The Dark Side of Data Centers, Part 3: Outlook for Idaho
The recent rapid proliferation of artificial intelligence (AI) has driven explosive growth in a once-niche industry: data centers. These facilities host vast networks of computer processors that power the processing, storage, and management of the data underpinning our digital lives. While data centers themselves are not new, demand for them has surged as our reliance on cloud storage has increased and the AI computing race has accelerated. Yet even as data centers become essential infrastructure for an increasingly complex digital world, they also bring significant impacts that warrant close attention.
In this Part 3 of the blog series, we will explore the data center outlook for Idaho and discuss policy recommendations for the future. Part 1 and Part 2 of this series looked at the energy and water usage of data centers, respectively.
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Now that we’ve previously covered the two biggest impacts of data centers, energy usage and water usage, let’s turn our attention to the outlook for data centers here in Idaho. At present, Idaho is “underdeveloped” compared to other regions with respect to data centers (the current national hotspots are Northern Virginia, Silicon Valley, and the Phoenix metro area). However, that may soon change. More and more tech companies are eying Idaho for new data centers because of our relatively low electricity rates, abundance of land, existing tax breaks for these facilities, and our generally anti-regulation state government.
Data centers in Idaho
Idaho’s first major data center is currently being constructed by Meta in Kuna, which is slated to be complete by the end of this year. Meta has not yet disclosed how much energy this facility will use, though they have said that they will support 100% of the facility’s energy usage through the addition of new renewable resources connected to Idaho Power’s system. This data center is expected to use an average of 70,000 gallons of water per day, which is 80% less than industry standard - in large part due to the facility’s ability to utilize air cooling in the winter months and other efficiency measures.
As big as the Meta data center will be, it will be dwarfed by what comes next. A very large data center (called the Gemstone Technology Park) was approved in Kuna earlier this year. This facility is expected to take 10 years to build and will have a 600-800 MW capacity, much bigger than the Meta data center currently under construction. This data center’s expected energy usage would constitute an approximately 15% increase to Idaho Power’s total power generation across its entire service territory once it comes online. Put another way, the amount of energy this data center is expected to consume would be enough to power somewhere between 390,000 and 520,000 homes — about twice as many households in all of Ada County. That is a truly mind-boggling amount of energy for one facility; as of right now, there are no details about where that energy would come from or who will operate this data center.
This is likely just the beginning of the data center boom in Idaho - we will be closely tracking new proposals for these facilities in Idaho as they arise.
Will my power bill go up?
To be determined.
One of the biggest concerns related to data centers is their potential to drive up power rates for the average Idahoan due to utilities passing along the infrastructure costs associated with meeting the extraordinary power demand brought on by data center growth and/or data centers negotiating sweetheart rates with utilities that are ultimately subsidized by other customers. For their part, Idaho Power, has said that the utility has extensive procedures in place approved by the Public Utilities Commission to ensure normal residential customers don’t subsidize large energy users or the infrastructure needed to specific service those large users (such as data centers).
Given that there are no large operating data centers in Idaho yet, we will have to wait and see what impact data center growth in the state has on the average Idahoan’s power bill. Your power bill is likely to go up in the near future - Idaho Power recently announced a ~10% rate increase for residential customers - but this increase is due to growth in the residential sector statewide as well as existing large industrial customers (e.g. Micron near Boise) rather than data centers. Nonetheless, we will be closely tracking how the two data centers currently under development in Idaho impact power rates and where our utilities get their energy from.
Policy recommendations
As we enter the brave new world of AI mega data centers, it would behoove the State to pass sensible legislation regulating this sector to protect average Idahoans from bearing the brunt of the energy and water impacts that this “boom” is expected to bring. Our policy recommendations on this issue fall into three categories:
Transparency - All data centers should be required to report on their energy and water usage before the project is permitted and then annually throughout its operation. Data centers should also disclose where their energy and water came from and what rate they paid for their electricity. Any incentives offered by the State for data centers should be disclosed and tied to metrics like jobs created per unit of water and/or energy used, rather than a blanket tax break for the entire industry.
Accountability - Data centers should be held accountable for the extreme demands they place on the energy grid. Normal ratepayers should not be forced to shoulder the burden of utility costs related to data centers or other very large loads. One option would be to create a special rate “class” or contracts for customers larger than 20 MW, which would include all large data centers.
Oversight - State oversight, in addition to local review, is needed to minimize the industry’s impacts on local communities and our electric grid. The Public Utilities Commission in Idaho should develop large load policies that uniformly apply to all Idaho utilities, in part to prevent data centers from privately negotiating special rates directly with utilities. Counties should develop transparent processes for evaluating data center proposals with an emphasis on local public input.
With more data centers likely to come to Idaho in the future, we should strive to be as prepared as possible to handle the increased strain they will put on our electric grid and water supply.
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