Developing Data Centers in North Carolina: Benefits and Challenges

Building a large-scale data center in North Carolina, such as the Amazon Web Services (AWS) projects in today's news, is a complex process involving significant investment, regulatory steps, infrastructure development, and community engagement. While these projects promise substantial economic benefits, they also bring potential challenges that require careful consideration.

The Process: From Site Selection to Operation

The process typically begins with site selection, where companies like AWS identify suitable locations based on several critical factors. Sources indicate that access to robust transmission infrastructure and capacity for large-use customers is paramount, as it reduces the need for new grid infrastructure. Abundant water is also critical for data centers. Large parcels of land, often referred to as "megasites," are necessary to accommodate the scale of these developments. For example, the Amazon project in Richmond County is planned for nearly 800 acres. The proposed Mooresville Technology Park site is approximately 400 acres.

Once a potential site is identified, the developer must navigate the zoning and permitting process. This often involves requesting zoning changes to allow data centers in areas previously zoned for different uses, such as Rural Residential. In Morrisville, text amendments were proposed to allow Data Centers as a special use in the Business Activity Center (BAC) zoning district, requiring a case-by-case evaluation through the Special Use Permit process. This process ensures compliance with infrastructure and environmental regulations. The Mooresville project involved a request to conditionally rezone a nearly 400-acre site from Iredell County Residential Agricultural (RA) to Town of Mooresville Conditional Industrial (C-IN) to allow for a data center. This required review by the Planning Board and ultimately the Town Board.

Community engagement is a significant part of this process, especially when proposing changes that impact the existing character of an area. Developers often host community meetings to provide project details and address resident concerns. In Mooresville, the developer conducted virtual meetings and outreach efforts, including creating a website and a dedicated phone number and email address for the project. They also engaged directly with neighbors, community members, and key stakeholders, such as nearby churches and school board members.

A crucial step is securing necessary infrastructure, particularly power and water/sewer. Data centers have high energy demands. Utilities like Duke Energy play a vital role in confirming their ability to deliver power to large customers and ensuring the grid can handle the load without negatively impacting existing customers. Developers are typically responsible for extending water and sewer lines to the site and making other required infrastructure improvements. This includes designing and installing water and wastewater infrastructure. Richmond County also undertook a significant sewer improvements project, awarding a bid for over $4.4 million for the Energy Way Industrial Complex where the Amazon data center will be located. In Mooresville, plans include proposed public lift stations, water lines, sanitary sewer force mains, and water storage tanks.

Finally, the project moves into the construction phase, which involves building the data center facilities and associated infrastructure. The Amazon campus in Richmond County is planned to feature 20 buildings, each approximately 200,000 to 225,000 square feet. In Mooresville, the plan anticipates approximately 1,500,000 square feet of data center space, expected to be five buildings of about 300,000 square feet each. The construction and development occur in phases, with the first building potentially operational several years after initial approvals.

Benefits to the Community

Data center projects like these offer significant benefits to the communities where they are located:

• Massive Capital Investment: The Amazon project in Richmond County represents an initial investment of at least $10 billion, described as the largest initial investment for a North Carolina project. Richmond County leaders celebrated this as the largest single capital project and largest capex announcement in the history of North Carolina. This investment far outweighs the entirety of Richmond County's 2023 property tax base, which was $3.2 billion.
• Job Creation: While data centers are often described as not requiring a large number of employees relative to the investment, they do create jobs. The Amazon project is expected to add 500 jobs over five years. These are typically high-paying, high-tech jobs. The Mooresville project highlights the potential for 195+ good-paying jobs.
• Increased Tax Revenue: A major benefit highlighted is the potential for a great deal of local tax revenue over time. This revenue can support local needs and does not have a corresponding local expense, such as for additional school construction, as the projects typically don't include housing development. In Richmond County, the local economic incentives include cash grants equal to a percentage of the annual property and personal property taxes. The Mooresville project also emphasizes tremendous tax revenue for local needs and significant tax revenue for the School District.
• Economic Catalyst and Transformation: Local leaders view these investments as a catalyst to transform the local economy, provide high-paying jobs, and improve the quality of life for all residents. It is seen as a turning point for the region and a way to position North Carolina as a hub for cutting-edge technology.
• Support for Education and Workforce Development: Amazon's investment in Richmond County includes support for local education and workforce development, partnering with community colleges, technical schools, and workforce organizations for specialized training programs. They also have STEM outreach initiatives and offer scholarships and internships for students.
• Modern Infrastructure Development: As part of the project, the developer is responsible for extending and upgrading infrastructure, such as water and sewer lines, which can benefit the broader community.

Potential Downsides and Concerns

Despite the substantial benefits, data center developments also raise concerns:

• Strain on Power Supply: Data centers have a high energy demand, leading to concerns about potential strain on the local power supply and available baseload capacity for power generation. Residents and officials have inquired about safeguards to ensure residential energy programs are not affected. While utilities and developers express confidence in the ability to deliver power, the sheer scale of power consumption is a notable concern. One source also links data centers for artificial intelligence to a larger methane build-out and pipeline projects, raising concerns about associated health, safety, and environmental issues, as well as increased utility rates for citizens.
• Noise Impacts: Backup generators, commonly used for data centers, can generate noise, especially near residential areas. Cooling equipment also produces noise. Residents have expressed concern about the potential for a constant hum audible off the property.
• Traffic: Although data centers generally have minimal parking needs and low traffic volume compared to other industrial uses, there are still concerns about traffic impacts, particularly on local roads and entry points.
• Impact on Rural Character and Landscape: Locating large industrial facilities like data centers in areas previously designated as Rural Residential raises concerns about inconsistency with existing land use plans and the loss of community character. The size and appearance of the buildings need to be considered.
• Water Usage: Data centers require abundant water, which can be a concern. Residents have asked how much water usage is expected daily.
• Potential Impact on Property Values: Some residents worry that home values could decline near such developments. The developer in Mooresville stated they have not identified any data indicating property values decline where data centers are built.

Developers and local governments attempt to mitigate these concerns through various measures required during the permitting and conditional zoning processes. These can include requirements for noise containment, visual impact mitigation (like roof wells and parapet walls), significant setbacks and buffers from property lines (e.g., a minimum 100' perimeter buffer and 150' building setback in Mooresville), and architectural design standards. Traffic mitigation measures, such as installing traffic signals and turn lanes, are also often required. Preservation areas are often designated to remain in a natural state. The Special Use Permit process allows for case-by-case evaluation to ensure impacts are addressed through detailed planning.

In conclusion, the process of building data centers in North Carolina involves a large-scale undertaking, beginning with strategic site selection based on infrastructure availability. It requires navigating complex local government processes like zoning changes and securing special permits, which include public hearings and community engagement. A critical component is the significant investment in and development of utility infrastructure by the developer. The primary benefits are substantial capital investment, job creation, and significant tax revenue, acting as a catalyst for economic growth. However, potential downsides related to power consumption, noise, traffic, and impacts on rural character are key concerns that are addressed through specific mitigation measures and regulatory oversight.