Wally Taylor, legal chair for the Iowa Sierra Club, the largest environmental nonprofit in the state, has lived in Cedar Rapids since 1979.
Taylor has grown increasingly concerned in recent months after a new wave of technology found its way into his community — the artificial intelligence, or AI, industry. A pair of data centers are under construction in Cedar Rapids, and while proponents of the projects express their excitement, community members and environmental advocates aren’t so sure the project is in the community’s best interest.
Data centers are used to house and process data. The centers are also used to store, compute, and process AI.
Taylor said he is concerned not only about the increasing reliance on AI but also the water and energy usage of the data centers.
The developments bring immense uncertainty to the Cedar Rapids community, Taylor said, and he worries that both water and electricity bills for Linn County residents could be affected.
“There are a lot of unknowns that really need to be determined before we just jump blindly into thinking these data centers are a great thing,” Taylor said.
The influx of data centers is widely associated with the rapid expansion of AI usage. Research from Goldman Sachs found that spending on the construction of AI infrastructure in the U.S. has tripled over the last three years.
According to Data Center Map, a global data center directory, Iowa is now home to 105 developments.
University of Iowa professor of business analytics Thiago Serra Azevedo Silva said AI saw gradual improvements over the last 10 years before it exploded with the introduction of ChatGPT, a chatbot that uses AI to provide human-like responses to prompts.
Serra Azevedo Silva said tech giants want to develop data centers in areas, such as Iowa, where land is cheap, water and electricity are accessible, and incentives — such as tax breaks — are offered.
John Madden, associate broker at JLL in Chicago, a global real estate company, helps tech clients acquire sites for data center developments. He said the industry has grown and changed rapidly since the introduction of AI.
“It has exploded, both in terms of demand and amount of power needed,” Madden said.
Madden said corporations have turned to Iowa not only for its accessible energy but because Illinois, which was previously a data center hub, instituted restrictions on data storage.
Illinois’ Biometric Information Privacy Act, passed in 2008, prevents companies from storing individuals’ biometric data — personal data such as fingerprints, used for identification — and has deterred tech corporations from targeting the state in recent years, Madden said.
He said when finding sites for data centers, he looks for markets with the most available energy and the best tax incentives. Madden said AI projects, which account for the influx of data centers, are often located in rural areas because they don’t need to be in communication hubs like traditional developments.
Both QTS and Google, the tech corporations behind the Cedar Rapids projects, were offered incentives by the city. Incentives in the Google agreement include a 20-year, 70 percent tax exemption, as long as the project meets the job threshold of at least 31 full-time positions at a high-quality wage rate of at least $26.20 per hour after construction.
Cedar Rapids Mayor Tiffany O’Donnell said the data centers provide an exceptional opportunity for the city to introduce an additional industry to the area.
“It brings Cedar Rapids to the forefront of cutting-edge technology,” she said.
O’Donnell said the state of Iowa has all the assets needed for data centers.
“We are fortunate that, not only through what is here naturally, we’ve had some tremendous foresight by the City of Cedar Rapids to ensure that we are prepared to support projects of this size,” she said.
The developments, located in the Big Cedar Industrial Center, are projected to be completed in five to seven years, according to the City of Cedar Rapids Economic Development Team. However, formal agreements include a much longer timeframe.
The Google project, which is estimated to cost $576 million, must be completed by 2031. The $750 million QTS development, set to be the largest data center development in Eastern Iowa, has an agreed completion period of 25 years.
The Google project has been in the works since May, while QTS began construction in August.
Data centers in Iowa
Cedar Rapids is the newest Iowa location of the expanding AI industry. Tech giants like Meta, Google, and Microsoft already have developments in the state, including Iowa’s largest data center on a Meta campus in Altoona, a northwest suburb of Des Moines.
Business Insider estimates power use at the Meta campus to fall between 82,000 and 131,200 megawatt-hours per year. Megawatt-hours are the amount of work done by one megawatt, or 1 million watts, in an hour.
Google has invested nearly $7 billion in a data center in Council Bluffs, built in 2007. In May, the tech giant announced an additional $7 billion investment in Iowa to expand AI infrastructure at the Council Bluffs campus and to develop the new Cedar Rapids location.
In response to the development boom, the Johnson County Board of Supervisors instituted a year-long moratorium, delaying the approval and construction of data center projects in unincorporated Johnson County.
Johnson County Supervisor Jon Green said the moratorium will be used to study resource costs and evaluate the impacts of construction.
“We want to ensure that any development is done sustainably and responsibly,” Green said.
Green said he is uncertain about any positive economic impacts of the developments, and he doesn’t think Johnson County will fall behind other counties due to the moratorium.
