- Tech companies want to build massive data centers across North Carolina.

Developers promise jobs and tax revenue.

But residents worry about water, power, and quality of life.

We examined what happens when big tech comes to town.

This is a "State Lines" Special.

- Funding for "State Lines" is made possible in part by... - Across North Carolina, strong communities begin at home.

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♪ - Welcome to a "State Lines" Special.

I'm David Hurst.

Behind me is Apex Town Hall, where city leaders are wrestling with whether or not to approve a billion-dollar data center.

It's a debate that's happening in communities all across North Carolina.

Some see opportunity, while others see risk.

We examine the data center debate and find out what's really at stake when these projects come to town.

- There is a fight happening in towns across North Carolina right now.

- Proposed data center.

- Proposed data center.

- Proposed data center.

- New at 6, the proposal to bring a new data center to Wake County is sparking big debate.

- Billion-dollar tech companies want to build massive data centers.

- More and more people are pushing back.

- Today, we're going to have a fun conversation about data centers.

- Data centers are giant warehouses filled with thousands of computer servers.

Every email, every stream, every photo you store, it all lives in a building like this.

North Carolina already has several.

Apple, Google, Meta, they've been here for years.

But AI has triggered massive new demand, and tech companies are proposing hyper-scale data centers across the state.

- A lot of this growth, or anticipated growth, I would say somewhat snuck up on us in the energy community.

Certainly, we went from a period of basically flat electricity demand for 20-so years to very rapidly changing those forecasts to growth of 4 to 5% a year, which is very large.

- The facilities can bring millions in tax revenue, but they need enormous amounts of electricity and water.

In the town of Apex, town leaders are weighing those trade-offs right now.

Lorraine McAvoy lives in New Hill, just outside of Apex, close to the site of a proposed data center.

- I work for a health data technology company, so I'm very familiar with data centers.

We use data centers every day.

So not anti-data center.

However, anti-hyper-scale data center directly across the street from, or within two miles of 6,000 homes.

- This is where it would go, 190 acres near the Shearon Harris Nuclear Power Plant, four buildings designed to run around the clock powering AI and cloud services.

No decision has been made, but the proposal has already drawn many neighbors to town hall.

- The number of people speaks volumes to the town council.

We show up, we wear red, we try to pack out the house, just so that they can see visibly, like people don't want this.

Or if it's going to have to be here, let's make sure it's something that we can all live with.

- Apex town leaders acknowledge they're still learning what a project like this would demand.

- A lot of what we've talked about here related to data centers is outside of the expertise of a lot of our staff.

- The scale has raised questions.

The proposed facility would require up to 300 megawatts of electricity.

That's about as much as a small city, and could use as much as one million gallons of water daily during peak summer heat for cooling.

But even with all those concerns, the potential tax revenue tied to a project this large is pretty tough to ignore, and that tension is playing out across the state.

In Stokes County, commissioners voted to move forward with a massive data center known as Project Delta, despite strong opposition from residents.

- You are hearing the voices of many from Walnut Cove that will be directly in the path telling you no.

It is your job not only to listen, but to act with the cries, pleas, and rantings of those individuals.

I stand with them.

- After months of public debate, the board approved the project in a narrow three to two vote.

- When we're offered something that could be a game changer for our county, for our schools, for economic development, we don't want it.

Because at the end of the day, we want new schools.

We want more than four deputies on the roads at one time in Stokes County.

We want a new hospital.

We want water and sewer and infrastructure everywhere.

But nobody wants to make a sacrifice to get those things.

- Across North Carolina, communities are making different calls with no statewide framework to guide them.

And a recent state law has raised new questions about who pays for the infrastructure these projects require.

Last year, North Carolina passed the Power Bill Reduction Act.

The bill in part changed how some utility costs are allocated and how companies can recover construction costs.

- The hope behind it is that it would reduce borrowing costs for Duke and therefore lower cost in the long run.

