underlying utility, water, permit and tax materials where available; ask who is responsible for each estimate and whether it is binding.
| Compare | What to request or verify |
|---|---|
| Electricity | Peak load, annual use, service timing, required generation or grid upgrades, and who pays for each. |
| Water | Cooling method, annual and peak demand, supply source, discharge, drought contingency and power assumptions behind indirect use. |
| Backup generation | Fuel, permitted operating hours, emergency versus routine use, testing and emissions controls. |
| Nearby conditions | Distance to homes and sensitive uses, noise limits and monitoring, lighting, visual design and construction effects. |
| Employment | Temporary construction work separated from permanent direct jobs, contracted positions and indirect estimates. |
| Public finances | Gross local tax receipts after abatements or exemptions, service costs and infrastructure commitments. |
| Community commitments | Specific benefits, deadlines, monitoring, enforcement and remedies in any agreement. |
| Oversight | Which utility regulator, environmental agency and local authority controls each decision or condition. |
Promised benefits and estimated costs should be compared on the same basis and time frame. If a proposal does not disclose a value—such as peak water demand or the local share of a grid upgrade—ask the responsible provider or agency whether it is unavailable, undecided or confidential, and what decision can be made without it.
What a national figure cannot tell a town
National electricity trends explain why utilities and governments are planning for growth, and statewide economic estimates show that an industry can matter to a state economy. Neither establishes the bill impact, water demand, noise level, permanent jobs or net tax benefit of a facility in a specific community. Those outcomes depend on local infrastructure, permits, contracts, tax terms and operating plans; the most useful evidence is the project’s own disclosures and the records of the agencies and providers responsible for it.
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