During the long summer months, it’s common to have increased electric bills as people look to beat the heat. However, for 67 million Americans, specifically those living in “data center hotspots” such as Virginia, Pennsylvania, and Ohio, their increased bills are due to more than just the weather.

PJM Interconnection, an electricity provider across the Midwest and East Coast of the United States, previously reported that electric bills for residents living in a data center hotspot will rise by up to five percent. As data center infrastructure booms across the Midwest with no signs of slowing down, data center developers are tasked with a large responsibility: selecting locations that align with both renewable energy availability and long-term cost efficiency for residents.

Energy burden of data center growth

The growing use of artificial intelligence (AI) is transforming data centers into substantial energy users. Outpacing energy usage within the EV industry, by 2035, data centers are projected to account for 8.6 percent of all US electricity demand, more than double their current amount (3.5 percent), according to a BloombergNEF report. Further reports from Goldman Sachs indicate global power demand from data centers will increase 50 percent by 2027 and by as much as 165 percent by 2030.

These forecasts are already impacting communities across the country. Most prominently, data centers have the strongest impact on overall electricity consumption in Virginia (25.59 percent), North Dakota (15.42 percent), Nebraska (11.7 percent), and Iowa (11.43 percent). While it remains a nationwide issue, future data center developers considering projects in these states specifically need to select locations in areas that can accommodate renewable energy production to lower the economic burden for residents.

Prioritizing wind & solar during the site selection process

For data center developers, selecting the optimal site stretches far beyond land cost. Although overall financial costs remain top of mind for developers, some may also look to take a sustainable approach to site selection, determining locations that best support renewable energy production.

The most straightforward way to reduce the operational costs of data centers is to strategically place them in areas with abundant clean energy resources. In the Midwest, for example, states are prioritizing renewable energy to generate electricity. In South Dakota, renewable energy accounted for 77 percent of the state’s electricity generation in 2023, and wind accounted for 62 percent of Iowa’s generation in 2022, according to the Energy Information Administration. In the Southwest, Arizona Public Service Company, the state’s largest utility, is adding 2.5GW of solar and battery storage to Arizona’s electricity grid by the end of 2025.

These initiatives paint a broader picture of the future of renewable energy. As states increasingly invest in and implement renewable energy within their electricity generation, developers must keep pace by selecting sites that accommodate renewables.

Securing land with tax credits, incentives, and title insurance

As demand for clean energy increases alongside AI data center expansions, developers face a complex regulatory landscape. While some states may offer tax incentives or renewable energy credits (RECs) to encourage sustainable development, these programs can vary significantly. For example, Virginia, Ohio, Pennsylvania, and California provide performance-based incentives, which pay solar owners based on how much energy their panels generate.

Additionally, securing land ownership without proper title insurance is a risk that developers cannot afford to take. Not only can the lack of title insurance lead to project delays, but it opens developers up to legal exposure and liability, especially when projects are in rural areas with outdated zoning laws. To avoid delays in these projects, developers must safeguard assets with adequate title insurance to provide legal support when communicating with state utility organizations. The path to successfully constructing a renewable data center lies in the ability of developers to protect their projects for the long term.

The most successful data centers of the future will be those designed not only for scale, but also for sustainability. Developers who prioritize renewable energy consider tax incentives and RECs within the site selection process, creating a win-win scenario for themselves and the communities of these projects. This approach creates a lower financial burden for Americans while securing locations that can support efficient and renewable energy.

Building smarter (and greener)

The path forward for data center developers may not be easy, but it is simple: Developers must build future infrastructure in areas that allow for renewable energy production, placing sustainability at the forefront of the data center industry. To successfully achieve this, site developers must be acutely aware of the holistic approach required, securing incentives, ensuring title protection, and selecting sites with long-term renewable energy availability.

Developers who follow this blueprint will build facilities capable of scaling with demand, all while keeping costs lower for operators and local residents.