Paul Hammel: Growth of data centers and AI prompt reconsideration by state leaders
Just about every week, I drive by a massive construction project on the north side of Lincoln, next to Interstate 80.
Construction cranes soar high into the air; bulky soil scrapers remove hills and build new ones; a steady stream of construction vehicles scurry to and fro.
Paul Hammel
It is the site for a $600-million data center for Google.
Work has been ongoing for more than three years, transforming farmland and a state rest stop into a home for banks and banks of high-powered computers.
When construction began, the project was only known by a code name, “Project Agate.” There was mostly just curiosity about what was going on there.
Since 2020, Nebraska has been encouraging data centers, after including tax incentives for such facilities in a new, economic development tool, the “ImagiNE Act.”
Forty-one of the 49 state senators voted in favor of tax credits for data centers. The bill was signed into law by then Gov. Pete Ricketts. (TV ads attacking gubernatorial candidate Lynne Walz for approving millions of dollars for data centers ought to name the 40 other state legislators and governor who OK’d the bill.)
Back then, the thinking was that data centers were a great new customer for the state’s public power providers. A few, high paying jobs would come along too.
But since then, attitudes have changed dramatically as these centers have grown larger and larger and their link to artificial intelligence has become clearer.
At least 12 communities across Nebraska have passed moratoriums blocking construction of data centers over concerns about huge consumption of electricity and water and noise. Lurking in the background is whether AI will replace jobs.
The Lincoln data center, according to the Lincoln Journal Star, is already online, and pulling 11% of the city’s electricity. City leaders there are saying one data center, for now, is enough, given other demands for water and power.
There’s a lot of mixed feelings about AI.
President Trump recently posted that data centers would lead to lower taxes and create tremendous wealth, and those opposing them favored “poverty, crime and squalor” and wished to be “backwards and poor.”
To be sure, we rely on AI to answer all kinds of questions, to help create speeches, and (as I just did) double check several dates and past news stories concerning data centers. (It sure was quicker, and more convenient, than searching through a newspaper clip file as in the olden days.)
I’ve also used AI to create a logo for a side business I have. It took only a few seconds and cost a fraction of what a graphic arts business might charge.
At one Lincoln business, 80% of its computer coding is now written by AI, saving time and money.
But worries about the new generation of massive data centers are growing.
Is there enough power and water for such complexes? Will our utility bills go up? What about noise and light pollution? Will jobs be eliminated by the AI revolution? And whose jobs?
A lot of these concerns have intensified in the past few months as these data centers have become much bigger, and more numerous.
Already, Nebraska has 39 data centers, which ranks No. 9 nationally for most per capita, according to reporting by the Nebraska Examiner’s Erin Bamer. They consume nearly 12% of the state’s electricity.
Likely in response to the AI backlash, Gov. Jim Pillen recently signed an executive order ending state tax incentives for data centers (just a few months after getting a law passed that helped data centers). In just five years, data centers have enjoyed more than (gulp) $500 million in property tax breaks alone.
Given that these new data centers are being built by some of the wealthiest corporations on earth, it seems pretty clear that they don’t need tax breaks any longer.
Pillen also created a task force to study issues surrounding data centers.
I’ve always appreciated Nebraska’s reluctance to be the first kid to jump into a new pool, choosing instead to let others check out a new technology or business opportunity before leaping.
It’s time to slow down, explore the issues around data centers and AI, and then decide how to proceed.
Paul Hammel has covered the Nebraska state government and the state for decades. He is a retired senior reporter for the Nebraska Examiner and the former Capitol Bureau Chief for the Omaha World-Herald. A native of Ralston, Nebraska, he loves traveling and writing about the state.
