Introduction to Data Centers
Written by Amardeep Dhanju, Senior Associate
June 18, 2026
What is a Data Center?
Data centers are industrial facilities that house interconnected computer systems used to store, process, and manage large volumes of electronic data. They often resemble warehouses or office buildings, but they are occupied entirely by electronic equipment. The digital information commonly described as being “in the cloud” is physically stored in computers housed in these “brick-and-mortar” facilities. Data centers require substantial amounts of electricity to power their computer systems, known as servers, as well as the networking equipment that enables efficient data transmission.
The rise of personal computers in the 1990s, combined with a rapid expansion of the internet, has led to the development of modern, server-based data centers. This trend accelerated significantly with the growth of cloud computing. In recent years, demand for data processing has surged to support generative artificial intelligence (AI), cryptocurrency mining, and other data intensive applications. As a result, data centers have become the heart of global digital infrastructure.
Data centers are designed to operate continuously, and they require nearly 100% reliability. To meet this requirement, they rely on energy-intensive support systems, including cooling, networking, and backup electric power generation that would operate if grid electricity was turned off for any reason.
Data centers vary widely in scale and design to meet different computing, business, and performance needs, ranging from massive cloud facilities to small, localized systems, as well as AI-focused systems known as “neo” data centers. Each data center type involves distinct trade-off in scalability, cost, and infrastructure requirements.
Why Are AI Data Centers Different than Conventional Data Centers?
AI data centers differ fundamentally from conventional data centers in terms of the intense energy demand. Traditional data centers are designed to support general computing, data storage, and networking workloads, whereas AI data centers are purpose-built to handle computer-intensive AI workloads using Graphics Processing Units (GPUs).
While use of GPUs allows fast data processing, this also uses much more electricity. Because nearly all the electrical power used by the servers is converted to heat, AI data centers need advanced cooling technologies that supplement or replace traditional cooling systems.
AI data centers also require extremely fast networks that allow thousands of GPUs to communicate with each other almost instantly. Together, these needs make AI data centers more power-dense than conventional data centers. This affects where AI data centers are built, and how closely developers must coordinate with utilities and local agencies.
Siting Drivers for Data Centers
Historically, data centers have been clustered in specific locations to take advantage of intensive fiber-optic networks, high-capacity power infrastructure, and skilled workforce. This “cluster effect” allowed data to travel more quickly between facilities, improve overall efficiency, and enable operators to share infrastructure across a region. Northern Virginia’s “Data Center Alley” and the Silicon Valley area (Santa Clara County) are a prominent example of the clustered data center siting model.
The latest generation of extra-large or “hyperscale” AI-focused data centers is diverging from this clustered pattern. Rather than concentrating on urban or legacy data center clusters, many new facilities are being developed as large, stand-alone campuses in rural counties. Siting decisions are now driven primarily by access to abundant, reliable power and availability of large parcels of land to accommodate future expansion. In some cases, these campuses incorporate on-site or dedicated power generation, including natural gas generation, allowing greater geographic flexibility.
Access to power infrastructure including transmission capacity, proximity to substations, and interconnection timelines is equally important. Water availability has become an increasingly important factor, influencing site selection and driving controversy in water-stressed regions. At the same time, fiber connectivity remains essential, requiring access to high-capacity, long distance fiber networks that connect major cities and regions, even as data centers are located farther away from traditional hubs.
Where Are Data Centers Located in the U.S.?
Data centers are installed in all 50 U.S. states, but the majority are concentrated in a few major regional clusters. According to Cleanview, which tracks data centers that are operating and under construction, the U.S. hosts approximately 598 operating data centers representing nearly 17 gigawatts of installed capacity. Northern Virginia is the largest hub in the country, followed by Dallas, San Francisco Bay Area, Chicago, and Atlanta.
In addition to these established hubs, cities such as Phoenix and Reno are emerging as major growth centers, driven by relatively low-cost power.
In California, there were 277 operating data centers (as of April 2026).[1] They are primarily concentrated in Santa Clara County, with Los Angeles downtown serving as another major hub and smaller clusters in Sacramento and Fresno.
Benefits and Impacts of Data Centers
Data centers can deliver substantial economic benefits to host communities, but they also introduce distinct sets of environmental impacts that require careful planning and mitigation.
Benefits
The benefits of data centers include employment, tax revenue, and employment. According to a study by Oklahoma State University and the University of Southern California, construction employment ranges from 0.7 to 2 workers per MW of capacity, while operations employ 0.15 to 0.35 workers per MW . Automated hyperscale data center campuses (>100 MW) can operate with around 20-30 staff per 100 MW capacity.[2] While operational staffing levels are typically modest, these positions are high-skill and well-compensated. Construction activity can be especially substantial when data centers are developed in regional clusters.
