How to Get Your Data Center Approved? Behave Like An Oil Company

AI data centers might be encountering a lot less community pushback in the U.S. if their developers thought of their projects like oilfields and spread the expected coming windfall much more freely, says Brian Janous, co-founder of Cloverleaf Infrastructure.

Opposition in the U.S. to AI data centers has exploded, becoming a key hot-button issue animating the Nov. 3 midterm elections. A September poll by The New York Times found that 61% of likely voters oppose data center construction, and The Information has tracked at least 550 states and localities that have active data center moratoriums in place.

Consequently, candidates in both red and blue states are racing to save their campaigns by trying to appear tough in confronting such projects.

Janous, whose firm develops data centers, spoke on a panel I moderated last week for The Information on data centers. He argued that cloud firms and data center developers should cut communities in on the massive profits they expect over the coming decades. Developers will spend almost $3 trillion on the AI data center buildout in the U.S. by 2030, according to McKinsey.

Janous cited oil development in Alaska, where since the 1970s oil companies have paid out some $31 billion to the state’s residents as their share of North Slope profits. The split is even richer in oil-producing countries such as Kazakhstan and Azerbaijan, where Western oil companies pay 80% of profits to the countries.

The most pragmatic oil industry veterans don’t regard such payments as generosity but as a way to keep the peace. Oil projects can earn hundreds of billions of dollars in profit over a 30-year period, making payments to local communities a reasonable price to pay.

While tech companies such as Microsoft, Meta and Amazon have talked up the benefits their data centers bring to local communities, they have doled out only tens of millions of dollars for accouterments like workforce training and recreation centers. At the higher end of the scale, though still relatively modest, was Amazon’s offer this month to invest $1 billion across the communities that host its data centers.

There is also Hazle Township, Pa., where NorthPoint Development, a Missouri industrial project developer, during the summer offered residents $10,000 each to support the construction of a new data center.

None of that will cut it, Janous said.

“Communities really have to feel like they won a lottery by having a data center,” he said. “I liken it to the old company town. People should feel like, ‘Hey, we’re excited that Anthropic’s here because our community is a lot better off.’”

The change in public reception to data centers has bubbled up relatively quickly: Over the last year, gripes surfaced about soaring electric bills, the use of sometimes-scarce water supplies, dust and noise. In recent months, however, those have spiraled into the moratoriums.

Many industry veterans attribute the increased public opposition to anxiety about AI itself, as leaders of the biggest AI companies release increasingly alarming predictions that—among other things—AI will end the human race.

The pushback has been international. There is resistance to new data centers and outright bans in South Korea, Singapore, Finland, Scotland, the Netherlands, Malaysia and many other countries.

Allan Schurr, chief commercial officer at Enchanted Rock, which installs microgrids that provide power to data centers while they await a connection to the grid, suggested that developers could attract some local acceptance by offering power to communities amid worsening grid reliability in many places.

Another panelist, William Mao, vice president of energy infrastructure at Delta Electronics, said data centers could provide power in the case of a catastrophic event like a hurricane or earthquake. “The data center power could be redirected to help stabilize the grid,” he said.

Schurr pointed out that data center developers were taking steps to ensure communities were not being burdened by data center projects. “I know of no data centers that are trying to not pay their own way,” he said.

Of course, it would be tricky for cloud firms to promise massive amounts to local communities since they don’t know when their investments would begin to pay off. But that’s not dissimilar to the oil companies, whose investments in oilfields also take years to deliver profits. The oil companies typically open the cash spigot to the countries in which they’re operating only after the capital expenses of oilfield development are paid off, which can take up to a decade.

Janous’ point, though, was that the psychology of the AI buildout needed to change because communities are angry.

“I think that’s what‘s driving a lot of this angst is the feeling like, ‘Hey, you know, what are we really getting out of this? We’re gonna make a bunch of tech companies richer, but are we gonna get to participate in some of this upside?’" he said.

Noteworthy

China agreed to halve its exports of hybrid electric cars to the EU. The agreement Friday follows an export surge of Chinese-made hybrids and plug-in hybrids to Europe as vehicle sales of the major European carmakers have fallen dramatically.

Ukraine for the first time struck a data center in Russia. Ukraine drones last week attacked Yandex, Russia’s leading AI company. Yandex said it suspended operations at its data center in the Russian town of Sasovo.

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Steve LeVine is editor of The Electric. Previously, he worked at Axios, Quartz and Medium, and before that The Wall Street Journal and The New York Times. He is the author of The Powerhouse: America, China and the Great Battery War, and is on Twitter @stevelevine