“I don’t believe that the capital investment is going to lead to a lasting economic boom for whatever jurisdiction hosts these facilities,” he said.
Sami Scheetz, a Linn County supervisor, said the board is drafting an ordinance for data centers in its unincorporated Linn County jurisdiction. He said the board is wary of any data center developments in the area before they can ensure the county has adequate resources to support such large projects.
He said Linn County has already commissioned two water studies intended to evaluate available resources in the area.
“We want to be mindful of our resources and taxpayers, making sure that we’re not overextending and that we’re being really prudent and careful with the resources that we have in our community, especially when trillion-dollar corporations want to come and build,” Scheetz said.
Benefits of booming development
O’Donnell said she has heard residents’ concerns about rising utility rates. However, she wants to assure community members that the developments will not cause price spikes but will instead benefit the city.
O’Donnell said the projects will “subsidize infrastructure improvements that need to happen anyway.”
She specifically noted improvements to water and wastewater services, and said the money from incoming data centers using the services will subsidize the upgrade.
“Individual users will now have better service because of the improvements and expansion that these companies are affording for Alliant,” O’Donnell said.
Both the QTS and Google developments include a “community betterment” component in their agreements, which O’Donnell said is another reason the data centers will benefit Cedar Rapids.
Google has committed to making annual payments of $400,000 for the next 15 years. QTS agreed to contribute $18 million over the next 18 years to the betterment fund.
She said philanthropic efforts, including donations to local nonprofits, are another positive contribution of the companies but are separate from the community betterment funds.
O’Donnell said the city has not yet considered which funds would be used, but she anticipates most development agreements going forward will include the beneficial component.
RELATED: JoCo supervisors discuss possible data center moratorium
“Anybody we invite to our community, we are going to encourage to be partners in multiple ways,” she said. “It gives us a little extra insurance when we can put it in the development agreement.”
Draining Iowa’s aquifers
Critics of data center development insist that environmental implications outweigh potential community benefits of the projects.
James Martin Schramm, policy analyst for Clean Energy Districts of Iowa, said negative impacts of data center production come in multiple forms. He cited concerns surrounding water usage, greenhouse gas emissions, grid strain, and electronic waste.
According to NPR, an average data center uses 300,000 gallons of water daily — enough to serve 1,000 homes. Water is used to cool internal equipment, including large computer servers. Martin Schramm compared the heat to regular laptops but on a much larger scale.
“You put your hand over your computer, it’s hot,” Martin Schramm said. “You need to get the heat away otherwise the equipment cooks itself.”
He said the large amount of water needed for the task is alarming and should be a cause for concern among residents. Martin Schramm said water usage becomes even more concerning when the water is pulled from aquifers, which he said are being extracted from quicker than they can regenerate.
Taylor, the Cedar Rapids resident and legal chair for the Sierra Club at Iowa, said he is concerned because both the amount of water usage and the amount of available water in aquifers is unclear.
“If [data centers] are taking more out than is being recharged, you are going to lose water in those aquifers that people and cities depend on,” Taylor said.
O’Donnell said she has heard concerns from residents about the water usage, but the manufacturing industries in the area are advanced enough to handle it. O’Donnell said Cedar Rapids water comes from both aquifers and the Cedar River, and evaluations have concluded the city has adequate access to the natural resource.
While the Google center is using the traditional water cooling method, the QTS development is using a newer “water-free cooling” method which recirculates water within the plant. QTS estimates it will conserve 4 billion gallons of water annually with the method as opposed to traditional evaporative cooling, which releases evaporated water directly into the atmosphere.
Madden said corporations are beginning to turn toward closed loops systems to conserve water. He said because of this, availability of electricity is a bigger factor than water when searching for land.
O’Donnell said the Google plant is estimated to use just over 4 million gallons of water a day, a third of the amount of water used by the highest user in Cedar Rapids. O’Donnell did not specify what the city’s highest user is.
She said QTS’ closed loop system will limit the usage. O’Donnell said the city intends to reuse water from the QTS center by selling the graywater — lightly-used, untreated water — to other industrial customers.
“Our potential challenge is not the water itself, but the means to treat it and get it to people,” O’Donnell said.
Exhausting energy resources
Madden said finding adequate power sources for prospective developments is the biggest challenge, and qualified sites are becoming harder to find.
“The country is running out of power and not enough people are talking about it,” he said.
According to Goldman Sachs, power demand for data centers is projected to increase 50 percent by 2027 and up to 165 percent by 2030. Global power usage by data centers is estimated to be around 55 gigawatts.
Coleman said due to the massive amount of energy needed to power data centers, there is a concern among clean energy advocates that fossil fuel plants, including coal plants, across the country will stay online or even reopen.
“They need so much energy, so then they’re just turning to wherever they can get it from,” she said.
