For twenty years, data centers were viewed as among the most uninteresting components of the tech infrastructure—large, rectangular structures that silently held and processed data for websites, email, and cloud services. They seldom captured public notice, and certainly never became a topic in political campaigns.
TL;DR
- AI data centers are transforming from quiet infrastructure to major political issues due to high power and water demands.
- Candidates in Virginia and New Jersey are debating tax incentives, resource consumption, and job creation related to data centers.
- A populist backlash against rising electricity costs is emerging, with some politicians across parties calling for bans on new facilities.
- Both parties are navigating the AI boom, with some advocating for rapid expansion and others expressing concerns about resource strain.
The surge in generative AI and its substantial computing demands has transformed former modest server farms into vast mega-complexes. These facilities can span millions of square feet, require electricity equivalent to powering a medium-sized city, and consume millions of gallons of water. Consequently, AI data centers have emerged as a significant political focal point for 2025, sparking intense discussions concerning power, water, land, and employment. Opponents attribute rising electricity costs and depleted water resources to them, while proponents highlight their capacity to stimulate economic expansion and provide substantial tax benefits to communities experiencing prolonged stagnation.
This autumn, those discussions will reach a critical point in Virginia and New Jersey, the sole states conducting gubernatorial elections this year. These two contests serve as initial trials for how the political landscape surrounding AI infrastructure might influence national campaigns in 2026 and subsequent years. The core issues involve tax incentives and infrastructure expenses that states are providing to draw large-scale AI data centers; increasing worries about electricity and water consumption; the minimal local employment opportunities these projects create relative to their substantial resource needs; and heightened examination of Big Tech's political sway—all occurring amidst a bipartisan race to dictate the speed and conditions of the AI expansion.
In Virginia, Democratic candidate Abigail Spanberger, who is polling as the frontrunner, has made data centers’ outsize energy demands a central issue, calling for tech companies to pay a “fair share” for the grid infrastructure their AI operations require. Her Republican opponent, Lt. Gov. Winsome Earle-Sears, supports continued data center growth while blaming Virginia’s Democratic leaders for pushing clean energy mandates too quickly, arguing that it’s their policies that threaten grid reliability and drive up costs.
In New Jersey, similar conflicts are occurring. Democratic contender Mikie Sherrill supports a bill mandating that data centers contribute to grid upgrades. Conversely, Republican Jack Ciattarelli aims to draw more such facilities to “supercharge economic growth” and advocates for establishing new natural gas power plants to satisfy the rapidly increasing demand.
But the political calculus is more complicated than a simple left-versus-right divide. As electricity bills climb, candidates are turning their fire on data centers in a rare populist backlash that cuts across party lines. For instance, in Virginia, dueling candidates for a local board of supervisors seat in Prince William County—Republican Patrick Harders and Democrat George Stewart—have both called for a ban on new facilities. “I think we should, personally, block all future data centers,” Harders said. Stewart agreed, decrying “the crushing and overwhelming weight of data centers” and accusing “massive companies” of forcing residents to “pay for their energy.”
Even within the GOP, divisions are surfacing. Missouri Republican Senator Josh Hawley publicly clashed this week with his own party’s state senate president pro tempore, Cindy O’Laughlin, after she wrote a letter urging him to stop raising questions about data centers and rising electricity rates. “Not a chance,” Hawley fired back on X. “These data centers are massive electricity hogs. That’s why Silicon Valley wants more transmission lines, solar farms, and windmills. Somebody has to pay for it all—and don’t believe any politician who says it won’t ultimately be you.”
But both parties are also leaning into the data center boom. Some of those who subscribe to the center-left “abundance” agenda (first articulated by journalists Ezra Klein and Derek Thompson) have framed these facilities as essential building blocks of a progressive future built on universal broadband, advanced AI, and a decarbonized grid. The pro-business right, meanwhile, celebrates every new project as proof it can attract investment and fuel economic growth.
The Trump administration has prioritized winning the AI race against China, advancing an AI Action Plan designed to expedite data center approvals and strengthen the power grid for escalating demand. In a period where AI infrastructure investment significantly fuels national economic expansion, both political parties are vying to demonstrate their ability to accelerate construction, satisfying well-funded tech firms needing greater computing capacity.
This situation has resulted in unusual alliances. For instance, in Pennsylvania, Democratic Governor Josh Shapiro took the stage at an AI summit in Pittsburgh at Carnegie Mellon, an initiative led by the state's Republican senator, Dave McCormick, and attended by President Donald Trump. This gathering followed Amazon's declaration of a $20 billion investment for data center campuses in Luzerne and Bucks counties.
“I can imagine a world where it would be easy for [Shapiro] to just stay neutral,” said Joanna Doven, creator of Pennsylvania’s AI Strike Team, which aims to make Pittsburgh a global hub for AI innovation and jobs. “But our state hasn’t been a high-growth state — he inherited that — so we’ve got to turn the economy back on.” AI is here to stay, she emphasized. “And it needs power, it needs data centers. We have all the resources to meet that demand. We need to own the moment.”
The politics of AI data centers start local
The fraught and politically chaotic debate is unfolding this way because data centers are largely a bottom-up issue, said Megan Mullin, a professor of public policy at UCLA. “Communities across the U.S. Vary widely in their ability to absorb new projects, new development, and new construction—and in their receptivity to it,” she told Coins2Day. “Like with housing development, there are places where it’s embraced and others where it’s viewed as a threat.”
