Do We Need to Slow Down to Speed Up?
If you’ve heard anything about the data center industry lately, it’s the unbridled desire for SPEED TO POWER. With exploding near-term demand for new compute capacity, data center developers and power providers are trying all sorts of creative solutions to address long grid interconnection lines and supply chain delays—even going as far as trying to resurrect old cruise ship and fighter jet engines in the quest to power new compute capacity.
But if you’ve heard anything else about the data center industry recently, it’s that communities are increasingly unhappy with their planned arrival. In many cases across the country, towns and counties are fighting to deny permits, establish moratoriums and otherwise make things hard for data center companies to come to town. Those two paths are like increasingly fast moving trains headed straight towards each other and, unless something changes, it’s going to get much worse before it starts to get better.
As someone who both believes in the potential and value of artificial intelligence (AI) and has spent two decades creating a framework that internalizes the human costs of energy development, I increasingly find myself asking the question, does data center development need to slow down in order to speed up?
Anxiety about the impact of AI on peoples’ families and livelihoods is now a central concern of most Americans. A Quinnipiac poll from March 2026 estimated that 80 percent of Americans are “very concerned” or “somewhat concerned” about AI, with 55 percent of those surveyed sharing the view that AI will do more harm than good in their daily lives. That anxiety is layering on top of concerns about rising electricity bills which have been getting more expensive for some time thanks to a complex set of factors that includes but goes well beyond new data center development. This perfect storm makes data centers a very easy target—a physical manifestation of our inability to understand and control our own destiny in this unchartered AI era.
If that is the true magnitude of the challenge, then no particular large load tariff, hyperscaler pledge or capacity procurement is sufficient to facilitate data center development at the speed demanded by the market. The data center industry and its customers are quickly realizing that putting their heads down and trying to barrel through is not a successful path forward.
There are a wide variety of policy and technology solutions available (none perfect, several good enough) that get data centers closer to paying for the costs they impose on the system. But the truth is that none will overcome the magnitude of concern communities carry over data centers coming for their jobs and opportunities.
Back in the era of zero load growth, I took a lot of heat as a federal energy regulator because I wanted interstate gas pipeline developers to “show their work” by demonstrating that new pipeline capacity was needed before they received the right to take private land for construction. And I took even more heat for my perspective that the impacts of new development on often involuntary host communities should be an important part of the review process.
But in the case of data centers, there is no federal eminent domain for development. Local zoning and permitting requirements, along with the increasingly salient politics of rising electricity bills and data center angst, give communities actual power to delay or shut down new developments.
It is in this context that I’ve come to believe that the best path forward for developers is to become true community partners. Establishing informal or formal community benefits arrangements is a tried and true concept in the infrastructure development space. Although memorializing a community benefits framework in the Inflation Reduction Act and its subsequent revocation has put a certain political tint on the concept, countless examples point to successful power projects that skeptical communities have come to support and even champion not because any specific project was so spectacular, but because the developer put in the time necessary to listen, educate and partner with local leaders and the broader community.
Lots of good examples of successful data center developers already affirm this principle. For starters, look at Columbia Law School’s Sabin Center thinking here, and Brookings’ research here. As I consider these helpful sources, some basic truths come to mind:
Developers must engage early, transparently and often. The traditional approach of laying low, having officials sign non-disclosure agreements, and buying up land through unidentifiable trusts is over as is the belief that community engagement is solely for the end goal of achieving a permit or zoning. Community partnership requires a commitment to listen to a town’s needs and challenges as well as their hopes and dreams. Meeting with community government officials and civic leaders to first, listen, and later, present, is a critical first step. The goal is to be a real partner—one where the partnership plan develops alongside the site and building plans.
Engagement must be with, not at, potential host communities. Advertising campaigns that describe end-use hyperscale customers as good partners on the job, environmental or grid front are useful for many reasons, including potentially softening up skeptical hearts and minds. But successful engagement cannot be aimed at towns: it has to be a two-way street. Telling a community the benefit a developer plans to provide, instead of first asking the community what types of benefits they want, is a recipe for failure. Communities may be looking to create new job pathways, repair decaying infrastructure and/or improve medical care facilities or equipment—the possibilities are endless. Whatever it is, the community’s hopes and needs should drive the partnership.
Honest education is key. Data centers do bring communities some benefit, like construction jobs, a small but increasing number of permanent jobs and massive amounts of new tax revenue without putting a drain on public services like schools and hospitals. But there are real water, air and energy impacts. Working to address the fake impacts that data center opponents raise while explaining clearly and with rigor where the real challenges lie and how they will be addressed is critical—it can make or break development opportunities. Credible messengers on the impacts, who will likely differ from community to community, can go a long way to opening the dialogue and allowing information to be heard.
Technology choices make a big difference. It is not surprising that communities who are being asked to host data centers may not like on-site diesel generation sets or may worry about water usage. They also don’t like that they could be paying more in utility bills for new electric generation or grid investments to serve large loads. One of the most exciting opportunities that comes along with this rapidly increasing generation demand are the technology solutions that not only speed up development but do so in a cheaper and cleaner way than has traditionally been the case. Hardware and software solutions that automate processes, allow for more dynamic and efficient operation of the existing grid, result in less water use and provide large loads with the flexibility to stop taking grid power in times of system stress have tremendous potential to increase speed to power while keeping a lid on development costs. And it turns out that communities like these solutions too.
Community engagement, education and innovative tech solutions are not the silver bullet. Neither a formalized community benefits agreement nor a more informal partnership will singularly solve the data center industry’s local opposition woes. But it is a necessary piece of the puzzle if we want to find a path forward for enabling the data center development required to satisfy even a portion of market deman
About Allison Clements
Allison Clements is the founder and principal of 804 Advisory and a former FERC commissioner. 804 Advisory operates at the intersection of energy policy, markets, and investment. The firm supports clients across the power sector, including investors, developers, and other stakeholders navigating regulatory and market complexity. For more information, visit: www.804Advisory.com.