Martin Schramm emphasized similar concerns and said states are already having to face harsh realities of increasing energy needs. This includes in Michigan, where President Donald Trump recently extended an order requiring the state to keep a coal plant, originally scheduled to close May 2024, open in order to meet demand.
While there has not been any indication of a similar situation in Iowa, a recent announcement on the reopening of the Duane Arnold Energy Center, a nuclear plant in Palo, Iowa, 20 minutes northwest of Cedar Rapids, has spurred concern. The plant was decommissioned in 2020 after sustaining immense damage from a derecho.
Nuclear energy is not a source of greenhouse gas emissions, but it is not a renewable resource because it relies on the finite supply of uranium.
The reopening stems from a partnership between Google and NextEra Energy, one of the largest utility companies worldwide. The Oct. 27 announcement cited the need for increased support of AI infrastructure in the state, which includes a potential additional — not yet approved — data center development in unincorporated Cedar Rapids.
Scheetz said the Linn County board is open to allowing the plant to provide energy to a nuclear plant in unincorporated parts of the county. He said since Google is paying NextEra Energy to reopen the plant and covering costs for all power from the plant, Linn County residents will not see an uptick in utility costs.
“I think it’s a very good thing that the plant is going to be reopening,” Scheetz said. “It will create 500 union good paying jobs, and it’ll be a huge boost to that part of the county.”
Alliant Energy, the power provider for both the QTS and Google developments, uses a mixture of sources including coal, natural gas, solar, and wind. Alliant has pledged to complete coal generation by 2040 in order to shift toward more renewable sources.
Martin Schramm said while natural gas has around half the carbon content of coal, it is a significant source of greenhouse gas emissions, which is a cause for unease considering the high amount of energy needed to power data centers.
“Data centers are extraordinarily energy intensive — it is 24/7, 365,” Martin Schramm said. “The challenge is associated with producing all of that natural gas, delivering it on site, combusting it, and then inevitably emissions are simply emitted into the atmosphere,” Martin Schramm said.
He said while Alliant Energy owns a significant amount of wind and solar, and has worked to use clean energy, it is impossible to decipher how much of it is powering data centers.
Emma Coleman, organizing representative at the Iowa Sierra Club, said companies see Iowa as an attractive place to build data centers because of the cheap, clean energy. But she said the intense spike in demand, which has caused Alliant Energy to increase power generation, could result in ratepayers seeing increased costs.
Martin Schramm said he doesn’t foresee utility rates increasing initially but rather in response to increased wholesale power costs in Alliant service territory, or a decrease in AI’s market value.
“Theres a lot of speculation right now that the AI industry is overvalued,” he said. “It’s possible these new power plants that are on the books or being built might be canceled, and that’s one way ratepayers could be on the hook.”
Accidental overbuilding and economic implications
UI Economics Professor Anne Villamil said economic implications of data centers remain to be seen, but overbuilding is one of the factors that could lead to increased rates.
She said overbuilding could occur because data center developers are providing utility companies inflated growth plans, which may lead to utilities ramping up production for a nonexistent demand.
“If all this power gets built, it is ratepayers like you and I who are going to pay for a substantial part of that, and it could end up leaving consumers holding the bag,” Villamil said.
Villamil said nationwide electricity prices have already risen 6 percent this year, including 16 percent in Illinois, according to the Financial Times.
Serra Azevedo Silva said while there is not yet a clear calculation on how data centers will impact local economies, he said communities who have given tax breaks for companies to build data centers may be left with negative earnings, especially due to limited full-term job offerings.
“If you think about a building full of software engineers working for Google and a building with a data center, the first one would give you jobs, the second one, not so much,” he said.
Serra Azevedo Silva said overbuilding poses a serious concern nationwide, with local economies bearing the brunt of the impact.
O’Donnell anticipates positive economic impacts stemming from the data centers. She said Cedar Rapids will see an influx of dollars due to taxes paid by Google and QTS, along with the building permits, which she said topple $120 million.
She said the “ripple effects” of data centers are underestimated, as O’Donnell anticipates supporting businesses will come to Cedar Rapids because of the new development. She noted an increase in the local workforce due to the projects also benefitting the economy.
O’Donnell said the data centers will require thousands of construction jobs, and she is hopeful for hundreds of long-term positions. However, full-time job requirements for the companies are much lower than the aspirations, with Google’s agreement being for just 31 positions.
O’Donnell said the data centers will bring immense technological advancement to Cedar Rapids, and the city is working to ensure the projects will promote long term viability of the community.
“I’m really proud of the work that the city has done alongside both companies, Google and QTS, to make sure that both [the companies and the community] have this tremendous opportunity,” O’Donnell said.