Politicians in the US state of Georgia want to suspend a tax break offered to data center operators because of the strain new developments are putting on the power grid.

Lawmakers in the state legislature announced the plan as part of a wide-ranging view of incentives offered to businesses which began last June.

Georgia’s tax incentives for data centers

Georgia has given data center operators an exemption from the state’s sales tax since 2018. Companies receive the tax break if they hit certain thresholds relating to investment and job creation. The exemptions were due to stay in place until 2028, but were subsequently extended to 2033.

But now state politicians are calling for a pause to be put in place on the tax break while Georgia’s power grid is expanded. The move comes after utility company Georgia Power said last year it needed to build more infrastructure to provide an additional 3,400MW of power and meet demand. It pinned 80 percent of this demand on the state’s data centers.

At a press conference on Wednesday, Republican Jon Burns, speaker of the Georgia House of Representatives, said: “These centers currently are using a disproportionate amount of our state’s energy.

“We have to make sure that we balance that and we have resources available.”

A 2022 study by the University of Georgia found that the tax break for data centers will cost Georgia a projected $44 million this year, but said that overall the measures are likely to benefit the state economically.

Data center projects spring up across Georgia

Georgia has become a hot spot for data center developments, and analysis from the Atlanta Journal-Constitution found that there 18 construction or expansion projects currently underway in the state.

Last year, Edged Energy broke ground on a 180MW facility which will be located in downtown Atlanta. Another provider, DataBank, is building at 200 Selig Drive in the city. This will be a colocation facility with 200,000 square feet (18,580 sqm) of raised floor space and 4MW of capacity, expandable to 40MW.

DCD also reported last October that Stack Infrastructure has filed to build two data centers outside Atlanta at a cost of $380 million. Collectively known as the Lithia Springs Data Center, the project will see two three-story data centers developed at 808 Factory Shoals Road. The buildings will span 146,380 sq ft (13,600 sqm), and could be up and running by 2026.