Data center developers will keep getting a tax break in Georgia after the state’s governor vetoed a measure that would have suspended the incentive for two years, a move that shows how the surging nationwide demand and concerns about power needs are spilling into the political arena.
Georgia's Republican governor, Brian Kemp, said the legislation would have stymied the state’s booming data center industry. Supporters of the measure said they wanted to suspend the tax break to study its effect on the state’s electrical grid.
Metropolitan Atlanta is one of the largest data center markets in the United States, and ongoing developments will more than double the market’s existing space, according to JLL’s recent North American Data Center report. Trammell Crow Co. last month applied for state approval to develop a seven-building, 2.3 million-square-foot data center campus near the Atlanta suburb of Douglasville, Georgia.
An industry group that represents Google, Equinix, Digital Realty and other data center developers and tenants lobbied Kemp to reject the tax-break suspension.
The legislation would have undermined “the investments made by high-technology data center operators, customers, and other stakeholders … and [inhibited] important infrastructure and job development,” Kemp said in a statement.
Commercial property developers, however, have warned that electric utilities don’t have enough capacity to fuel data centers’ huge and growing power needs. In addition, artificial intelligence requires even greater supplies of power, according to architects who design data centers.
The increased need for power is expected to draw governments further into deciding between differing parties and demands in coming years, according to JLL.
“Governments have the responsibility to manage resources and balance competing demands from different industries,” said Bob Tan, executive director, capital markets transactions for JLL, said in the report.
He added that “this not only includes considerations on energy and utilities consumption, but also land usage and allocation — whether it’s better used for data centers or a variety of other industries such as value-added manufacturing services,” he said.
'Running Out of Power'
Dominion Energy recently said during an earnings conference call that data center developers have told the Richmond, Virginia-based utility that they need as much power as can be generated by several nuclear reactors.
Data centers soon will not have enough electric power to meet their needs, Marc Ganzi, CEO of data center developer DigitalBridge Group, said in a recent conference call.
“We’re kind of running out of power in the next 18 to 24 months,” Ganzi said.
Data center tenants are gobbling up available space at a record pace and stressing electric power supplies, according to the JLL report. In 2023, tenants leased or preleased a record 4.3 gigawatts of power capacity at North American data centers, enough to power 3.2 million households for a year.
Atlanta, with an inventory of 478 megawatts of data center power, is seeing a boom in data center construction that will more than double its existing space. About 630 megawatts of additional inventory is underway and another 750.8 megawatts are planned, according to JLL's report.
Environmental groups criticized Kemp for vetoing the measure because Southern Co.'s Georgia Power, the state’s largest utility, said it plans to meet data centers' electricity demands through coal and natural gas power plants.
“The surge in the demand for power from data centers is propping up old coal plants and causing a rush to build new gas infrastructure,” Gina Webber, director of the Sierra Club’s Georgia chapter, said in a statement.
Google operates the largest data center in Georgia, an 808,000-square-foot facility at 300 Riverside Parkway in Lithia Springs.