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Michael Dunne: I’m Michael Dunne. I’ll be honest: I don’t know which 180-degree turn in public opinion has happened faster, the Ducks or data centers. With the Ducks, we’ve gone from national championship certainty to wondering if we’ll even have a winning record. With data centers, it’s gone from “let’s build more and more” to “let’s keep them out of the state entirely.” Indeed, data centers are the hot-button topic these days, and probably not in the way their corporations wanted. Today on the show, our colleague at OPB joins us to discuss her reporting on a new study that shows just how much data centers are costing Oregonians in electricity, water and goodwill. What was always promised as an economic boom certainly looks like a fizzled dream. But with AI looming over everything, data centers aren’t likely to go anywhere soon. Kyra Buckley is a business reporter for OPB. Kyra, it’s always great to talk to you. Thanks so much for coming on.
Kyra Buckley: Thanks for having me, Michael.
Dunne: A lot of times we talk about the WNBA, but this time we’re talking about the subject that seems to be on everybody’s lips: data centers. In your great piece, researchers, for the first time, really quantified the size and scope of data centers in Oregon, a state where data centers have really planted their flag. Give us some of the details. How big, how much, all that stuff.
Buckley: Yeah. I asked researchers why this report was so important, and one of the things they said is that as data centers continue to grow in interest among the public, there continues to not be great information out there. So the folks at ECONorthwest and the University of Virginia were funded by the Lemelson Foundation to go out and find some of this information. They found that there are 111 operational facilities, and of those, 67 are considered hyperscale data centers. Those are the big ones, the size of multiple football fields, and they’re mostly concentrated on the eastern side of Oregon. That’s what a lot of people think of when they think of data centers: those huge hyperscale facilities, normally run by an Amazon or a Google. But researchers also found that there are 32 planned facilities. A lot of those are going to be smaller, and they’re going to be here on the western side of the state. I’m in Portland. They’re essentially data centers that companies might rent space in to store their data. Of course, all of this has become more of an issue as artificial intelligence has boomed, and you need a lot more storage and computing availability for AI. That tends to happen at the big hyperscale facilities, and we already have a lot of those in Oregon. To give you a sense of the space, right now we have 22.1 million square feet of gross building space.
Dunne: Wow.
Buckley: And that’s about 200 football fields.
Dunne: So, 200 Autzen Stadiums.
Buckley: Well, the field, yeah. The planned data centers will add nearly 7 million square feet. That’s still a lot, but it shows that we already have a huge footprint. So that’s the top line of what the researchers found when it comes to size. We can get into more. They also looked at electricity, water usage and employment. Again, that’s information we didn’t have access to, or didn’t have all in one place, before this report came out.
Dunne: Well, let’s take those one at a time. Let’s start with what I think is on the minds of a lot of people: the resources these data centers command. Let’s talk about water and energy. What did the study find?
Buckley: First, I’m going to start with the disappointing part: The researchers had a hard time finding information about water use, and this is a huge issue, especially for our communities in Eastern Oregon and our more agricultural communities, where water is becoming a scarce resource. I’m going to read you exactly what the report authors wrote: “No comprehensive facility-level data set consistently identifies water withdrawals, consumption, water sources, cooling technologies or seasonal demand.” They also found that for the facilities where data was publicly available, the definitions and reporting practices varied so widely that it was really hard to make comparisons, and they didn’t feel comfortable putting out comprehensive data on water usage. So that’s a huge bummer. Of course, there is still some information out there, and shout-out to my colleagues at OPB and other outlets across the state who are talking to communities and trying to get that information at the county level. But at the state level, we don’t have it. So that’s the bummer for water. Now let’s talk about electricity, which is one of my favorite topics. Michael, you may not know this about me, but I spent a few years in Houston covering the energy industry, so I was happy to put my energy reporter hat back on and dive into the electricity. I was astounded at how much electricity data centers are using and will continue to use. Researchers found that data centers accounted for around 23% of Oregon’s retail electricity sales. That’s jargon for saying that right now, data centers are consuming nearly a quarter of Oregon’s electricity demand, and that’s going to go up. I’m used to looking at electricity in megawatts or gigawatts, but we’re going to be talking in terawatt-hours. I had to look up what that even means. One terawatt-hour of electricity powers about 100,000 homes for an entire year, and researchers found that by the end of this decade, data center demand in Oregon could increase to 25 terawatt-hours. That’s enough electricity to power 2.5 million homes.