The concern, of course, is that it, one, raises rates now, and then two, it's possible that if the demand doesn't end up being as high as anticipated, then rate payers will have already paid for facilities that don't need to be built or aren't that useful.

- That means residential customers could end up paying for facilities built to serve data centers.

In Apex, it has residents like Lorraine McAvoy not just worried about the immediate impact.

They're also thinking long term.

- This is uncharted territory, and we don't know what we don't know.

So you're going to build these big monstrosities of buildings and the technology is going to change within the next five to ten years, and then what?

- While many communities are saying no to data centers, Catawba County has made a different decision.

In the early 2000s, the town of Maiden rolled out the Welcome App for tech giant Apple to build a massive data center in their community.

We visit to see how that decision played out.

In 2009, Apple announced something big for a small North Carolina town.

- This is our third data center that we just completed.

It's in Maiden, North Carolina.

- The promise was striking, a billion dollar investment, 50 jobs and millions in tax revenue for a small town.

Fifteen years later, what did Maiden actually get?

- The Lasserie sold merchandises up there and then everything else we can reach from the floor.

- Samantha Saunders has owned Piedmont Hardware on Main Street for decades.

She's seen Maiden change over the years.

The furniture mills close, Main Street quiet down, but the biggest change came in 2009 when Apple announced a massive data center.

At first, people had questions.

- They didn't know if it would intrude on their daily life, if it was going to interrupt traffic patterns, if it was going to cause the power to go up.

They were very hesitant in the beginning.

- Fifteen years later, the massive facility runs just a few miles away, hundreds of thousands of square feet processing data around the clock, drawing power from Duke Energy.

Apple even built a 20-megawatt solar farm right next to the facility, though that power gets sold back to the grid.

It doesn't directly power the data center.

But as for quality of life, Saunders says, life went on as usual.

- Out of sight, out of mind.

We barely know they're over there.

They don't even call it Apple.

They have another name on the road marker.

- The facility didn't disrupt daily life, but it did change Maiden in other ways.

Back then, the town had just lost Carolina Mills, 3,500 jobs gone.

Apple's data center promised just 50 jobs.

But today, after recent expansion, the facility employs about 400.

Not thousands, but some local businesses did benefit.

- Apple just had their 15-year anniversary, and some of those folks have been there that entire time.

So the landscaping company that's been operating there, same company for 15 years.

That makes a difference to a small business.

- And county leaders say the tax revenue changed things.

Everyone in town, from homeowners to businesses, ended up paying less in property taxes, while the town built more.

The town used that revenue to build a new town hall, new fire and police stations, and a community center.

- And so the income stream that's coming as a result of that investment has largely benefited the town.

It's benefited the folks across this town, whether they know it or not.

- But there were trade-offs.

Housing got more expensive, and so did opening a business.

For communities considering data centers today, Maiden may be able to show what they can expect.

- Obviously, each community gets to decide what they want to do on that site that is appropriately zoned for that project.

And so there will be some communities that say, "No, this is not for us," and then there's going to be other communities that say, "All right, the impacts are not that great after having looked at it pretty deeply.

Yes, we'll consider going ahead with this opportunity."

- Duct tape and... - And for Samantha Saunders, maybe the biggest change is that simply it put her town on the map.

- If we go out of town or something, people might have heard of us nowadays, where they didn't know where we were before.

- That's what 15 years with a data center looks like in Maiden.

More North Carolina towns are deciding now if they want the same.

And here with me in studio to talk all things data centers, we have Representative Jeff McNeely of Iredell County.

Next to him is Tim Profetta, founding director of the Nicholas Institute for Energy, Environment, and Sustainability at Duke University.

And finally, Nick Jimenez, senior attorney at the Southern Environmental Law Center.

Gentlemen, thanks for being here today.

- Thank you, sir.

- Pleasure.

- Tim, I want to start with you.

Let's talk about these data centers.

Why are we seeing such unprecedented demand for these facilities?

- Well, we're really in a transformational moment right now, David.

