Georgia is on the verge of suspending a tax break for data center construction, a move that opponents say will bring the robust development of new data centers in the state to a halt.
The Georgia Senate approved the measure earlier this month, following its approval by the state House of Representatives. The legislation must be approved by Gov. Brian Kemp to become law, and opposition groups have said they will lobby the Republican governor to veto it.
The sales and use tax suspension comes only a year after the state Legislature and governor approved an extension of the financial incentive through 2023. Since that time, however, Georgia Power has said that data centers consume so much energy that the utility must dramatically expand power production to keep up with demand.
Data centers use the equivalent of all the power generated by a single nuclear power reactor operated by Georgia Power, Republican state Sen. Chuck Hufstetler said during a recent legislative hearing, according to news site Capitol Beat.
Data centers are poised to consume even more energy in the coming years because of the rise of artificial intelligence. AI-driven computer applications churn through dramatically more energy, leading architects and engineers to devise new ways to design data centers to compensate.
Atlanta is seeing a boom in data center construction that will more than double its existing space, according to JLL's North American Data Center report for the second half of last year.
An alliance of data center operators said that developers will leave the state if Georgia removes the tax break. About 90% of data center investments wouldn’t have happened in Georgia without the tax break, according to the Data Center Coalition, a group with a board of directors that includes executives from Amazon and Google and data center owners Digital Realty, Equinix, CyrusOne and Iron Mountain Data Centers.
Under the proposed suspension, tax breaks would expire after a two-year period, during which time a new task force will be formed to study the economic impact of data centers on the state’s electric grid.