Regarding economic development, AI data centers function distinctively compared to, for instance, car factories. A key difference is that data centers don't typically provide substantial long-term employment after their construction phase concludes. While the initial build-out can spur a construction surge—as seen in Abilene, Texas, where thousands are employed at OpenAI’s primary “Stargate” facility—the ongoing staff is projected to number approximately 1,700, with uncertainty surrounding the proportion of full-time positions. Other AI data centers anticipate even fewer permanent roles; Meta's $10 billion, 4-million-square-foot site, established on former farmland in Northeast Louisiana, anticipates hiring only 300-500 permanent employees post-construction.
This situation has prompted inquiries into whether the substantial tax breaks and infrastructure funding that these locations require from state and local authorities—including power generation facilities, electricity transmission networks, improvements to water systems, and roadways—will ultimately benefit the surrounding areas.
The issue of electricity has particularly resonated. For the first time in many years, grid managers are cautioning about significant rises in electricity consumption, prompting power companies to hurry in boosting their capacity. This involves bringing back proposals for natural-gas power stations or constructing new ones, and in certain areas, even prolonging the operational lifespan of aging coal plants. (The renewable energy sectors, which were anticipated to expand and accommodate some of this increased need, suffered a substantial setback due to the expedited elimination of federal tax incentives for renewable energy initiatives in the spending legislation approved by Republicans this past summer.)
In Georgia—one of only about ten states where utility regulators are elected—two seats on the Public Service Commission (PSC) are on the ballot in November. Democrats Alicia Johnson and Peter Hubbard are challenging incumbent Republicans, and Hubbard has made data centers a campaign issue. “Those data centers are being offered a sweetheart deal of five cents a kilowatt-hour, while you and I, residential customers, pay 21 cents,” he said at a recent local forum. “That’s why they’re coming to Georgia—because we give them sweetheart deals and tax abatements and other perks. That’s costing you. That’s why we have to fight at the PSC.” If Democrats win, it would break the commission’s all-Republican control for the first time in nearly two decades—and potentially reshape how Georgia regulates power for AI facilities.
Mullin informed Coins2Day that data center politics are increasingly integrated into wider campaign tactics, and the expansion plans of well-funded technology firms are now a significant consideration for politicians across the spectrum. She added, “Candidates are lining up the coalition that they want to bring them into office,”. This might involve considering a bipartisan opponent in the future, she elaborated, but their current focus is on their primary opponent and securing their party's nomination. She stated, “That’s where this becomes really important,”.
Governor Gavin Newsom of California, for instance, recently rejected legislation mandating that data centers disclose their anticipated and yearly water consumption. He cited a hesitancy to implement what he termed “rigid reporting requirements” without a complete grasp of the ramifications for enterprises and customers. This action aligned with the anti-bureaucracy elements of the “abundance” platform championed by Newsom has embraced, though Mullin pointed out that the decision might stem as much from political considerations as from policy: It's also probable that this will satisfy California's influential technology sector.
“It’s about lining up the endorsers and funders who will put him in a position of strength for whatever he pursues next,” she explained. “He is taking steps that make it seem like he’s building a coalition, and some segment of tech leaders would be a really critical part of that coalition.”
A populist flashpoint
The pressures on leaders from both political parties have been apparent since President Trump's election, when he started inviting numerous tech executives to the White House and Mar-a-Lago to advocate for AI infrastructure requirements, including figures like Nvidia CEO Jensen Huang and OpenAI CEO Sam Altman.
Nonetheless, these pressures are also encountering a different potent force in certain states: increasing public discontent from inhabitants—and electors—regarding escalating utility costs.
New Jersey residents, for instance, have already experienced a rapid surge in energy costs attributed to data centers. In early June, New Jerseyans' electricity bills increased by approximately 20% due to capacity auctions, which are markets where power generators receive payment for ensuring future energy availability. Electricity costs reached unprecedented levels anticipating the substantial energy demands of data centers, with further increases projected for Next June.
Combined with an intense summer heat wave, the surge caught many residents off guard, said Alex Ambrose, a transportation and climate policy analyst at New Jersey Policy Perspective. “People were not expecting that kind of increase,” Ambrose said. “And now they’re demanding that lawmakers do something about it.”
Numerous residents are also wondering if constructing AI data centers fits with New Jersey's wider land-use objectives. For instance, one planned facility in central New Jersey is slated for farmland, igniting local resistance from those who cherish the area's undeveloped natural areas. This discussion brings to mind the surge in warehouse construction across the state during the pandemic, when developers aimed to build on protected land—however, residents argue that data centers are more detrimental due to their minimal creation of enduring employment. Furthermore, even when these facilities aren't situated locally, New Jersey residents still experience their effects. Given that the state is integrated into a regional power grid, the electricity needs of data centers in adjacent states can lead to increased household utility costs.
Many believe it's unavoidable: data centers will be constructed somewhere, driven by American tech firms competing fiercely with each other and China for AI dominance and the ultimate aim of Artificial General Intelligence (AGI), which refers to AI systems matching or surpassing human capabilities.
State-level proponents say this is the moment to profit from the gold rush. “If we wait for a perfect scenario, the jobs are going to keep getting shipped off to Ohio,” said Doven, of Pennsylvania’s AI Strike Team. “And I can tell you, sitting here in Pittsburgh—the Steel City, and the city where we have the world’s number one AI school, Carnegie Mellon—there is something big happening here. One consistent thing that makes no sense is: Where are our data centers?”
AI data centers, viewed either as a significant economic chance for a generation or an impending disaster, have moved beyond being mere unseen infrastructure. They are now influencing election outcomes, altering energy strategies, and determining the extent to which both residents and elected officials will commit to fueling the future of technology.