Upzoned Podcast Summary

Episode: Why Data Center Electricity Use "Scares Me to the Bone"
Host: Abby Newsham
Guest: Edward Erfurt (Chief Technical Advisor, Strong Towns)
Air Date: August 20, 2025

Overview

This episode dives into the growing controversy surrounding the impact of data centers on electricity use in the United States. Using a recent AP News article as a springboard—"As Electric Bills Rise, Evidence Mounts that Data Centers Share Blame, States feel Pressure to Act"—the discussion explores how the proliferation of data centers is affecting utility costs, infrastructure planning, and land use policy. Abby and Edward unpack the hidden costs of technological advancement, zoning challenges, the fragility of utilities, and the socio-economic implications for communities and future development.

Key Discussion Points & Insights

1. Data Centers: A New Land Use Challenge

• Emergence of Data Centers:
  • Data centers, which power everything from cloud computing to AI, are proliferating, with electricity consumption rivaling major cities in some regions.
    (04:31) Edward: “What we've seen ... everywhere there's been a hole in between those housing developments...these data centers have emerged, and they're prolific in this area.”
• Zoning Dilemmas:
  • Data centers don’t fit traditional zoning categories (not quite factories, nor warehouses, but high in energy and water use), creating regulatory headaches for planners.
    (07:48) Abby: "Data centers are this new emerging land use type...they really can be inserted into older buildings...but you also see large industrial expanses on the outskirts of town.")

2. Economic Development vs. Hidden Costs

• Tax Benefits and Minimal Services Needed:
  • Data centers promise hefty property tax revenue with minimal strain on municipal services (no significant population, traffic, or police needs).
    (09:47) Edward: "These are giant cash cows for many of our communities when it comes to the land value that's being created from it.")
• Subsidies and Public Cost Absorption:
  • Local governments frequently incentivize data centers for economic development, but the true costs of electricity and infrastructure expansion are often socialized among everyday ratepayers.

3. Electricity Consumption & Grid Fragility

• Unprecedented Utility Demand:
  • Data centers cluster, drawing “100 times that of a suburban subdivision." The pace of new demand outstrips current power plant capacity and expansion.
    (04:31) Edward: "The amount of energy ... one of these centers needs ... is like a hundred times that of a suburban subdivision.")
• Lack of Planning Coordination:
  • Standard planning processes generally assume electricity is plentiful, neglecting its actual capacity or long-term impacts.
    (14:56) Edward: “In our planning decisions at city hall, we would never look at electricity. We just assume it's going to be there.”

4. Utility Rates, Regulation, and Socialization of Costs

• Ratepayers Shoulder the Burden:
  • Consumer protection regulation for utility rates works with incremental growth, but high-intensity demands like data centers distort the system, ultimately passing costs to all users.
    (24:57) Edward: "None of us are going to advocate for our utility bills to go up right?")

5. Potential Solutions and Dilemmas

• Shifting Cost to Data Centers:
  • Some states propose tailored rates/fees for data centers, but political and economic pressure complicates implementation, especially where there are perceived benefits from tech-sector growth.
  • Impact on Consumer Tech and “Free” Services:
    (19:55) Abby: “Would shifting the cost to data centers change the business model of technology…and would we need to start paying for certain tools?”
• Alternative Energy Generation:
  • Data centers may need to generate their own power (e.g., private plants, renewables, or even nuclear), raising new species of land use and public safety issues.
    (16:40) Edward: “Could you imagine...here's our special application for this extra use, this variance for a nuclear reactor three blocks from your house?”
• Planning for Utility Capacity:
  • Municipalities often overlook actual utility infrastructure when planning; development should align with areas of available utility capacity.
    (30:43) Edward: “What I suggest is they look at their sewer capacity...maybe the areas where they have sewer capacity are not the places they are actually doing their master planning.”

