US Elections Leave the Future of Data Center Expansion Uncertain

TVS News AI, editorially supervised, presents US Elections Leave the Future of Data Center Expansion Uncertain.

Of the 34 elected governors whose races the AP had decisively called, 32 support tighter rules or other restrictions on data centers. 12 of them even advocate bans or moratoria. Behind this markedly tougher political stance lies a dispute over electricity, water and whether the practical benefits of a large facility outweigh the additional burdens it creates.

Although the regulation of data centers was not a central issue on most ballots, according to a report by Clarín, it featured in numerous campaigns. According to AdImpact, major and minor candidates spent a combined more than 380 million US dollars on television ads mentioning data centers. The Democrats spent three times as much as the Republicans.

32 Governors Put Expansion to the Test

The political direction

The Democrats did not just take control of Congress; they also flipped at least five gubernatorial elections and gained full control of the state government in another five states. Some of these states already have large data centers. As a result, regulation now faces not only a new federal party but potentially new state governments as well.

The winners tracked by Data Center Watch, a project of the AI security consultancy 10a Labs, support this assessment. According to the project, 32 of 34 governors support tighter regulations or restrictions. For 12 candidates, this specifically means a ban or a temporary halt to approvals.

Wisconsin shows how quickly positions can change

David Crowley, the new governor of Wisconsin, initially rejected a moratorium. Under pressure from his Republican opponent, he hardened his position. He later supported a moratorium and called for abolishing the state sales tax exemption for data center operators and developers.

Crowley told the AP that he was already speaking with decision-makers about possible measures. These included disclosure of water and energy consumption, municipal approval before further planning, and protection of consumers and taxpayers from the energy costs of new projects. The report did not yet specify any concrete laws. However, the issues raised indicate where the new state government may be heading.

A state can become a countermodel

The results in Texas and Ohio illustrate how different the consequences may be. Morgan Stanley described Gina Hinojosa’s victory in Texas as the most consequential election result for data center development. Hinojosa said she would block a permit if the project would not benefit the community or if the community had not had a say.

Amy Acton takes a similarly tough approach in Ohio. She has promised to prevent projects that fail to meet certain standards. Morgan Stanley therefore describes a significant risk of delays in Ohio.

According to Morgan Stanley, this creates the possibility that the United States will split into areas with open opportunities for new data centers and areas with effectively closed markets. Choosing a state will therefore become more important to operators than the prospect of a uniform federal regulatory framework. Even if President Donald Trump halts a nationwide assault on the industry, tighter state rules could slow expansion.

The Local Level Backs Restrictions in 44 of 45 Votes

Voters are deciding more than just state policy

The political shift is also evident in local referendums. Redbud Consulting analyzed 47 votes in 44 municipalities across 12 states. Of these, 21 took place in Ohio, 8 in Maine, 7 in Illinois and 4 in Kansas.

Of the 45 votes for which complete results were already available, restrictions on data centers were approved in 44. Decisions about individual projects are therefore increasingly being made by local authorities. A project may have political support at the state and federal levels and still fail at a referendum or from opposition by the municipality concerned.

Voters are more critical than their voting choices might suggest

According to AP Voter Poll, approximately three-quarters of US voters oppose building a data center in their own municipality. This majority existed in both Republican and Democratic states. Resistance was particularly strong in some traditionally Republican states, including Wyoming, West Virginia, Louisiana and Mississippi.

This does not mean voters ranked the issue among their most important concerns. Only about one-quarter described AI data centers as decisive in their congressional vote. According to the surveys, the issue ranked behind state corruption and the cost of living. Political damage to projects therefore does not necessarily arise from a broad voter movement; it can already result from local opposition and tighter permitting rules.

Texas Links the Electricity Question to the Water Crisis

A flashpoint with particular risks

In Texas, the impact of data centers on electricity and water was a central election issue, according to Clarín. For new agriculture commissioner Clayton Tucker, the first Democrat to hold the office since 1986, the fight against expansion was decisive in his victory.

Farmers feared that data centers could endanger their limited water reserves. Tucker told the AP that farmers’ position had changed: “This is what the fight is about.” Against the backdrop of drought in Texas, the election campaign gave this resource conflict additional weight.

Market share is growing as barriers rise

A JLL real estate report expects Texas to overtake northern Virginia as the world’s largest data center market by 2030. At the same time, the report by El Comercio Lima and Clarín describes the political developments as uncertain: the Democrats have won the elections and announced stricter rules, but their practical implementation at the regional and local levels remains open.

OpenAI published a framework paper on Thursday urging federal, state and local politicians to establish clear rules for building facilities. It calls for responsible investment, the protection of residents and the broad sharing of the benefits of AI infrastructure. At the same time, the industry association Data Center Coalition warns of the real consequences of the announced moratoria: municipalities could lose tax revenue and payments from technology companies.

Expansion now faces a clearly defined conflict of goals. Data centers are considered AI infrastructure and, according to the industry, also promote industrial development. For future permits, however, it increasingly matters whether a municipality accepts the energy and water consumption and receives benefits in return. This turns every new facility into a question of location and regulation. Its economic viability is no longer the only deciding factor; so is the political price a region is willing to pay to build it.