Years ago, Washington passed a law requiring electric utilities to go carbon-neutral in a decade. Yet lawmakers continued to give generous tax incentives to data centers, which use a huge amount of electricity. In fact, in the last few years Washington has gotten a smaller share of its electricity from renewable sources than it did two decades ago, despite producing a quarter of the nation’s hydropower. Lulu Ramadan, investigative reporter at the Seattle Times, joins us to talk about her reporting.
The following transcript was created by a computer and edited by a volunteer:
Dave Miller: From the Gert Boyle Studio at OPB, this is Think out loud. I’m Dave Miller. In 2019, Washington passed a law requiring electric utilities to go carbon neutral by the end of this decade. But lawmakers continued to give generous tax breaks to data centers which use a huge amount of electricity. In fact, in the last few years, Washington has gotten a smaller share of its electricity from renewable resources than it did two decades ago, despite producing a quarter of the nation’s hydropower. What’s more, it seems likely that these data centers have not created the number of jobs that were initially part of the public sales pitch.
Lulu Ramadan has been looking into data centers as an investigative reporter at the Seattle Times. She joins us to talk about what she found. Lulu, welcome to the show.
Lulu Ramadan: Hi, great to be here.
Miller: Can you give us a sense for just how much growth there’s been in data centers in Washington over the last, say, 20 years?
Ramadan: Yeah, it’s an industry that has really blossomed. Central Washington, in particular, has seen significant growth in data centers. The Seattle market also has a lot of data centers. There is no statewide accounting of exactly how many data centers there are. But there are organizations, companies that track data center growth and Washington has about 87 data centers as of July. And many more lined up to open in Washington, which is a significant growth over where we were back in the early 2000s when a handful of major data centers started the site in Central Washington.
Miller: How has that transformed the energy usage picture in the state?
Ramadan: These data centers require a lot of power. They have to run 24/7. These are the centers that are the backbone to our internet and our cloud usage. So they require a lot of energy. And we were able to take a small look at different markets in Washington by getting utility data and state data and kind of examining what that growth in the data center market looked like.
They’ve grown to be really significant power users in a handful of counties where we’ve had sort of rich, cheap hydropower historically and they’ve grown to use a really significant amount of power. We kind of honed in on this specific county in Central Washington, Grant County, where the county has seen the largest growth in data centers. As it stands, data centers use about 40% of the county’s total electricity now. This is a largely agricultural area.
Miller: I was shocked to learn that stat. I mentioned in my intro that the percentage of electricity that Washington gets from renewable sources is actually lower now than it was 20 years ago. How much of that is a direct result of these data centers?
Ramadan: That’s a great question. It’s very difficult to tell how much is a direct result of data centers because we really don’t have any statewide accounting. We attempted to capture that in the markets where we know there has been the most significant growth. So we were able to look at a handful of utilities and what changes look like on the local level. But something that state lawmakers really wanted to understand was the impact of data centers and its data centers tax break, in particular, on the power grid.
That was something that was introduced into a bill in 2019 that had bipartisan support but ultimately, was partially vetoed by the governor, Jay Inslee. Governor Inslee vetoed a portion of the data centers tax break legislation that focused on a study on data center power usage.
So really, it’s very difficult to tell without some kind of tracking or statewide accounting. It’s really hard to tell how much of that has impacted the statewide renewable profile. But we do know that, at the local level, a lot of these counties have started to rely on imported power because it’s too risky to rely on their hydropower supply alone, and they have a significant data center market growth that has driven up power demands.
Miller: For decades, Grant County had enough hydropower to power itself. So is that still the case?
Ramadan: Well, in recent years, data centers have grown significantly, as has the county as a whole. But essentially, Grant County used to rely on its hydro power supply alone. But in recent years, it has started to sell off its hydro supply in favor of importing what’s known as unspecified electricity. It’s basically market fuel, it’s difficult to trace, sometimes impossible to trace and it’s hard to know what it is. But experts say typically, unspecified fuel of that nature is carbon emitting, usually it’s natural gas in the region. They’ve done that because they need to ensure reliability with their power. So what they’ve said is, essentially power has grown in demand to such a degree that it’s necessary to bring in other fuel sources to ensure reliability.
The county is actually experiencing what they describe as an energy crunch right now. Internal documents have kind of delved into this where they’re having these conversations about a need to generate new sources of electricity by 2025. So just by next year, this county that has a significant amount of hydropower at its disposal will be needing more power, more clean power.
Miller: Clean power is a key there because the state, as I mentioned, has this law to make utilities carbon neutral by 2030. How does that affect just Grant County in particular?
Ramadan: It’s a decision that Grant County is going to have to contend with in coming years. They’ll have to find a way to serve that demand in their region using clean resources. And part of what we tried to explore with the story was the availability of those clean resources that again gets to that declining renewable profile, the rising demand from data centers and from the electrification of everything. We’re also, as a state, transitioning away from the use of natural gas in home appliances, away from gas-powered vehicles, in addition to other clean energy moves.
Those demands are essentially competing against the availability of wind and solar power at the state level, as well as other clean resources. And so several utilities in the state are going to have to really quickly bring online or find sources of clean power in order to meet these significantly growing demands.
Miller: What are other electricity users in the area … just to focus on Grant County in Central or South Central Washington as the key example here. Whether it’s farmers, residential customers or even other industrial users, what are they saying about this sort of data center-created electricity crunch?