Like, every day, the projections for the amount of build-out we're seeing and the amount of energy we need to power them is going upwards.

And it's really because of the amount of investment that's going into artificial intelligence and what it's doing for the productivity of our economy and our country and our national security.

There's really pretty much bipartisan interest in getting and sort of winning the AI race, but that requires us to build out data centers at a very fast speed, and that creates a lot of resource constraints, a lot of local concerns.

So we have to somehow find a way to balance all those things.

- And how do these differ from-- because data centers aren't new.

They've been around North Carolina for quite some time.

Are these-- how are these different than some of the other ones?

- Well, the AI products are using learning models, and they are constantly, let's just say, churning and having their models learn and become more intelligent and more able to provide the services that AI provides.

And so, they run at a much-- they're just bigger.

They require a great deal more power.

Even like a year ago, we were talking about data centers at like 200-, 300-megawatt size.

Now, we're talking at gigawatts, you know, the size of small cities, that just a data center's power demand would be.

- Representative, do you see these as economic opportunities, infrastructure challenges, maybe a little bit of both?

- Well, you know, there's pros and cons with everything.

Most of the time, they're looking for 200-, 300 acres minimum.

So, to find that, a lot of times, you're gonna eat up some farmland, more than likely.

And I'm in agriculture, and so, we have, you know, a little cringe to that.

But when you look at it from a county perspective and usually municipality that runs water sewer to it, it's a boom.

I mean, you know, with us, they're gonna build one in Iredell County, near Statesville, and the projected build-out's gonna be about $5 billion.

And we have a very low tax rate in the county, but that's still gonna bring in around $25 million more tax revenue a year, and not really ask for a lot, to a point.

Ask for power, maybe, but far as what you need from the government, county and municipality, not a lot at all.

Maybe some water, you know, they'll have to supply.

So, I think there's great opportunity, but with everything that comes, there's concerns about what you give up to achieve these opportunities.

And so, loss of farmland, we're already number two in the nation in loss of farmland.

The more data centers we probably get, the more farmland we'll lose, it looks like.

But yet, we'll still build a infrastructure that's gonna take us into the future with AI like it is.

We can't be the state that says, "Nah, we're good, we don't need 'em."

We just gotta be able to place 'em in good spots.

And we've talked about this at the General Assembly, and, you know, right now, we're not sure if we need to interfere into what the county and municipalities are doing, let them kind of vet it out.

If we do anything, it might be trying to help push them to some of our tier one counties.

And for people that don't understand the tier system in North Carolina, this is gonna be some of what we can say is poor counties.

Don't have a lot of taxable base, therefore, their tax rate's high.

This may allow them to be able to build schools and to build jails and sheriff's offices and EMS and whatever without taxing their people more or borrowing more.

So, you know, there's a lot of pluses, but there's negatives too.

I think, like I talked to these gentlemen earlier, I think the worst thing you can be is that county beside the county.

You get all the negatives and you get none of the positives.

So, you know, who's gonna be the last guy that doesn't have a data center that's gonna be built in North Carolina?

That's the fear.

- And the communities weighing those pros and cons.

Nick, I'm curious, from a consumer point of view, what concerns you, if anything, about just how rapid this growth is happening?

- So I focus in my work mostly on energy and that's the way that I see the data centers showing up.

You know, Tim mentioned that they can take as much power as a small city.

That's certainly right.

At least the new AI data centers that we're seeing.

We don't really have them in the state yet, but they're trying to come.

And in North Carolina, just to kind of level set a little bit, we have a regulated monopoly utility structure.

In most of the state, that's Duke Energy.

If you get your power, you get it from Duke.

And when the utility sees these large load customers like data centers coming on, and it says, oh, we need to build some stuff to be able to serve their electric needs, as part of that system, we all are gonna pay for it.

And so from a consumer perspective, what I'm worried about is seeing these data centers coming in, they might bring tax revenue to the counties where they land, but the cost of the grid to serve them, and it could be quite a lot, is gonna be socialized, unless we're very careful, it's gonna be socialized to all the rest of us customers.

