Data-Center Construction Jumped 90% in September. Voters Just Pushed Back.

By James Calloway

The value of U.S. data-center construction rose 90 percent in September from a year earlier, according to the U.S. Census Bureau — even as voters in the midterm elections punished politicians who backed the boom. That is the central tension now facing the AI industry: record demand colliding with organized community resistance that just gained political force.

The pushback was most dramatic in Texas, where Gina Hinojosa, described by Bloomberg Opinion columnist Thomas Black as "a relatively unknown state legislator," defeated three-term incumbent Governor Greg Abbott after campaigning heavily against data-center projects. Abbott had embraced the boom and only called a pause in August "amid alarming poll numbers," Black writes. Democrats also won governorships in longtime Republican strongholds including Texas and Kansas.

Black's verdict on the election signal is blunt: "We don't want these noisy behemoths in our backyard." But he argues the consequence should not be the demonization of data centers. The facilities, which house thousands of computer servers, underpin everything from routine clicks and taps to the productivity gains expected from AI. Productivity gains, he notes, are what allow wages to rise without inflation — the basis for high U.S. living standards.

What do the order books say?

The supply chain tells a story of undiminished demand. Vertiv Holdings Co. and Amphenol Corp., two suppliers closely tied to data centers, each reported third-quarter orders twice as high as a year earlier, with what Black calls "no visible cracks in demand."

So construction will not stop. What changes, in Black's assessment, is bargaining power. The election results "give communities the upper hand in negotiating where and how they will be built," tempering the rush to erect projects and halting what he labels community-unfriendly solutions — such as deploying loud jet-aircraft engines as a quick way to generate off-grid electricity.

Takeaway: demand is intact, but developers have lost the political benefit of the doubt.

Can residential power bills be protected?

The biggest obstacle for data centers is access to vast amounts of uninterrupted power, and the fear that residential electricity bills will skyrocket. Black's prescription is straightforward: generate more electricity and shield households from cost increases.

More than 200 companies — including the largest power producers and hyperscalers (the giant cloud providers like Google that operate at global scale) — signed a Ratepayer Protection Pledge at the White House in March. Among other commitments, they promised that data-center power needs would not push up residential rates.

The pledge is voluntary. "These promises aren't mandatory, but the backlash should be fierce if they're broken," Black writes. That is a promise enforced by politics, not contract law — a caveat worth holding onto.

Early signs, he argues, are encouraging:

• In a deal to expand Google's data-center campus in West Memphis, Arkansas, Entergy Corp. plans to add grid capacity that it says will save customers $500 million beginning in 2028.
• Google pledged $25 million over five years for the local community, including workforce training.
• Duke Energy Corp. last month reached a deal with several of the largest tech companies to protect customers in North Carolina from some data-center costs, including infrastructure such as substations and transmission lines.

Note the attribution: Entergy "says" the grid expansion will produce $500 million in savings, and the savings begin in 2028 — a projection, not a delivered result.

Takeaway: the industry is making concrete financial commitments, but none of them are yet enforceable guarantees.

Is the water problem real?

Opponents frequently cite water consumption as a serious drawback. Black says this has been blown out of proportion: data centers do not use nearly as much water as traditional industries including agriculture, chemicals or food and beverages, and recycling technology can cut data-center water use to negligible amounts.

Oracle Corp. is deploying closed-loop cooling technology — systems that recirculate coolant rather than drawing a continuous water supply — at data centers it is building in New Mexico, Michigan, Texas and Wisconsin. Acoustic panels, Black adds, could mitigate the low humming noise that opponents cite.

Governance, in his framing, matters as much as technology: good siting can locate projects away from residential neighborhoods and insist on robust water recycling.

Takeaway: the water objection has engineering answers; whether developers apply them consistently is a separate question.

Why the rhetoric turned toxic?

Black is unsparing toward his own side of the argument's political failures. Politicians "latched on to the public's concern and then amplified it into irrational fear that now has people discussing these projects as if they were nuclear waste dumps," he writes. The opposition was fueled by simplistic sound bites and even disinformation flooding social media, where many people obtain their news.

At the same time, he concedes the case for scrutiny. More oversight of large projects "is welcome to head off abuses that could take place if developers had free rein to build these facilities," and builders would be wise to be more transparent about energy use, water consumption and noise.

He also draws a comparison to manufacturing, which most people and politicians want more of in the U.S.: those plants use electricity, consume water, make noise and create traffic — local challenges, he argues, that can be overcome rather than reasons to quit.

What do communities actually get?

The benefits, Black argues, have been lost in the overheated midterm rhetoric:

• Local tax revenue.
• A relatively light environmental footprint compared with heavy industries such as steel, glass or chemicals.
• Minimal truck traffic compared with typical industrial plants and warehouses.

The strongest claim in the piece is also the most conditional: "Done right, these facilities will drive the digital revolution while most communities won't even know they're there, humming along 24/7 and processing every tap and click." "Done right" is carrying a great deal of weight in that sentence — it presumes the ratepayer pledges hold, the recycling technology gets deployed, and the siting disputes get resolved.

What is not said: nothing in the piece quantifies total projected electricity demand from AI, and the $500 million Entergy savings figure is a company estimate four years out from delivery. The Ratepayer Protection Pledge carries no stated enforcement mechanism beyond reputational backlash.

The boom, Black concludes, will continue because AI has unleashed unprecedented demand. The open question the midterms answered is not whether data centers get built, but on whose terms — and the negotiating leverage just shifted toward the neighborhoods next door.