Ramadan: So it’s really very interesting. We spent a lot of time in Grant County, including at public utility district meetings. And it’s become a pretty interesting topic of conversation. You have more farmers, for instance, showing up at utility meetings to raise concerns. The county utility district does not pin all of the growth exclusively on data centers, but data shows that data centers are the most significant, though – the largest single category of power users in the county – and that’s not lost on a lot of the residents and farmers who have shown up to meetings to express concerns.
They’re essentially worried about bearing the costs of significant growth that will be needed in the county. There’s a lot of conversation happening about rates and the need to increase rates. Some farmers have shown up to say that they can’t really weather that type of situation, that type of rate increase. So it’ll be interesting to see how it plays out. But there are definitely much more engaged utility ratepayers in the region.
Miller: You mentioned Jay Inslee, who it’s worth just reminding folks when he had his short-lived presidential campaign four years ago, he made climate change his central issue. He also opposed making it so that the state would have really clear data about the connection between data centers and energy usage. How have other states handled the energy needs or energy use of these data centers?
Ramadan: Other states have attempted to tackle the growth of data centers by voting on, implementing or agreeing to some sort of study to track data center power usage and its impacts on the grid. Some examples that we laid out in a story we published alongside our first piece on power explored that Virginia, which has the largest data center market in the country – Northern Virginia is a huge hub for data centers – had recently approved a study of power usage to really understand the impacts of data centers on the grid. [In] Georgia, which is another state with a really large data center market, lawmakers actually took it a step further and voted to halt their state data centers’ tax break while they studied the impact on the power grid.
That was ultimately vetoed by Georgia Governor Brian Kemp, similar to the situation in Washington. Except in Washington, Governor Inslee has justified the veto by saying that it was duplicative of studies that are already underway. But lawmakers who crafted the very language that ultimately passed Jay Inslee’s desk said that they were hoping for more precise data, more specific information. [They said] they were blindsided by the veto and were really disappointed that there wasn’t more of an attempt to rework the legislation, to work with those lawmakers to craft something that would help them get some of the answers they’re looking for.
Miller: But another big investigation you did focused on the job creation promises because, from the very beginning, one of the sales pitches for these centers was that they would be job creators, not just construction jobs, but ongoing ones. How much were job requirements watered down over the last decade?
Ramadan: So the state tax break for data centers, while it expanded, did change the requirements for jobs. Essentially, this was pitched as a way to encourage economic growth in rural areas when it was initially brought to the legislature and when it initially passed in 2010. But the fact is we actually can’t see whether or not the companies that have benefited from this growing tax break have actually fulfilled their obligation to hire jobs because of a confidentiality clause.
The state really couldn’t tell us how many jobs were created or whether or not some of these companies actually fulfilled the obligations. In some instances we found that, for one example, T-Mobile actually filed the state reports noting that it hired no employees in the state of Washington. And we really couldn’t get clarification on whether or not that company fulfilled its obligations, but the company still received a tax break.
Miller: It’d be one thing if the public were in the dark about these job creation numbers, but there was really robust accountability within the government. But your reporting makes clear that that’s not really happening either. How much money has the state foregone in these tax incentives?
Ramadan: We found that the cumulative total since 2018 is more than $474 million. And just for reference, that tax exemption now exceeds the combined total of what the state gives its aerospace programs, including Boeing. And so that, in 2013, exceeded even Boeing’s tax breaks, which I think longtime residents of the state of Washington would be surprised to learn because Boeing has historically been a huge recipient of tax breaks in the state.
Miller: There has been in the past some bipartisan support for tax incentives for these data centers, support for these data centers. Is there now bipartisan skepticism?
Ramadan: Yes. So at least one lawmaker over the course of our reporting immediately questioned whether or not the data centers tax break should continue given the impact on the power grid. That was Senator Jamie Pedersen from Seattle, the majority floor leader. And other lawmakers have supported and sort of emphasized their support for the tax break because of its impact on the rural economy, because of the property tax revenue and jobs that it has brought. So in particular, the property tax revenue to rural areas … and that’s sort of where we’re at. But we’re waiting to hear from others in response to the stories.
Miller: It can be tempting to focus on the shock and how much energy these data centers are using as if it’s separate from us. But this is us when we play a song on Spotify, or watch a movie on Netflix, or keep pictures or videos in the cloud, or post to Instagram, or talk to people via Zoom – which you’re doing right now. We are all sending zeros and ones to and from these data centers. We are using electricity, even if it’s far away from where you are at the moment. It’s just a helpful reminder for me that this is us.
What are the expectations for how much more electricity these centers or new ones are going to suck up in the future?
Ramadan: You bring up a really great point. These data centers are growing because they’re catering to our insatiable demands for our online world. And we are expecting a lot of growth in the data center industry. Experts have forecasted really significant growth at the global level. But just for some perspective, regional power planners that specifically are looking at growth in the Northwest – Oregon, Washington, parts of Montana and Idaho – have produced really wide-ranging forecasts on the amount of power that data centers could use by 2029. And so for reference on that scale of possibility … and the regional power planners don’t consider any of these predictions more accurate than one another, but on that scale, data centers could add in the Northwest as much power as the entire usage of Puget Sound Energy, the entire current usage of Puget Sound Energy users.
So then that is the largest utility in the region and that would be something that the region could accommodate. But on that same forecast scale, power planners found that data centers could use significantly more power; enough power, in fact, that would imperil the Northwest Power System. It would require a significant amount of power to be added to our regional grid in order to accommodate such growth, which would require an enormous amount of coordination and planning at a really quick pace.
Miller: Lulu, thanks very much.
Ramadan: Thank you.
Miller: Lulu Ramadan is an investigative reporter for the Seattle Times and a fellow with ProPublica’s Local Reporting Network.
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