To keep household electricity and local tax bills stable, there may be no single more effective solution today than a local data center. Our basic local infrastructure systems – electricity, roads, water/sewer – are steadily getting more expensive to maintain, meaning some level of population and/or revenue growth is needed to keep per capita costs down.
Prior to data center development in central Mississippi, local electric systems badly needed new customers to help bear the costs of improving storm resiliency and replacing old equipment like the 50 year-old gas generating plants in Greenville and Vicksburg. These costs alone are in the billions.
Every town and county needs an expanding tax base to avoid degraded systems and/or higher taxes. The Jackson water struggles are clear examples of challenges that come with economic decline (and mismanagement) with no clear financial solution in sight for City of Jackson infrastructure. In the absence of a growing population, large industrial projects are the best bets to generate new revenue for infrastructure systems.
Opposition to local data center development fails to recognize these realities along with the fact that our collective lifestyles are driving the demand for more data storage infrastructure. Each post we read on Jackson Jambalaya, every show we stream on Netflix or Amazon Prime, every purchase we make by card, driving directions we request on Google maps, our thousands of photos, years of emails, preferences and information on our apps, questions asked on ChatGPT and so on are all uses of a data center.
Across the country currently, anti-data center rhetoric, much of it exaggeration or misinformation, seems to have a louder voice than the story of massive economic benefits we’re seeing play out where companies like Amazon Web Services (AWS), AVAIO and Compass are building centers locally. Today’s negativity about data centers is reminiscent of the anti-fracking movement 10-15 years ago in the advent years of record growth in U.S. oil and gas production due to newly discovered drilling methods, which turned out to be one of the biggest economic game changers in U.S. history.
The point is, because of the sheer scale of these data center developments in Mississippi, both electricity and local tax rates appear far more likely to be lower in the future in places where these developments are happening, aside from the fact that our economy is demanding more data storage anyway.
In Madison County, officials are forecasting an additional $5 billion in added local tax revenue over 30 years from the AWS project alone, an average of $167 million per year, and not counting revenue growth from the ripple effect. In addition to a windfall for schools and roads, the threat of higher future taxes should be gone. Across Entergy Mississippi’s service area, which is much of western Mississippi, the company is projecting the data center projects will result in $2 billion in savings for existing customers over the next 20 years.
The accusation that data centers drive electric rates up is not supported by what’s happening in Mississippi, and while 2021-2025 inflation spikes drove up electricity prices everywhere, studies nationally are finding areas with large data center growth generally see benefits across the entire customer base on those systems, even declining rates in some cases (inflation adjusted).
The counterview to some’s perception about data centers is the reality that, in Mississippi, data centers look to be a huge factor in keeping electricity and local tax bills from climbing by bringing badly needed industrial scale to those systems.
Part 2 will address how electricity demand from data center and AI growth is being met, what does threaten electricity price increases in the future, and associated policy needs for Mississippi.
Patrick Sullivan is President of Mississippi Energy Institute and author of this column.
This post is sponsored by the Mississippi Energy Institute.
22 comments:
Yes, but I don't understand data centers,and for that reason alone, do not want them In MS
Math is easy. They pay for all set up and what they use and the future consumers get the benefit.
Right now the USA is in a virtual AI arms race with China. The winner will dominate the technology landscape for the next century. Do you remember the parable of the tortoise and the hare? The USA is the hare. All of the big names in technology are here in the USA. Nvidia, Texas Instruments, Micron, AMD, etc. TSMC and ASML are the not American but adversarial with China. Also, China has been denied access long enough that they are cultivating domestic production. They just pulled ahead of South Korea in DRAM production. Also, their AI models and training data are closing the gap very quickly. If we do not maintain our lead then the tortoise will pass us by and win the race.
