A new ICF paper explores key considerations for utilities, developers, and government agencies that impact the feasibility and economic benefits of data center sites across four key areas -- energy infrastructure, fiber optic network infrastructure, environmental requirements and regulatory and policy environment.
Energy Infrastructure
“While all variables in the data center siting framework matter, energy typically carries the most weight. The reason is simple: Data centers supporting AI use a vast amount of electricity and spend a vast amount of money on it,” ICF said in the report.
“Without a favorable energy supply and grid infrastructure, projects don’t move forward. Developers, utilities, and government agencies should consider several energy supply variables when identifying optimal sites or planning future development,” it said.
• Powered land access: Do parcels have existing or near-term access to electricity?
• Grid capacity: What are the local grid’s withdrawal capabilities under near-term scenarios?
• Grid stability: Is substation-level reliability and system resilience, measured by voltage stability and short-circuit strength, adequate to ensure operational stability?
• Interconnection: What is the large load interconnection process and costs?
• Gas infrastructure: Are there natural gas pipelines nearby with available capacity to support paired or backup generation?
• Power price outlook: How will regional power market dynamics impact long-term energy procurement costs and contracted generation?
Fiber Optic Network Infrastructure
In addition to energy, data centers need high speed, high bandwidth, and highly reliable internet connections to transmit data in real time, the report notes.
“Fiber optic networks are the industry standard. Developers and government planners should consider two key variables when evaluating data center sites in relation to fiber-optic network availability”:
• Proximity to fiber optic network hubs: Is the site as close as possible to long-distance fiber optic cable?
• Data center clustering: Is the site part of a data center cluster (or could it be), which would allow it to benefit from colocation and shared infrastructure?
Environmental and permitting requirements
“Securing energy and fiber solutions is necessary but not sufficient for data center development success. Developers must simultaneously address environmental and permitting requirements, gauge community sentiment, and proactively engage with local stakeholders,” ICF said. “The ability to navigate these factors efficiently can be as critical to project viability as the technical infrastructure itself.
ICF said that variables that developers and planners should include in their decision-making framework include:
• Water access: Is there a sustainable source of water available to use for data center and onsite power generation cooling needs?
• Long-term weather risk: Are sites at risk from flooding, wildfire exposure, or other extreme weather events—and how are those risks expected to evolve?
• Ecological impacts: Does a site include any sensitive habitats like wetlands or threatened or endangered species habitats, which could increase development requirements?
• Land availability and zoning: Are suitable land parcels zoned for industrial and mixed use, and do they satisfy local zoning requirements?
• Permitting complexity: What are relevant local ordinances and environmental review requirements, and how will they impact project costs and timelines?
Regulatory and policy environment
“Data center developers and utilities understand that jurisdictions differ significantly in how supportive— or not—the regulatory and policy environment is for development,” the report noted.
ICF said that factors that contribute to the regulatory and policy environment include:
• Federal and state drivers: Are there programs that incentivize data center development at certain sites? Are there relevant policy restrictions related to emissions or noise?
• Power market structure: How do ISO or RTO market rules impact the interconnection timeline and energy procurement? Do vertically integrated utilities offer a faster approach for large load interconnection?
• Tax incentives and financial support: Does the site offer any location-based benefits, such as certain sales tax exemptions?
• Local community acceptance: How close is the site to nearby communities, and do those communities have a history of supporting or opposing data centers?
APPA in October released "What Public Power Needs to Know About Serving Data Centers," a report that explains how the scale and pace of load growth driven by data centers present opportunities, as well as challenges, for the electric utilities serving these customers.
