Data Center Push Hits Resistance as Energy Concerns Mount

The race to build AI-fueled data centers facing pushback over power and water, but not only from local communities.

More than a dozen investors are pushing companies ahead of annual meetings to disclose more information about water usage, energy consumption and community impacts. The scrutiny underscores a growing risk for developers and landlords tied to data center growth.

Amazon, Microsoft and Google have all scrapped multibillion-dollar U.S. data center projects in recent months amid local opposition, Reuters reported, a sign that the infrastructure underpinning the tech boom is colliding with real-world resource limits. That friction is spilling into boardrooms, where investors are pressing for answers on how these projects pencil out environmentally and financially.

Boston-based Trillium Asset Management, which has about $4 billion under management, filed a resolution targeting Alphabet’s climate strategy, arguing the company’s emissions have surged alongside its data center buildout. The firm said Alphabet’s emissions have climbed 51 percent since 2020, even as it pledged to cut them in half by 2030.

Water is emerging as a flashpoint. North American data centers consumed nearly 1 trillion liters last year, according to Mordor Intelligence, a number in line with New York City’s annual demand. While hyperscalers have rolled out more efficient cooling systems, disclosures remain inconsistent with limited site-level data, the kind investors say is critical to underwriting long-term risk.

That opacity is also fueling local resistance. Communities have raised concerns about strained water supplies, rising power costs and land use, forcing some projects to stall or collapse altogether. For developers, that introduces a layer of risk akin to what multifamily and industrial builders have long faced in NIMBY-heavy markets.

The industry is adjusting. Officials from the Data Center Coalition, a lobbying group working on behalf of developers in the sector, say operators are prioritizing community engagement and transparency, particularly around resource consumption and utility impacts.

But the stakes are rising as AI demand accelerates and more localities fight back. Maine is on the verge of being the first state to pass a data center construction moratorium, according to the Wall Street Journal, and lawmakers in more than 10 states are proposing temporary bans of their own.

— Holden Walter-Warner