Like 10:19, I do not totally understand data centers, and I'm pretty sure that most of my fellow readers do not either. That being said, before we all go jump on the anti-data center bandwagon, there needs to be an honest assessment of data centers so that intelligent people can make intelligent decisions about them. So far this has not happened. The people who are pushing the data centers only talk about how great they are, while those against the data centers can see no good in them. I am old enough to know that the truth is somewhere in the middle. Certainly there is at least one unbiased intelligent individual who can properly explain the data centers and outline both the positives and negatives of them.
That is all correct. But most importantly is how the state negotiated the contract. It can help or it can hurt. What do u think the intelligence level of ur leaders is against the intelligence of these technology driven LLCs that most of the little people are counterparties? The more corruption happening in government and the non transparency of negotiations, the more likely Mississippians will end up paying the price. Other people are way smarter and not as biased so it doesn’t cloud their ability to think.
If what Sullivan claims is true - that data centers will strengthen the electric grid, and keep residential electricity rates and homeowners' property taxes stable - why all the secrecy? Why can't we see the deals made by the State with data center developers? The extent of this secrecy is disturbing.
I assume the issues of water usage and noise will be honestly addressed
An honest assessment can't be made with all the secrecy by the State and local governments.
I wish he'd share how much water a data system uses. How many or few jobs it will generate would be good to know as well. I'm well aware of the usefulness for our Nation. I'm not as clear as how it will help Mississippi prosper and grow.
The anti-data center movement is funded by China. What a shock. https://www.youtube.com/watch?v=pMYNaTI9T2M
10:51 am Thank you and what is the actually number of Mississippians that will be hired and will Mississippians companies be used to build it?
I'd also like to know why a more rural area in the Delta or South Mississippi wasn't chosen instead of an area that wouldn't negatively impact any chance of our capital city with it's historic buildings? It's that we are at the crossroads of the state so shipping in equipment is cheaper, and we have more water to drain off from our underground aquifers and rivers?
That comment, from 10:19 explains a lot about why Mississippi (and Jackson specifically) stays on the bottom. I don't understand it, therefore I don't want it. Brilliant
Water usage has been honestly addressed. Noise has been honestly addresed. However, many folks don't want to listen to the answers because they feel they already know.
The center in Ridgeland recently had a meeting at the new center where a question was people about the noise concerns. They were then shown that the facility was operating, as was the generator, all during the presentation and no one present could hear any noise from either the operating facility or the generator that was running for the sole purpose of showing there was no noise. But yet, social media experts have continued to claim there is a noise issue.
Same with water; the center in Canton uses totally recycled water, returning it to the river more refined than when they received it from the sewage treatment plant. Ridgeland facility will use well water three months out of the year, rest of year will use recycled water. To provide their water, and water for the city of Ridgeland, the facility has constructed five new wells for the city's use.
But in Jackson --- no. We don't want those tens of millions of dollars of tax revenue, because --- well, we don't understand them and social media has said we need to stand up against the powerful folks who do know.
So data centers will actually lower our energy bills, contrary to all of the data from actual communities where they have been built.
That sounds like more AI hallucinations.
We all need to support Jackson Jambalaya with our cash. He is reduced to raising money by accepting payment for publishing packs of lies like this from the the well-connected elites. I will not spend effort to count all the lies in this post, but they are in every single paragraph. The author is trying to sell them a future where he says the sky isn't blue.
This part. Who is foolish enough to believe that exponential growth in grid usage will stabilize and lower energy rates? Who?
Most people against data centers don't know anything about them. Listen to the
people who talk at Jxn city council meetings againt data centers.
To me, it looks like Mr Sullivan is counting chickens before they hatch...But I'm sure others are lining up to pull on them data center teats as well...
@12:38 for those who were sleeping in freshman economics:
Economies of scale occur when a company increases its production output, leading to a decrease in the average cost per unit. By expanding operations, companies can spread fixed costs over a larger volume,
12:39, So you actually think Tariq Abdul-Tawwab Skyhook represents the typical Mississippian.
That tells me all I need to know about you.
10:58, You believe Kevin O'Leary, while pushing to build his own data farm in Utah, is a neutral voice?
Wonder what happens when the next Carrington level event happens?🤔
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