Tax Revenue. Data centers also generate meaningful tax revenues, including property taxes, sales taxes on equipment, and, in some jurisdictions, special infrastructure and utility payments. These revenues can support local services, schools, and public infrastructure. In Loudoun County, Virginia – nation’s largest data center hub – data centers generated approximately $875 million in property tax revenue in fiscal year 2024,[3] enabling the County to reduce its property tax rate while maintaining public services levels.
Renewable Energy Infrastructure. Data centers can also provide system-wide utility benefits if they fund the acceleration of renewable energy infrastructure, which lowers the overall carbon intensity of the grid and reduces long-term energy costs for all consumers. According to Bloomberg NEF, in 2025, technology giants Meta, Amazon, Google, and Microsoft were responsible for 49% of all global purchases of renewable energy through Power Purchase Agreements (PPAs) to power their data centers.[4] While there are opportunities for co-locating data centers with renewable energy and energy storage projects, these generation and storage facilities cannot provide the immediate back-up power required in a power outage (see impacts, below).
Environmental Impacts of Data Centers
Depending on their size, location, and configuration, data centers can create significant impacts, including the following:
Increases in energy demand: These demands can strain local transmission and distribution systems and lead to proliferation of natural gas power plants to generate adequate power to serve demand, and can postpone the planned retirement of existing coal and natural gas power plants.
Water demand: In water-stressed regions, data center cooling needs can impact long-term water availability through excessive use of surface waters and groundwater resources.
Air emissions: Air emissions are generated by backup diesel or natural gas-fired generators. These emissions can affect public health and exacerbate existing poor air quality conditions.
Noise: Cooling equipment, backup generators, and substations can be noisy due to continuously running fans and other equipment. This noise may affect nearby residential or other sensitive land uses.
Visual impacts: Large building footprints, perimeter fencing, and utility infrastructure may be incompatible with surrounding land uses or community character.
Environmental Justice: All the impacts discussed above may disproportionately impact communities already overburdened by existing industrial and environmental stressors.
The Role of Environmental Planning in Data Center Development
As data centers continue to expand across the United States, successful project delivery increasingly depends on proactive environmental planning and regulatory coordination. Aspen Environmental Group support developers, utilities, and public agencies by guiding projects through complex federal, state, and local permitting requirements while addressing community concerns and environmental constraints. Aspen brings extensive experience in preparing CEQA and NEPA documentation for large-scale infrastructure projects, including transmission lines, substations, power generation facilities, and other energy-related developments that are often closely tied to data center siting and operation.
By integrating early environmental analysis with siting strategy, Aspen helps identify potential constraints related to air quality, biological and cultural resources, water availability, environmental justice considerations, and land use compatibility. This approach enables project teams to avoid or minimize impacts, streamline permitting, and support more informed decision-making. As the demand for reliable power, water, and land continues to shape where and how data centers are developed, environmental planning will play a critical role in balancing infrastructure needs with responsible resource management.
Conclusion
As data centers continue to expand in scale and geographic reach, governments and policy makers increasingly recognize them as critical infrastructure. While these facilities can deliver economic benefits, they also result in environmental impacts related to energy demand, water use, land use, and air emissions, noise, and visual impacts. Effectively balancing the benefits and impacts will require thoughtful siting decisions, early coordination with utilities, regulators, and public stakeholders, and careful environmental planning.
In subsequent blog posts, we will discuss the energy use by data centers, and we will dig deeper into some of the impact concerns.
[1] Pew Research Center, Most new data centers in the U.S. are coming to rural areas. April 13, 2026. Accessed fromhttps://www.pewresearch.org/short-reads/2026/04/13/most-new-data-centers-in-the-us-are-coming-to-rural-areas/#:~:text=The%20United%20States%20has%20more%20than%203%2C000,to%20grow%20substantially%20in%20the%20years%20ahead.
[2] Ruy A. and Hiatt, S.R. (November 2025. Data Center Employment Forecast Analysis. https://hamminstitute.org/site-files/documents/data_center_workforce.pdf#:~:text=Workforce%20intensity%20varies%20sharply%20by%20facility%20scale.,to%20lower%20automation%20and%20more%20complex%20operations.
[3] Loudoun County Data Center Tax Revenue fact sheet. https://23372029.fs1.hubspotusercontent-na1.net/hubfs/23372029/Website%20Files/Data%20Center%20Fact%20Sheet%20One%20Pager%205.1.25.pdf
[4] Corporate Clean Energy Buying Fell in 2025 After Nearly a Decade of Growth. BloombergNEF. February 19, 2026. https://about.bnef.com/insights/clean-energy/corporate-clean-energy-buying-fell-in-2025-after-nearly-a-decade-of-growth/