Data centers are draining our pocketbooks, water, and Michigan’s future

Last year, Lansing politicians voted to hand massive, no-strings-attached tax breaks to Big Tech – ignoring warnings from experts, advocates, and everyday Michiganders to incentivize new investments in our state. 

Advocacy organizations, like Michigan LCV, fought that legislation every step of the way, warning data centers would drain public and natural resources, spike our energy bills, and fail to deliver on the jobs they promised. 

Now, the costs of the reckless decisions are coming into focus. 

For months, the debate about data centers – both in Michigan and nationally – has grown in scale and notoriety, especially as the impacts on communities across the country begin to become apparent. Data centers don’t just burn staggering amounts of electricity – sometimes as much as a small city – they also require enormous volumes of water to stay cool. A single facility can consume millions of gallons of water every day, and hyperscale facilities alone can use around 365 million gallons of water annually, equal to the annual usage of roughly 12,000 Americans. In states like Arizona and Oregon, increased water demand has already sparked local crises, forcing officials to choose between keeping taps flowing for families or fueling Big Tech’s servers. 

The stakes are only rising, especially with the widespread integration and use of Artificial Intelligence (AI) tools – one of the main drivers behind the push to build more and more of these data centers. AI requires massive amounts of computing power, and AI data centers are already responsible for over four percent of national electricity use. This share is projected to nearly triple by 2028. With AI tools like ChatGPT, Gemini, and Grok now mainstream (and based in the U.S.), each query runs on U.S. servers and adds to the electricity demand, pushing the grid to its limits. 

This surge isn’t theoretical – it’s already affecting energy bills for Americans. Electricity prices in the U.S. have climbed more than 30 percent since 2020, and studies warn of an additional eight percent increase nationwide by 2030. These rising costs largely stem from utilities being forced to build new infrastructure to meet AI-driven demand – costs that are being passed on to everyday people and communities. 

These concerns and consequences are shared and being felt globally. Across Europe, people are pushing back against data centers’ outsized water use, especially as the climate crisis drives droughts and water shortages. In the U.S., Virginia has become a flashpoint, with sprawling facilities devouring electricity, straining water systems, and disrupting previously tranquil communities – all while residents see little to no return on investment. 

Unfortunately, the crisis has arrived here in Michigan. Recent proposals across Washtenaw County look to place three data centers in Ypsilanti Township, Milan, and Saline, each threatening to strain local utilities and natural resources. The most controversial is a proposed $1.2 billion data center jointly undertaken by the University of Michigan and Los Alamos National Laboratory. Township officials have urged relocating the project away from the Huron River watershed and the predominantly Black communities nearby, citing noise impacts, rising utility costs, and added pressure on groundwater in an already overburdened neighborhood. 

All this comes amid a stark warning of the potentially devastating impacts of data centers on our Great Lakes. A new Great Lakes regional study found that data centers in Great Lakes states could consume more than 150 billion gallons of water annually, straining groundwater and sparking conflicts with other users like farms, industry, and residents. One facility alone may need millions of gallons per day to cool its servers, and water usage is projected to climb sharply in the next several years. 

As a state, we should be supporting innovation, but not without commonsense policy. If Michigan is going all in, we need serious guardrails: transparency about energy and water use, limits on subsidies and tax cuts, and protections against runaway energy bills and depleted resources for our communities. Anything less is setting us up to pay the price. 

Like many other states, Michigan is certainly starting to feel the effects of data center investment, except we’ve made ourselves more vulnerable. Our lawmakers locked in sweetheart deals with Big Tech without requiring companies to disclose electricity consumption. That means Michigan communities will face rising energy bills, new water shortages, and increased stress on our rivers and lakes unless something changes – all while billions in public money slip away in subsidies. 

The bottom line? Michigan is gambling with its most precious resources while families pay the price. Giving away billions in tax breaks to Big Tech while risking future water and energy crises is not economic development – it’s corporate welfare at the expense of Michiganders and our Great Lakes.