Dunne: Wow, that’s amazing. That truly is amazing. So, peeling the onion back a little bit here: Is that one of the reasons Oregon has been such a pro-data center state for some time? Our electricity is relatively cheap compared to other states, and of course, in Eastern Oregon, land is cheap for such big centers.
Buckley: Yeah. First of all, in the middle of the last century, Oregon built a bunch of dams. We have hydroelectricity, and that is not how most states generate their electricity. For decades, that really helped attract these big data centers that need a lot of electricity. They need it cheap, and hydroelectricity is a renewable resource, and it’s plentiful in Oregon, or at least it has been. You mentioned land. The other reason is tax breaks. Essentially, a lot of Oregon communities said, “Hey, we need some sort of economic driver,” and most of this happened before the AI boom. They said to big corporations, “Hey, if you want to put your data center here, we’ll give you a tax break.” It tended to be, “We’ll give you a break on your annual taxes, but then we want something in return. Help employ folks, maybe give money to the schools.” What has shifted during that time is the AI boom, and also this push to electrify everything to help with the climate crisis. Both of those things have pushed up demand for electricity, and AI also pushes up demand for these data centers. So a lot of conditions have changed since most of these data centers made their mark in Oregon.
Dunne: As you mentioned, data centers take a tremendous amount of electricity. Is that sustainable? You’ve talked about growth, how big they are and more coming online. Is there concern, and does this report quantify whether we’ll be able to provide the electricity this industry needs going forward?
Buckley: Yes and no. Let me start by saying that our energy infrastructure here in Oregon and across the country is in need of major upgrades. If we want to avoid the catastrophic effects of climate change, we need more renewable energy. We need more large power lines to get that energy places, and they need to be able to withstand major storms and other weather events. Right now, we have an aging infrastructure. More homes, cars and businesses want electricity, and these data centers also want a voracious amount of electricity. I have heard from many researchers and economists who look at this issue that they are concerned about what happens if our grid is not continually maintained and upgraded, and I think that concern is rightfully placed. I don’t want to say that we don’t have the ability, but we definitely will need more infrastructure. I’ve done a lot of reporting on the challenges of building big infrastructure like that. It starts with being able to get the right skilled workers and resources, and it ends with being able to get the permits and the blessing of landowners. We know here in Oregon that those things can all be very challenging.
Dunne: Looking at aerial photography of a data center, you see this massive structure, and I sometimes wonder about people who haven’t followed this issue, and perhaps even the policymakers who approve them. It’s great to look at these huge buildings and think, “Wow, that’s bringing a lot of employment into this region.” But data centers are kind of a conundrum, aren’t they? They’re huge, but what happens once they’re built? Talk about the employment picture.
Buckley: Yeah, it’s not very much. Less than 1%. In fact, less than half a percent. Just 0.2% of the state’s roughly 1.9 million-person workforce works for data centers.
Dunne: Wow.
Buckley: Now, that is direct employment. That number is 2,630 Oregonians in data centers, and of those, 2,205 are in Eastern Oregon. That gets at the outsized impact data centers may have on these Eastern Oregon communities, where a higher share of the workforce may be employed by data centers than in, say, Washington County, which is the big cluster here on the western side of the state. So it’s a bit of a tale of two data center industries in Oregon. The eastern side of the state is more built out with these large facilities, and the western side of the state is growing, but only about 400 people directly work for data centers here on the western side. That’s a very small number. Now, I do want to say that the construction and maintenance of a data center is done by a lot of third-party contractors, so data centers do generate opportunities in an area for folks who work in different trades or who are contractors. They certainly have a large economic impact. But when it comes to direct employment, there just aren’t a lot of people on site from day to day.
Dunne: Kyra, you talked about plans for more data centers on the western side of the state, and we’ve done many stories about the western and eastern divide in Oregon, rural versus urban and whatnot. There’s a city close to you, Hillsboro, that used to very much court data centers. Its city council put a moratorium on them. Is it even possible for Western Oregon to court more data centers if more and more municipalities say they don’t want them?
