Market Data
Governor Bob Ferguson Tackles Data Center Growth in Washington with New Workgroup
Washington Governor Bob Ferguson has announced the formation of a workgroup to investigate the impacts of data centers in the state. This move comes as tech giants like Amazon and Microsoft are rapidly expanding their data center infrastructure worldwide, with plans to invest billions in new construction over the next year. The executive order signed by Ferguson highlights the need to balance economic development, tax revenue, energy use, and environmental responsibility. While data centers drive the state’s digital economy, they also consume vast amounts of energy, posing significant sustainability challenges.
The workgroup will focus on understanding the shifting landscape of data centers and artificial intelligence (AI). Recent advancements, such as the release of a more efficient AI chatbot by Chinese company DeepSeek, have raised questions about the necessity of large-scale data center deployments. However, the growing adoption of AI tools ensures that demand for data center capacity will continue to rise. In 2023, Washington ranked among the top 10 U.S. markets for data center leases, according to CBRE, a global real estate consulting firm. The state’s appeal stems from its renewable energy sources, such as hydroelectric power, competitive electricity rates, and tax incentives for data centers.
Despite these advantages, Washington faces significant challenges. Energy demand is outpacing supply, with hyperscale data center operators consuming increasing amounts of electricity. Josh Jacobs, Puget Sound Energy’s vice president of clean energy strategy and planning, warned that “hyperscalers are growing today” and are using up available hydro power and carbon-emitting resources. This growing energy demand is making it harder to find suitable locations for data center infrastructure in the Pacific Northwest, according to CBRE. In Central Washington, hyperscalers and data center developers are actively searching for sites, while exploring alternative power sources like solar, wind, batteries, and biofuels.
The workgroup, convened by the Washington Department of Revenue, will include representatives from state agencies such as the Departments of Commerce and Ecology, the Utilities and Transportation Commission, electric utilities, environmental groups, labor organizations, and other stakeholders. The group has been tasked with submitting its findings and recommendations by December 1 of this year. The ultimate goal is to ensure that Washington can continue to attract data centers while addressing the associated environmental and energy challenges.
This initiative aligns with broader national efforts to address the implications of data center growth. Earlier this year, President Joe Biden signed an executive order aimed at promoting sustainable AI development and data center operations, which could benefit companies like Amazon and Microsoft. These tech giants are also exploring innovative energy solutions to mitigate the environmental impact of their operations.
In conclusion, Governor Bob Ferguson’s workgroup represents a proactive step toward managing the complex challenges and opportunities posed by data centers in Washington. As the demand for digital infrastructure continues to grow, the state must balance economic development with environmental responsibility, ensuring a sustainable future for this critical sector.
