This audio is automatically generated. Please let us know if you have any comments.
Increased scrutiny of data centers hasn’t stopped contractors from moving forward with construction plans.
New restrictions and growing community opposition in the US are adding complexity to data center development. The energy and water concerns of local residents and public officials are rising alongside the incredible pace of construction spending about these projects.
But contractors with industry awards aren’t ringing the alarm bells just yet. In fact, even though several contractors say they are paying more attention to addressing community rejection of projects, demand for these builds has not diminished.
“We’re seeing increased scrutiny on some aspects, particularly around energy availability, water use, land use and the overall community impact of large-scale data center developments,” said Chris Teddy, national director of mission critical for JE Dunn Construction, a data center builder. “This doesn’t necessarily prevent projects from moving forward, but it can extend timelines and add complexity during the planning and awarding phases.”
Impacts of data center executive orders on construction
virginia Governor Abigail Spanberger signed an executive order in September, which, among other measures, prohibits projects with an expected peak demand of at least 25 megawatts from receiving state aid through accelerated permitting and site development programs. The order also directs state agencies to address issues such as noise, emissions, water use, electricity demand and other impacts in the coming months.
Before that, Pennsylvania Governor Josh Shapiro signed an executive order in August on energy affordability and environmental protection. The order also gives local communities a greater role in the development process.
Texas Governor Greg Abbott chaired the Texas Commission on Environmental Quality stop all permissions requested by data centers until the Electric Reliability Council of Texas completes its audit, according to a Sept. 21 news release. In the Lone Star State, data centers must cover all electrical infrastructure costs and not use water needed by local communities, according to the statement.
These changes are catching the attention of contractors. However, they haven’t shaken the confidence of HITT Contracting CEO Kim Roy.
The Falls Church, Virginia-based general contractor has built data centers for more than 25 years and invested heavily in the industry as demand accelerated, Roy told Construction Dive. Asked if community opposition or state restrictions are affecting HITT’s construction schedules, Roy said he didn’t see it coming to this point.
“I don’t see it,” said Roy. “I mean, at this point, it’s just listening and addressing the concern. It doesn’t really affect our construction schedule.”
HITT will monitor what comes out of Virginia’s executive order, he said, though he added that the move is an early-stage development that has not affected active projects.
“Our team is watching it closely, but it has no real effect on anything under construction,” Roy said. “As a company, we will always comply with laws and regulations. But again, I think there is a path to smart building where policy and development teams can work together.”
More work before the construction phase
Local opposition and state restrictions tend to affect projects the most before construction crews arrive on site.
For example, JE Dunn has seen clients become more strategic about site selection, Teddy said. Along with adequate access to power, developers are also increasingly prioritizing the receptivity of jurisdictions and communities before finalizing an investment in a region.
In some cases, poor reception may steer customers to another market where there is better support for the project, Teddy said. Despite those obstacles, demand for data center construction continues to soar at an “unprecedented pace,” he said.
Tactical planning
At the same time, the builders are not ignoring the growing public sentiment against the projects.
“General contractors thrive on predictability,” Teddy told Construction Dive. “When permitting requirements continue to evolve or community concerns significantly delay approvals, it becomes more difficult to manage labor resources, lock in subcontractor commitments.”
For that reason, the preconstruction phase of a data center build is critical to keeping the project on budget, according to Greg Werner, senior vice president of Minneapolis-based Mortenson. Werner said the contractor is spending more time on projects to address community concerns.
“The best time to address local questions is before they become project constraints,” Werner said. “For a general contractor, community concerns and permitting requirements are most important when they begin to affect schedule certainty or the client’s ability to make timely decisions.”
To avoid that problem, Werner said conversations about a project should include those community concerns, in addition to the construction details of the data center facility. Those conversations should play an important role in infrastructure and design decisions, he said.
Change the tone in communities
Some of the criticism surrounding data centers has been based on outdated assumptions, Roy told Construction Dive.
For example, cooling technology has evolved from facility-level chillers to closed-loop systems that can cool rack-level equipment, he said. This process uses substantially less water than previous designs.
“I think it’s important for the industry to give the correct information about what the current state is and how this is evolving,” he said. “I wish it could catch up and have that transparency so that the communities also understand the benefits, the tax benefits.”
Likewise, Werner said closed-loop cooling systems rank as one of the ways newer projects can address water consumption concerns. He also agreed that developers and builders need to be specific about investments in labor and how new electricity infrastructure will affect the local grid.
“Community engagements should identify benefits such as workforce training, sustained demand for skilled trades, support for local suppliers and tax revenue that can fund public education, emergency services, highways and municipal infrastructure,” Werner told Construction Dive. “Energy planning should show how customers support new generation and finance necessary grid improvements rather than simply adding demand to the existing grid.”
In addition to the benefits of a data center once operational, contractors should also carefully manage the effects of an active construction site on the community, such as road closures and noise.
“You have to be an active listener,” Roy told Construction Dive. “What’s the problem, and let’s deal with it.”