And we're already seeing across the state, I'm sure you all have heard from it, from your constituents or seen it yourselves, our bills going up.

And that's even before we see this wave of infrastructure building to serve the data centers.

- Representative, on the theme of money, you all passed a bill last session that in part helped change some of the cost allocation as a result to these data centers.

What did that bill, what did you hope that bill would accomplish?

What was kind of the problem it was solving?

- Assume it was the Senate bill that helped re-regulate what I'll call it, our power industry here in the state.

We had done one previous to that, Duke Energy and some of the other players, they're always the main player, had come to us four years ago, possibly five.

And it was a house bill, and I was a little bit more involved in it.

And it put some, I thought, pretty stringent regulations as far as emissions and stuff like that.

This one kind of backed some of those off and made it a longer term, which is gonna allow Duke and the other energy suppliers time to maybe kind of figure out this thing without having the overburdener, over, I don't know if even overburden's a word, but the other elephant in the room of emissions.

So this gives them a little breathing room 'til they can figure out how they're gonna power these AI data centers without having to say, okay, how are we gonna do it with maybe like one arm tie behind our back?

And so I thought that was good at the time.

That was the biggest thing I saw coming out of that is allowing them to have a little more area to manipulate and figure out.

'Cause I think without that, we were doomed, still probably are, but definitely doomed to see a huge spike in our cost of energy in the state.

So this kind of spreads it out some.

Still have emissions goals to set, but they're farther out on the horizon.

So hopefully with that, Duke can figure out new plants, whatever they're doing to generate power efficiently, but hopefully better for the environment too.

And that's one of the fears that we see with the data center.

What does it do environmentally?

I'm not sure.

I don't think really anybody is just yet.

They're so new to the game.

We don't have a 20-year look back that says, oh, it caused this problem, or it was fine and we had no problem.

So this is a steep learning curve 'cause they're coming quick.

They're coming very quick.

- And Tim, help us understand what infrastructure is actually required to help power some of these new facilities?

- Absolutely.

And I just to speak a little bit to the energy affordability and the sustainability challenge, I think we have to look at the data center as both a risk and an opportunity.

We have data center developers, the companies, particularly what they call the hyperscalers, the big five AI companies coming in.

They all have two things.

They want the social license to build.

So they wanna make sure that they don't raise people's rates, that they can, and Microsoft recently in particular put out a series of principles that says, we will carry the cost of the infrastructure for our data centers.

We will not allow it to go to your average rate payer.

And if there are ways that our utility commission and our regulators can sort of ring fence the cost of data center to the big company and not lead out to the rate payers that I think we should pursue as a state.

Those companies also have sustainability objectives.

They all have zero carbon commitments, pretty aggressive.

So they want clean energy.

So we also wanna build those structures to allow Duke to build the things that the market wants, which is things that don't emit greenhouse gases.

And so there's an opportunity there that really could allow us to build a clean, modern 21st century grid on the backs of the biggest checkbooks in the country, which are these big companies and do it in a way that brings benefits to North Carolina citizens.

If we don't do that in the thoughtful way though, however, there's a risk that there's gonna be a rush.

There's a risk that the counties will race against each other down to the bottom and create environmental harms and create rate payers increase.

And then we're gonna have actually a lot of pushback against the data centers.

The infrastructure they need, they need electrons.

They need more power and they need firm power.

They need the power that's always available to them.

So they need A, to use our grid and probably build out more wires to the data centers to get the power to them when it's needed.

They'll probably need to build more generating assets, things that will generate the electrons, whether they be solar and storage or gas or gas with carbon capture or nuclear.

Those are sort of the conversations.

And then they do need to use water to cool.

And I think water is underappreciated environmental impact as well.

That most of them are using water to cool.

They may be going towards more closed loop systems, but we're seeing water stress in other regions of the country from data centers as well.

