Key facts
- 16 state legislatures have considered bans on data center development.
- Proximity to customers and internet service were traditional site selection factors.
- Northern Virginia became a dominant data center hub due to favorable conditions.
The prime locations for building data centers are becoming increasingly scarce as backlash against facilities supporting artificial intelligence grows. Traditionally, data center sites were chosen based on proximity to customers, internet speed, tax incentives, local policies, and power costs. Northern Virginia, for example, became a major hub due to its federal government clients, major internet cables, favorable zoning, a 2018 state tax exemption, and affordable electricity.
However, concerns over the strain on U.S. electrical grids and voter opposition to large data centers are prompting a shift in development strategies. As a result, 16 state legislatures have explored outright bans on new data center construction, leading developers to re-evaluate their essential site requirements. "On balance, when we look at the industry, the primary drivers are not ones of a bounty of choice. It’s one of very limited choice," said Ian Nieboer, who leads energy transition research at Enverus.