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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowA consumer advocacy group is calling on the Indiana General Assembly to enact a moratorium on huge new data centers, saying they could lead to skyrocketing utility bills and large tax subsidies.
Citizens Action Coalition of Indiana issued the call Tuesday, saying that so-called “hyperscale” data centers will provide few jobs relative to their energy consumption and the incentives they receive.
A hyperscaler is a massive data center that is engineered to deliver large-scale cloud computing power and data-management services to business customers. They can also provide clients with artificial intelligence, machine learning, and big data analytics. The centers typically house computers, servers, digital storage and cooling systems. Hyperscalers are making huge investments in data centers to keep up with AI demand.
The data centers operate around the clock, guzzling huge amounts of electricity to run their computers and servers. And some consumer groups, such as the Citizens Action Coalition, worry they could strain the system.
“Hoosiers must be fully protected from the rapacious resource needs, massive tax subsidies, and extraordinary utility cost burden associated with these facilities that could lead to skyrocketing utility bills across Indiana,” said Kerwin Olson, CAC’s executive director, in written remarks.
In recent years, Indiana has been offering “data-center incentives,” a series of tax breaks, often worth hundreds of millions of dollars, which can be locked in for up to 50 years.
The push for a moratorium comes as Big Tech companies have announced plans for numerous hyperscaler data centers in Indiana. Amazon Web Services said in April it plans to invest $11 billion to build a data center about 10 miles west of South Bend in New Carlisle that would create about 1,000 jobs.
The state’s job creation agency—the Indiana Economic Development Corp.—plans to provide nearly $150 million in performance-based incentives for the Amazon project. The center also qualifies for Indiana’s data center sale tax exemption, which means AWS won’t have to pay the state’s sales tax on the purchase of the computers, servers and software in the data center or on the electricity used in running that equipment.
Also in April, Google said it planned to spend $2 billion on a data center project in southeast Fort Wayne—more than double the amount the company said the development would cost when it first disclosed its involvement in January. The project is expected to create about 200 jobs over the next several years.
In June, Gov. Eric Holcomb’s office announced that Microsoft plans to spend $1 billion to build a data center in La Porte. The company aims to use the facility to accelerate its Microsoft Cloud infrastructure to support growth in technology and artificial intelligence.
In January, Meta Platforms announced plans to establish a new $800 million data center campus in Jeffersonville, which will support about 100 operational jobs.
Many of the announced projects will take place within the service territory of Indiana Michigan Power, along the northern border of Indiana and in the state’s northeastern quadrant.
I&M said in August it would “take the steps necessary” to acquire additional resources to serve the load growth associated with the hyperscaler customers, but it did not say how much customers’ monthly bills might rise as a result. The utility did not immediately respond to two emails from IBJ seeking comment.
I&M is forecasting that its hyperscaler data centers will use more electricity by 2030 (35 million MWh per year) than all 6.8 million Hoosiers use in their homes today (31.9 million MWh per year), according to Citizens Action Coalition.
The utility is proposing tariff changes for hyperscaler customers to ensure that it has reasonable terms and conditions of service in place. That matter is now before state regulators.
Brian Inskeep, program director for Citizens Action, said I&M does not currently have any customers who use 150 megawatts or more. However, new hyperscaler data centers with loads in the hundreds to thousands of megawatts are now planned to locate in I&M’s service territory.
These new large loads will require billions of dollars in I&M investments for electric service, Inskeep told the Indiana Utility Regulatory Commission in written testimony he filed on Tuesday, in support of I&M’s proposed tariff changes.
“The new large loads anticipated for I&M’s service territory are unprecedented and staggering, including facilities that will be among the single largest electric users in the state,” Inskeep wrote. “Without the prompt implementation of robust consumer protections and enhanced transparency, existing ratepayers are at extraordinary risk from these new large loads.”
Another utility, AES Indiana, which serves the Indianapolis area, told IBJ on Tuesday it is in “advanced discussions” with a hyperscaler, but did not name the party. It previously told IBJ that a hyperscaler in its service territory would require additional power generation. It has not said whether that would mean the construction of a power plant.
The Indiana Energy Association, a statewide trade group for investor-owned utilities, told IBJ on Tuesday it supports the state’s efforts to recruit new businesses, including hyperscalers.
“Understanding the significant amount of electricity data centers can consume, electric companies are working with these businesses who are targeting Indiana to understand their timelines, energy needs, and where they are wanting to locate,” Danielle McGrath, the organization’s president, told IBJ in an email.
She added: “Through this type of advance planning and coordination with state, regional, and local partners, our goal is to support this growth and the communities who have welcomed them. Further, we will not compromise the reliability of the service we provide, and a key priority is to ensure that existing customers are appropriately protected (in terms of both reliability and cost) with the addition of any new customer growth.”
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Yes, we NEED to stop subsidizing these data centers. They employ very few longterm employees and they use a TON of power, putting stress on utilities whose burdens nearly always get shifted to everyday consumers. Subsidizing then is bad business.
We need more nuclear energy in Indiana. Small modular reactors could fulfill this need. It would potentially help reinforce the grid with reliable energy compared to the unreliable wind and solar we seem so interested in subsidizing.
We need to stop subsidizing Wind and Solar. They’re too unreliable for the 21st century.
+1
As long as they build them all in the north east corner of the state, so when one of them has a problem, Indianapolis is down wind of them.
Going after data centers was the idea of state leaders that really didn’t understand that they result in little employment after they ‘re built. It really wasn’t smart, but the big names sure looked good in the press for politicians and economic development folks. Infosys anyone?
Infosys is not a data center. Theoretically, a generic company with a similar profile to Infosys would’ve been great for Indy. The problem is that giving foreign companies $$$$$$ in economic development subsidies tends to fail more often than giving analogous subsidies to analogous domestic companies.
I know Infosys is not a data center. It’s just another example of “big deal” rolled out to the public that ends up not being a “big deal” at all.
Moratoriums just give the lobbyists more time to secure an even worse deal for the State. We just don’t need these data centers here.
I don’t think the real issue is whether or not these facilities are built, or do we need them. We probably don’t NEED lots of industrial projects. But they do attract employment, and other industries we might want to bring their facilities and jobs to Indiana.
The issue is who pays for all of this power generation. And should this be tax subsidized. Tax subsidies are a rathole down which political types like to race. We don’t need a tax subsidized sports stadium, but we get them.
Legislators need to insure citizens and “normal” industrial and commercial entities are subsidizing these efforts. The power companies and their shareholders should take on the burden, as they are the ones who will reap the potential profits.
Data centers practically run themselves, thus why they’re really not worth it. They use a ton of electricity and don’t help stimulate the local economy very much.
These Data Centers are part of “the cloud”, and it makes almost no difference where they are located.
Would like to see subsides for Data Centers removed. doesn’t make sense that they get 50 years of tax subs when they don’t provide long term employment and strain the energy grid. where do we benefit having these massive data center parks? Another prime example that the IEDC needs more oversight and limitations.
Sounds like we all agree that this is not a necessity for our state nor an efficient use of taxpayer money to promote and subsidize these ventures. I wonder if all of the legislators we vote for know our concerns?
Legislators only care about the concerns of the public when the public removes them from elected office for ignoring their concerns.
Since we have an electorate that cares only about wedge issues and they’ve been gerrymandered into irrelevance, it leaves legislators free to focus all their time and energy on those sweet, sweet campaign contributions from lobbyists.