And so we need to find a way that they, we both re-infence that cost to the data center owners and we also minimize those impacts and try and drive the investment towards the clean and affordable things we want in the state.

- And Nick, help me understand from a community point of view.

I mean, that tax revenue sounds pretty nice, but a lot of these smaller rural communities may not have access to the infrastructure needs in order to run these facilities.

What's kind of that balance look like?

- Glad to.

If I could first piggyback on what Tim was just saying about what gets built, because I think there's, we can look to what Duke's plan is for what it's gonna build.

And so that's one of the things I work on at SELC is Duke's long-term resource plan representing nonprofits.

And it's planning to build a lot of methane gas generating plants, like giant methane generators.

So I think there's that answer that right there, and we're seeing, if you just take a kind of simple view of we have a lot of load coming on and we're building these methane plants, you have this kind of technology of the future, we're told, that's being powered by this kind of energy of the past.

And so there's a reason to do that.

It's a kind of a simpler way to meet new load.

In terms of what infrastructure communities, from the data center developers that I've spoken with, they're really looking for lower cost land.

That's why we're seeing this in North Carolina now.

The data center boom was first in Virginia, it's still the largest data center hub in the world.

Then it kind of moved to Atlanta, around Atlanta, and we're seeing it kind of close the gap.

And so we're seeing a lot of interest in development here for the structural reasons that Tim identified earlier.

There's this boom in AI, there's tons of money behind these companies, but why is it coming here?

It's because we're kind of filling that gap when we have relatively low cost land, relatively low cost power, for now anyway, and fiber, that's the other main thing they need.

So when you find those places where those things combine.

- Not to mention universities too, that are STEM related, that's gonna help supply these.

They don't do a lot of employment, but what they do, they're highly technical, and we have that, we're blessed.

- I hope they do take advantage of that, for sure.

- Tim, you wanna hop in?

- Yeah, I just wanted to, there's one opportunity we really haven't talked about, and this stems from some research we did at Duke University.

I think most people don't realize this, but we build our grid to that coldest day in the winter, that hottest day in the summer.

On your average day, we use, in the Carolinas, between 50 to 55% of the grid, and 45% of it's just not being used.

So if we could actually ask these new loads, called the large loads, the big data centers that come in, to just not draw power 20 hours out of the year, we can justify interconnecting, plugging a lot more of them in, without actually having to build new infrastructure.

And that's an opportunity that's really come to the fore, and it will require some state policy, it will require some work by our utility commission, by our policy makers, to design the right and STEM structure.

But we can use what we built already, to power this for like, say the next five years.

And in that way, the quickest thing to build is the thing you don't have to build.

And so we could probably grab the opportunity that a lot of these data centers offer us, without even having to build a new infrastructure.

And I think we really need to lead the nation in that sort of approach.

- Representative, any appetite to address this topic in the upcoming legislative session?

- Oh, well, short session's always difficult, 'cause it should have happened already, now we're just dragging it to the next part.

But there probably will be a talk, I feel like it'll probably end up going back into the next long session, and then there'll be some proposals, 'cause this is not something we just wanna, you know, just do off the cuff.

I think there needs to be a lot of thought put into this.

And, you know, at the end of the day, you try to find that sweet spot if you're government, and you're trying to be the best government you can, to where either everybody leaves the room happy, or everybody leaves the room mad.

One of the two, there's no middle ground.

But you find where that is, and hopefully we'll make some, I hope, wise decisions, but we'll take our time and think this out, because if we're gonna try to start doing the roadmap now, and a lot of the people are already driving down the road that we hadn't actually built, 'cause there's no legislation.

So, there's a, we need to move quickly, but not so quick that we mishandle this.

- Important to get it right.

Gentlemen, we appreciate you sharing insight on this topic.

Thanks for coming by, and appreciate your perspectives.

Thank you.

- Thank you.

- Thank you.

- Thank you.

- And thank you at home for watching and engaging.

I'm David Hurst.

Thanks for watching State Lines, and we'll be sure to see you next time.

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