6. Community-Level Implications and Future Risks

• Competition for Limited Resources:
  • Local infrastructure (water, sewer, energy) is historically underfunded for maintenance and upgrades; the rapid influx of data centers may exacerbate existing financial and capacity shortfalls.
• Development Moratoriums:
  • If utility limits are breached, cities could face moratoriums not just on data centers, but all types of construction—including housing and EV infrastructure.
    (21:04) Edward: "If you were to go at a state level...we're out of power, we have to limit development. And it wouldn't just be limiting development on data centers...")
• Uncharted Regulatory Terrain:
  • Planners and municipalities are mostly unprepared for the complexity and scale of the challenge; solutions likely reside with state authorities, public utility commissions, and potentially large private actors.

Notable Quotes & Memorable Moments

• “I am in the epicenter of the data center debate. ... These data centers have emerged and they're prolific in this area ... it's a new zoning category. So where do they kind of go? They're not a warehouse, they're not a factory ... they consume an enormous amount of electricity.”
  — Edward Erfurt, (04:31)

• “It's showing the fragility of one of our core infrastructures that we all take for granted as almost as if the air around us is its equivalent.”
  — Edward Erfurt, (14:56)

• “How would you permit a power plant in an urban location—not to mention the types of power that would be available—imagine that discussion showing up at a public meeting … a nuclear reactor three blocks from your house.”
  — Edward Erfurt, (16:40)

• “If we've not planned for those components, then we're behind. And if we're behind year after year after year ... we are now at the point that two things are happening. We're behind on our maintenance and upgrade of the system and we're at peak demand.”
  — Edward Erfurt, (29:56)

• “Laying a new color on your zoning map is not going to solve this. ... It's going to the public service commissions, it's going to the state level of figuring out how energy rates are set ... these are the big shiny objects that every economic development office across the country wants because of all the tax base and the limited liability...”
  — Edward Erfurt, (34:26)

• "What this story really points out is right now where I believe the Achilles heel is for data centers ... this type of fragility within our power grid is also reflective in our water and sewer systems and our roadway systems and our communities."
  — Edward Erfurt, (37:49)

Timestamps for Key Segments

• [02:22] — Introduction to the week’s story and context for rising electrical costs related to data centers
• [04:31] — Edward’s first-hand experience with the explosion of data centers and their unique zoning challenges
• [09:47] — Economic development incentives, tax benefits, and hidden costs for municipalities
• [14:56] — Discussion on the assumed abundance of electricity and the oversight in planning
• [16:40] — Consideration of alternative energy (including nuclear) and siting dilemmas
• [21:04] — Infrastructure parallels between energy and water/sewer; growth moratoriums
• [24:57] — Utility company structure, deferred maintenance, and the challenge of increasing rates
• [29:56] — Why this situation “scares me to the bone”: maintenance backlogs and strained capacity
• [30:43] — Aligning development with existing infrastructure capacities; learning from incremental development
• [34:26] — The limits of traditional planning, state-level decision-making, and economic development allure
• [37:49] — Takeaways on utility fragility and parallels to other essential municipal systems

Tone and Speaker Dynamics

• Abby brings a planner’s perspective—curious, solution-oriented, focused on land use and community impacts.
• Edward offers local insight and technical expertise, candidly articulating his alarm over utilities’ fragility and the inadequacy of existing planning practices to handle the scope of change.
• The tone is earnest, reflective, sometimes alarmed, and consistently grounded in practical planning realities.

Concluding Thoughts

The conversation ends with the recognition that data center expansion is both a land use and infrastructure resource challenge with implications that go well beyond local zoning. The speakers suggest the need for stronger alignment between planning, utility regulation, and state-level policy, warning that without such coordination, communities risk being left with unsustainable costs and development constraints.

Memorable Segment Title Reference:

• The episode’s title—“scares me to the bone”—is referenced [29:56] when Edward describes just how vulnerable utility infrastructure is and the cascading effects this could have on all types of local growth and development.

For listeners who missed the episode:
This summary delivers a comprehensive look at the complex, often unseen consequences of data center growth for American communities—touching on utility fragility, economic incentives, land use adaptation, and potential solutions. The hosts make it clear: as our technological demands soar, so too do the challenges for the places we call home.