Data center projects planned in Illinois over the next decade could generate tens of thousands of new jobs and hundreds of millions of dollars in new tax revenues but also drive up utility bills, according to a report released Thursday.
The state is expecting $57 billion worth of new data center projects through 2035, which the labor-backed think tank, Illinois Economic Policy Institute, and the University of Illinois say could create 121,000 mostly temporary skilled trade and construction jobs.
If those projects come to fruition, local municipalities could also see nearly $300 million more in annual property tax revenues, “reducing the tax burden on homeowners while funding schools, libraries, police and fire districts,” the report said.
But as the state expands its data center landscape, study author Frank Manzo said residents could have to pay $12 more per month in electric bills.
“The key is to install guardrails that minimize the risks while maximizing the value,” said Manzo, an economist at the Economic Policy Institute, which is aligned with the Illinois AFL-CIO. That umbrella labor organization is a supporter of data center construction.
Data centers and the growing use of artificial intelligence continue to dominate national debate, becoming a hot-button issue on the campaign trail. Gov. J.B. Pritzker, who is running for a historic third-term, has called for national guardrails, comparing AI to nuclear weapons.
Pritzker last month formed an Illinois AI cabinet to “assess the various risks” of the technology, including the energy burden data centers will have on Illinois’ power grid.
And his administration, earlier this year, put a two-year pause on state tax incentives for data center construction.
Illinois has more than 200 operational or planned data centers, the largest one being a 795-acre site in Joliet slated to be operational by 2030. Manzo said Illinois ranks ninth in the U.S. for having the most centers per million residents, and that’s because the state is an “ideal destination” for many developers.
“We have a central location in the country. We have a cooler climate which really helps with heating costs,” Manzo said, adding the state’s stable of skilled and productive construction workers and university-educated workers are an additional draw for data center developers.
The projects planned the next 10 years will need 6.5 gigawatts of electricity, equivalent to powering 4.5 million homes. The report notes that electricity costs for both commercial and residential users will rise as more data centers materialize.
But, Manzo said, that can be mitigated.
He and the study’s authors have offered 10 state policy recommendations, which include the state barring utilities from raising rates by more than 5% per year and encouraging data centers to capture the heat emitted from the centers and sending it to neighboring homes and businesses.
The authors also recommend legislation to require data centers to come up with their own clean energy supply or enter into cost-sharing agreements with utility companies.
State Rep. Ann Williams, D-Chicago, said she was pleased to see many of these recommendations mimic what was in the POWER Act, a sweeping package aimed at regulating data centers’ use of energy and water, among other things.
Though it received overwhelming support from environmental groups and Democratic lawmakers, the plan failed to pass last spring. But Williams said conversations are still ongoing.
“Our priorities would be ensuring ratepayer protection, ensuring there’s sufficient capacity on the grid, safeguarding water and other resources,” Williams said. “My mantra is and will continue to be as we continue to explore legislation: Put people first.”
Williams has held several legislative hearings on data centers and a town hall on the issue in her North Side district. She said many residents don’t have a positive opinion of data centers in general, and it’s not just because their utility bills are high. She said constituents also worry about the centers’ water usage and noise pollution.
“I think we’re at the point with data centers that we need to mandate some of these requirements,” Williams said. “Resources don’t seem to be an issue. I don’t see the need for incentives, and I’m hopeful that we can avoid that conversation and really talk about what data centers can do for communities if they do locate there.”