Why Amazon and Microsoft Are Taking Communities’ Side Against Utilities

Amazon, Microsoft, Oracle and other AI data center developers are sweetening financial offers to municipalities and regulators to gain approval for new facilities. They’re also getting smarter about standing up for consumers against utilities that have proposed to make the public pay for some of the cost of handling new electricity loads.

The tech giants still face years of local fights as activists ignore the money offered and ramp up their objections, but the companies are offering more tangible benefits instead of just refining their messages in information wars.

Plus, as Oracle’s earnings showed last week, cloud providers and other buyers of Nvidia servers can afford to make richer offers because the servers’ value keeps rising and cloud providers can now extract significant prepayments from AI developers that want to rent them.

The Frederick Digital Campus in Frederick County, Md., which is set to consume as much as 2 gigawatts of power, is a prime example of how data center developers are granting more concessions to locals.

Two weeks ago, the site’s developer, which private equity giant TPG owns, announced what it says is the largest proposed community benefits agreement between a data center and a host community in the U.S. The $110 million deal includes $30 million for an elementary school, $40 million for recreation facilities, $14.5 million for a workforce training center and $10.5 million for agricultural preservation. That’s on top of $215 million in annual property taxes it would pay once the campus is fully built, a more than 40% boost to the county’s tax base.

Beyond the money, the developer agreed to reduce building square footage almost 20% from the original plan and reduce potable water consumption 80% by spending another $75 million to $100 million to build a water reclamation system.

Frederick County is still reviewing the benefits agreement, and some opponents are vowing this fall to vote out the Democratic county executive, Jessica Fitzwater, who negotiated it. She’s in the line of fire even though she did not take office until after the county approved the Frederick project in 2021 and she vowed not to support further data centers after this one. She is also lobbying state lawmakers to increase taxes on data centers and says she secured a promise from Catellus, the developer of the site, to support this.

The Frederick site, where an aluminum smelter once stood under thick veins of power lines, is well positioned to capture overflow from Northern Virginia’s Data Center Alley. A key attraction is its recently finished 41-mile, high-capacity fiber loop going under the Potomac River and connecting to the heart of Virginia’s Loudoun County. But sentiment soured in 2024 after a series of environmental violations by a prior developer. TPG removed that developer and installed a new one, Catellus Real Estate Development, that says it has conducted “hundreds” of meetings with community members.

Meanwhile, Amazon and Aligned Data Centers, backed by BlackRock and Microsoft, are both waiting to move into the Frederick campus, which is under construction.

“This project has turned a once-dormant, vacant, brownfield site into the workhorse employment engine of this county,” Michael Kuykendall, executive vice president at Catellus, told me. “We’re really proud of this agreement. It shows we’ve listened to the community.”

The proposed deal reflects a rapidly emerging consensus by both tech companies and host governments to eliminate giveaways to developers and to accelerate benefits to towns in the vicinity of the facilities.

On Wednesday, Amazon Web Services went before a county planning commission in Pennsylvania to say it “does not anticipate seeking any economic incentives” that would reduce its fully assessed property taxes on a massive, 36-building data center complex it intends to build in Homer City. It’s still negotiating a community benefits agreement, but that could be significant, too: The Homer City energy and data park will total 4.5 GW, one of the largest projects in the U.S., and Amazon will be its lead tenant.

Effective Altruism?

Some of the savvier moves I’ve seen lately from tech companies involve them taking the side of consumers in power rate battles.

Microsoft, for instance, recently challenged American Transmission Co. and We Energies’ proposal about how they would charge for new power lines and substations for Microsoft’s Wisconsin data center. Microsoft said the plan lacked airtight mechanisms to keep retail customers from getting stuck with the bill if conditions changed and the company didn’t use it.

Microsoft told the Federal Energy Regulatory Commission, which regulates interstate transmission, that the proposed rates “may not be just and reasonable” for ordinary households. The company said the deal could run afoul of its commitment to President Donald Trump’s Ratepayer Protection Pledge requiring that it pay its fair share.

Tom Content, head of the watchdog group Citizens Utility Board of Wisconsin, said he was glad for the assist. In this case, “the giant customer and the small customer are aligned” in wanting more clarity about how transmission costs are allocated and whether they are accurate.

In another example from the summer, Google and Amazon successfully argued to Virginia regulators that they should self-fund high-voltage transmission upgrades in the state rather than let Dominion Energy slip those expenses into all customer bills with a markup. Former Biden Energy Secretary Jennifer Granholm celebrated the move.

The Next Fight

To be sure, offering more money and committing to paying for grid upgrades may not be enough to win over some communities.

One of the next topics tech firms will need to tackle could be forever chemicals. Rising demand for coolants, water treatments and fire suppressants for data centers, as well as coatings for semiconductors, is starting to raise environmentalists’ hackles about the use of hazardous chemicals in such infrastructure, according to Heatmap. It’s a complex subject that opponents of data centers, including Earthjustice, are preparing to use in their fight against the industry.

Even if the industry is already following regulations that apply to these chemicals, in today’s charged climate, they will still face questions for using them.

Ann Davis Vaughan is the author of the AI Infrastructure newsletter for The Information. She is a former senior Wall Street Journal investigative reporter turned investment strategist who has tracked the energy, industrial and financial sectors for three decades.