Southeast data center surge comes with opportunities and many tradeoffs
The dramatic results of Georgia’s Public Service Commission races sent a clear message: Voters are paying attention to how the state manages its energy future.
Nowhere is that responsibility more pressing than in the explosive growth of data centers across Georgia and the broader Southeast.
As these power-hungry facilities multiply — reshaping local economies, utilities and even landscapes — the PSC and its counterparts in other states must move swiftly to balance innovation with sustainability, ensuring that the digital economy’s foundation doesn’t outpace the region’s ability to support it.
Across the South, leaders are grappling with historic waves of investment, construction and policy questions driven by digital connectivity, artificial intelligence (AI) and cloud computing.
Growth is unprecedented and accelerating. Metro Atlanta is the nation’s fastest-growing data center market, with 2,000 megawatts of new capacity under construction.
Projects approach the scale of small cities, from the $19 billion, 8.7 million-square-foot “Project Bunkhouse” in Bartow County, Georgia, to Meta’s 4 million-square-foot AI campus in northeast Louisiana.
Mississippi landed a $10 billion Compass Datacenter campus in Meridian, and AWS’s investment there has risen from $10 billion to an estimated $16 billion. Bessemer, Alabama, just approved a $14 billion campus, with South Carolina, Tennessee and North Carolina close behind.
The economic promise is significant: capital investment, high-paying construction jobs and substantial gains in property tax revenue. Leaders in Butts and Douglas counties, Georgia, call these “historic days” as Amazon and others break ground. In Mississippi, arrivals are a “game changer” for jobs and the tax base.
But there are tradeoffs. Sales tax exemptions for equipment could cost Georgia nearly $300 million this year, raising questions about public benefit. Data centers typically create few permanent jobs. Tension is rising over whether incentives and infrastructure costs are fairly distributed.
As data center reach grows so does the need for more power
Tensions require hard questions before siting data centers:
- More tax revenue is good, but what about the long-term impacts on land, water and infrastructure?
- Who pays for growth? Are small towns, low-income neighborhoods and residential ratepayers protected from stranded assets if demand doesn’t materialize?
- Do local voices have a say? Or are decisions made behind nondisclosure agreements (NDAs) and closed doors, without citizen input?
The most urgent challenge is energy and water. This new generation of facilities requires hundreds of megawatts, akin to a small nuclear reactor.
In metro Atlanta, Georgia Power forecasts an additional 8,200 megawatts of demand by 2031, roughly eight nuclear reactors.
The Tennessee Valley Authority and South Carolina’s Santee Cooper have approved new rate classes and contracts so data centers, not existing customers, fund new infrastructure.
Water is equally critical: data centers require vast quantities for cooling, sometimes more than entire towns. In Bessemer, Alabama, the 4.5-million-square-foot campus could draw over 2 million gallons daily. Atlanta now requires special use permits, mandating disclosure of water and energy impacts.
New developments should priorities fairness and openness
As this wave grows, scrutiny is increasing.
In the past year, multiple Georgia counties enacted temporary moratoriums to allow review. Atlanta has banned new data centers in neighborhoods across the city, and other municipalities require environmental and transmission assessments.
The Georgia Department of Community Affairs recently adopted new rules requiring disclosure of each project’s energy and water needs, helping provide local leaders with even more information.
State legislatures are also engaging. Georgia’s General Assembly debated measures to sunset incentives and require that data centers pay the full cost of new energy infrastructure.
In South Carolina, lawmakers limit incentives and ensure large users pay their share. Alabama groups have taken legal action over environmental impacts and a lack of public engagement.
Demand uncertainty looms. Analysts warn of a dot-com-style bubble: overbuilding, shifting AI infrastructure needs and business models still in flux. Some tech companies have reversed planned centers and emerging technologies could render today’s mega-builds obsolete.
Skeptics see classic bubble signals; vast sums chasing hype, with little clarity on who will be left holding the billion-dollar bag.
Developers have a critical public role on par with policymakers and stakeholders. They must sell to citizens and elected officials. For new developments, operators should prioritize fairness, openness and local context. From Day 1, engage communities with early meetings, impact assessments and transparency to build trust and undercut opposition.
The data center boom is about the future that the Southeast chooses to build. Things are moving fast. Policymakers, communities and developers who navigate challenges and seize opportunities will thrive, but only with a fair, open and balanced approach.
Joshua Whitman, Ph.D., and Rick Dent, J.D., are senior consultants with Matrix LLC, a boutique public affairs firm with offices in Atlanta, Montgomery, Birmingham and Tuscaloosa, and they have worked closely with policymakers across the Southeast.
