Can efficiency measures turn data center opposition into approval?
At a glance
- Crucial data center development is placing new pressure on grid reliability and energy affordability.
- Community pushback is growing as locals with concerns over rising electricity rates and resources become more organized.
- Energy efficiency and water conservation measures may be the answer to offsetting impacts while delivering tangible benefits to households.
- These community benefit programs offer a practical way to strengthen neighborhood relationships and turn opposition into approvals.
The data center boom draws daily headlines. Thousands of large‑scale projects are currently planned or under development across the U.S., while pushback continues to build from the communities asked to host them.
This heightened attention is reflective of what’s coming: latest forecasts put five‑year electricity peak demand growth seven times higher than it was in 2022, and data centers are on the hook for over half that. With electricity rates rising faster than inflation, hitting many households hard, these factors put data centers squarely at the center of today’s grid reliability and energy affordability conversations.
We need creative solutions to tackle the financial concerns for residents and enable this critical growth industry to continue to move forward.
The solution starts at home
What if one answer lies in the direct install energy efficiency measures we already bring to thousands of homes and businesses every year?
The premise is straightforward. Water conservation programs address a top concern communities raise about incoming data center projects, providing items like new low-flow bathroom installations and high-efficiency washing machines.
Residential energy efficiency direct install programs can provide households with items like heat pump water heaters and even solar panels. As a result of these measures, we could:
- Lower households’ energy and water costs
- Deliver tangible comfort benefits to residents
- Ease community concerns, especially when combined with early outreach (see the first blog in our Data Center series for more)
- Offset a portion of the energy load used by the data center
Data-backed modelling
Early modelling by analysts already demonstrates how effective it can be when hyperscalers work directly with energy efficiency programs. Policy Group AnnDyl modelled a scenario in which, by investing in insulation, air sealing, and smart thermostats for nearby households, a hyperscaler responsible for a 200 MW data center could offset 10% of its peak load and generate about $3 million in annual customer savings.
Other analysts have taken a wider, hypothetical view that hyperscalers could actually meet one-third of the nation’s projected additional capacity needs simply by paying for heat pumps in households with inefficient electric heating, cooling, and water heating.
A neighborly agreement
Energy efficiency programs offer a tangible, community‑centered way to address the near‑term effects of data center growth. This is a pivotal opportunity for hyperscalers to be involved directly at the energy efficiency program level to address energy load concerns impacted by data centers in a meaningful way and be good neighbors to their surrounding community.
As these efficiency investments develop positive public sentiment, the next step is a community benefit agreement (CBA). CBAs can provide a framework for ongoing dialogue and accountability. Community concerns remain front and center as projects move from proposal to operation, offering reassurance to residents and a clear path through local approval processes for developers.
Developing partnerships that last
As North America’s largest energy solutions provider, we see a huge potential for energy efficiency within this crucial facet of the data center story. Such a targeted focus on local communities is a compelling first step to building a partnership that addresses local affordability concerns while supporting the continued growth of this critical digital infrastructure.