(The Center Square) – Public misgivings about the proliferation of Ohio taxpayer-sponsored data centers are shared by economists, a new survey found.
The report released by Scioto Analysis, an independent policy analytical group, found that 10 out of 14 economists polled in its Ohio Economic Experts Panel agreed that “tax incentives for data centers are not an efficient use of public funds to stimulate job growth in Ohio.”
A majority of the experts also “disagreed that the economic benefits of new data centers in Ohio exceed the environmental and energy market externality costs associated with their construction.”
A major reason for this is the long-term economic impact of data centers.
The projects require big investments and employ thousands of people up front. For a few years, a new data center creates a surge of employment opportunities through development and construction.
Once operational, however, the centers require a much leaner staff of specialists.
The state currently has more than 200 data centers, making it a leader nationally in the industry. The numbers have been bolstered by major companies like Vertiv, whose $50 million Westerville headquarters expansion is receiving millions in taxpayer dollars.
Data centers require so much energy that their rise has spurned mass frenzy for new sources. In addition to the President Donald Trump administration’s push to “unleash” the nation’s natural gas reserves, the industry has prompted a resurgence of interest in nuclear technology, pushing the development of small modular reactors farther and faster than the industry had gone in decades.
In the meantime, most are hooked onto existing power grids built to support communities.
American Electric Power in Ohio has levied tariffs on new data center projects in order to offset their energy consumption. The tariffs, which call for an 85% minimum energy demand charge over 12-year contract terms with exit penalties, was challenged and is currently under consideration in the Ohio Supreme Court.
The public has taken steps on their own to legislate around the issue.
A petition created by a group from Brown and Adams counties is circulating that would call for a vote on a constitutional amendment prohibiting the construction of new data centers with peak loads of more than 25 megawatts in the state.
For individuals, the concern around data centers often goes beyond energy costs to the local environmental impact, with rural areas taking the brunt of development.
“[Data centers] create very few jobs and destroy environmental conditions, for example, by changing water temperatures [and] disrupting fish stocks,” said Christian Imboden, economics professor at Bowling Green State University.
Amidst these concerns, however, most economists surveyed did not recognize a statewide ban as an efficient solution to the problem. Eight out of 14 agreed that the costs of such a measure would outweigh the benefits.
“It should be up to the market to pick winners and losers; and Ohio should not be targeting a particular industry,” said Michael Jones, economics professor at the University of Cincinnati. “If there are concerns about energy use or land use, then data centers should internalize and pay the real costs of their deployment.”
