As the rapid expansion of artificial intelligence drives a need for more, ever-larger data centers, they present a range of opportunities and risks to communities. Although data centers can provide economic benefits, particularly local tax revenue, their physical size and resource-intensive operations can strain infrastructure and spark opposition.

Increased demand for electricity, which is one of the primary inputs to data centers, poses several risks for communities, including higher utility bills for households and businesses, the potential for overinvesting in new electrical infrastructure, and negative impacts on grid reliability and power quality. If left unchecked, these issues could exacerbate existing challenges in communities and further erode public acceptance of data centers.

Fortunately, communities, utilities, and data centers have an array of ways to meet data center energy needs while mitigating affordability and reliability risks. This can be done through investments at the data center facility (i.e., behind the meter), across the community, and at utility scale. This report outlines several strategies and then provides insights into their collective potential via two case studies. First, by applying desktop research, RMI illustrates how a combination of solar, battery storage, demand response, and virtual power plant technologies could offset nearly 65% of peak load for an anticipated 560 megawatts (MW) for new data center facilities in Memphis, Tennessee. Second, efforts in Wise County, Virginia, to support a data center by building a co-located solar plant on an abandoned mine underscore the potential for creative solutions when communities, companies, and utilities collaborate effectively.

Finally, this report details how local governments and communities can take advantage of these strategies and best practices:

• Develop an engagement plan and identify collective priorities: Local leaders should engage community members to understand their priorities related to data center development and formulate a plan.
• Enact beneficial local policies and programs: City and county officials can facilitate and accelerate the deployment of local clean energy resources by implementing a range of supportive policies and programs to meet the data center’s additional demand.
• Collaborate with the data center company: Communities should engage with data center companies early in the development process to share priorities and establish key areas of alignment.
• Engage local utilities, utility regulators, and legislators: In some cases, local leaders may also wish to engage with their utility, regulators, or legislators to unlock additional opportunities and establish common rules and procedures for data center development and regional large-load users more broadly.