By Roland Murphy for AZBEX
By the time you read this column, Mohave County may have joined the ranks of Arizona public bodies looking to restrict data center development in its jurisdiction.
As we have previously reported, the cities of Chandler, Phoenix and Mesa have all restricted data center zoning options, and Phoenix Mayor Kate Gallego has called for the Arizona State Legislature to eliminate development incentives for the burgeoning Industrial subsector, calling them “antiquated.” (AZBEX: June 10, June 18)
While Gallego and others have expressed concerns about a modest count of permanent jobs and impacts on “walkability” and neighborhood character—even though the land requirements for high-volume data centers mean they rarely directly abut residential areas—the primary opposition has mostly been pointed toward environmental concerns, particularly data centers’ water and electricity requirements and the ability of utility providers to meet them.
The Mohave County Board of Supervisors was scheduled to consider removing data centers from the Economic Development Department’s list of business attraction goals in its July 21 meeting, after this issue went to press.
The DATABEX project database shows there are currently no large-scale data centers in Mohave County. Pegasus Group Holdings proposed a $3B, 715-acre data center and solar farm known as The Hive in mid-2019 and a 770-acre expansion code-named “Firefly” later the same year. (AZBEX: Dec. 20, 2019)
In the expansion announcement, Dan Briggs, President and CEO of Pegasus Group Holdings, said, “We have elected to expand our operations in Mohave County because it has been an ideal place to conduct business. Mohave County Supervisor Jean Bishop and Tami Ursenbach, Director of Economic Development, were instrumental in ensuring that the development and launch of phase one of our project went smoothly. My team and I are extremely grateful to the county officials and the residents of Kingman and Golden Valley for their continued support of our endeavors. We are excited about phase two and hope that we will continue to be a valuable member of the Mohave County business community.”
The Hive never started construction, and the project was officially cancelled in mid-2021.
Mohave BoS Consideration
The three pieces of material submitted to the Mohave County Board of Supervisors in support of the recommendation by District 5 Supervisor Ron Gould’s office do not appear intended to guide the Board to an objective consideration of the issue.
The first is an opinion piece written by Tulsa University faculty and staff members and originally run last year in the Dallas Morning News. While offering no solutions or recommendations, the writers did decry data centers’ water use and said, “Data centers are not a renewable resource. The average lifespan of a data center is approximately 10-15 years and needs continuous maintenance just like a gas-powered vehicle. While the initial construction of a data center generates jobs, after its completion, the number of employees needed at the center drops by approximately 90%.
“Optimizing renewable power with AI and data centers at the expense of increasing water consumption is not a sustainable solution. Prioritizing one aspect of sustainability, such as reducing carbon emissions, while neglecting another crucial resource like water, creates an illusion of sustainability. In reality, this can lead to unsustainable practices that can have severe unintended consequences for individuals and farmers, especially in water-stressed regions.”
The second item is a highly technical 79-page report by Berkeley Lab’s Energy Analysis & Environmental Impacts Division. The 2024 United States Data Center Energy Usage Report is an update to a 2016 report required under the Energy Act of 2020. The report was funded by the Biden administration’s Department of Energy’s Industrial Efficiency and Decarbonization Office and uses data dating back to 2014.
Not only would the data set offset efficiencies gained in energy usage over the last several years and the types of utility service partnership and development agreements currently accepted as standard practice, the structure of the report itself—which is intended for a technical and highly informed audience—would make its findings difficult for any layperson to thoroughly understand.
The third entry is a 2022 article from The Oregonian detailing how Google’s water use tripled in the Wasco County city of The Dalles from the time it started operations until it reached full operation. While the article included commentary and explanations from Google project members, it largely focused on concerns raised by area environmental group representatives about the data center and two more planned along the Columbia River.
Economic Development Impacts
While there is no denying the challenges utilities have encountered and continue to encounter in providing data centers with the resources they need to operate, and while that utility accommodation has entered BEX’s list of ongoing challenges facing the market, there is also no denying the cooperative efforts between data center operators and utilities to meet those challenges or the economic impact Arizona’s emergence as a leading data center development market has had and will continue to have on the state.
Hyperscale data centers cost billions of dollars in construction and specialized equipment to develop. While Phoenix Mayor Gallego and other opponents are correct that up to 90% of the jobs involved in development are not retained when a center starts operations, what they overlook or omit with that claim is the fact each data center job fuels as many as nine secondary jobs, thus making the subsector a much more powerful job creator than its base employment numbers would suggest.
DATABEX shows 65 data center projects in total for Arizona since the service launched in mid-2016, not including those that have been cancelled or are identified as master plans. The 64 for which construction valuations are available total slightly more than $53.77B.
Of those, 19 have been completed at a total construction valuation of $5.23B, and 22 more are under construction, with a total construction valuation of more than $10B. Those in the various stages of planning, design or pre-construction total 22 projects, with a total valuation of $38.38B.
In addressing some cities’ moves to restrict data center development, Arizona Commerce Authority President and CEO Sandra Watson wrote in an opinion piece: “Data centers have proven to be valuable economic contributors to local communities as well as important environmental partners. Data center companies commit to substantial renewable energy purchases, providing a stable demand that supports utility companies in upgrading infrastructure and transitioning to low-carbon power generation. These investments help make large-scale clean energy projects financially viable, ensuring a sustainable energy future.”
While it is neither our place nor our intention to lobby authorities on policy decisions, it is our hope that representatives in Mohave County and around Arizona continue to take into consideration the full expanse of issues associated with data center development and understand the multifaceted nature of the issue and the potential ramifications of their decisions.