Buckley: Well, I think we’re going to find out. I think this is an inflection point right now. We are in an election year. I gratefully don’t cover politics day to day, but my colleagues certainly do, and they also have been doing a lot of research on data centers and hearing about it a lot. Again, a lot of things changed with the AI boom and the awareness of how many resources these data centers use, and so there’s a lot of public pushback. A lot of communities have switched from giving tax breaks and courting these companies to putting moratoriums in place. I think there are also a lot of challenges right now to developing in Oregon for any business. So yes, I think companies are going to keep wanting to put data centers here, because we still have a massive amount of electricity generated from water and other renewable sources. It’s still relatively cheap. There are communities still offering tax incentives. But as the public continues to push back and policymakers continue to consider these moratoriums, and, by the way, Oregon has a big tax burden for its businesses, I think it’s going to be a lot harder for companies to justify building data centers here. Honestly, we don’t know how the public may or may not react to that. That may be what the public or policymakers are looking for in the future, but I think they’ll be hard-pressed to find massive support for that among the business community, which is looking for ways to court businesses here. If it’s not data centers, they’re going to look to another industry.
Dunne: I totally understand you’re not a political reporter, but I am curious, as a business reporter: Have you seen an industry go almost 180 degrees in terms of popularity? It seemed like data centers here in Oregon were a poster child for growth and innovation, and all of a sudden, it seems like nobody wants them. I’m curious if you’ve seen other industries that had that kind of whiplash effect.
Buckley: Not to this degree. When we’re talking about AI and the computer chips that you need, we are talking about billion- and trillion-dollar industries. Nvidia is the first company to ever hit a trillion dollars. These are massive amounts of money. This is huge. I will say that there have been some industries, yes. I think back to my time covering energy. The solar power industry went from really being a darling among renewables to facing a lot of the issues data centers face, where a lot of people were like, “Oh, yeah, we want more renewable energy, but we don’t want it in our backyard or in our neighborhood.” So there have definitely been smaller-scale industries that have been political and economic darlings, and then that’s turned. But I don’t know if they’ve been bringing in as much money and innovation and change to the way we live our daily lives as AI and data centers do.
Dunne: OK, Kyra, my last question for you is a tax question. Are data centers a positive for Oregon with regard to something like property taxes, or is that a mixed bag?
Buckley: It’s a mixed bag. Here’s the thing: We do not know if data centers would have located here without tax incentives. When the researchers analyzed taxes, they saw tax exemptions likely ranging from $230 million to $450 million for data centers. On the flip side, it looks like Oregon took in about $60.2 million in property taxes from data centers. You can’t do a one-to-one comparison on that, because again, we don’t know. Without the incentives, data centers may not have located here, and we wouldn’t even have the $60 million. But we also can’t make that distinction. So again, researchers found that it was hard to come up with consistent numbers for this. They were mostly able to find that $60.2 million came in from property taxes, and local communities also probably got some other taxes and fees. But otherwise, drawing conclusions around how much Oregon may have saved without data centers was just not something they were able to do.
Dunne: She is Kyra Buckley. She covers business for OPB and does an amazing job. Kyra, always great to talk to you. Thanks so much.
Buckley: Thanks for having me. It was a pleasure.
Dunne: That’s the show for today. All episodes of “Oregon on the Record” are available as a podcast at klcc.org. Before we go, it’s been a while since we read listener comments about past shows, so I thought it’d be good to read some of them now. On our story about how the Trump administration wants to allow more road building and logging in our national forests, Barbara says, “Bulldozing roads through old-growth forests is not the answer to wildfires. Clear-cutting is also not the answer. Carefully planned thinning has been found to be the most effective.” On our story about a local nonprofit helping families with postpartum depression, Jane says, “I am so grateful my postpartum depression was so mild. I had a few intrusive thoughts, but never seriously, which is wild, because I was fairly well rested at the time and I had a good support system. But I can easily see how quickly it could have spun out of control. My heart breaks for people dealing with this.” On our story about South Eugene High School having trouble fielding a football team, Norma said, “Back in the day, they were the powerhouse of the league. It’s so sad to see they can’t even field a varsity team.” But Daniel says, “I had a knee replaced recently due to a high school football injury. Suffered my whole adult life with it. Why? Teach whole-life sports, not ones that injure kids for life.” On our story about how the state is not transparent about low-income housing costs, Stephen writes, “I wouldn’t be surprised if our regulatory burden for housing adds the most costs in the nation.” As always, thanks for your comments. If you’d like to reach out to us, send us an email at questions@klcc.org. Monday on the show, we’ll get an update on the plight of our Oregon coast gray whales. I’m Michael Dunne, host of “Oregon on the Record.” Thanks for listening.
Editor’s note: In this episode, Kyra Buckley said Nvidia was the first company to reach $1 trillion in market value. PetroChina was the first, in November 2007, and Apple became the first U.S. company to do so in August 2018. Nvidia passed $1 trillion in May 2023 and later became the first company to reach $4 trillion and $5 trillion.
