Lawmakers seek ways to prevent data centers from straining Illinois’
power grids
[April 10, 2025]
By Leonardo Pini and Medill Illinois News Bureau
SPRINGFIELD — Illinois has been at the forefront of the data center
boom, but state lawmakers are working to gauge and mitigate the impact
these centers have on climate and energy consumption.
In the last two decades, data centers have multiplied due to increased
demand for cloud computing, information storage and data processing.
However, data centers now also serve AI and cryptocurrency mining, which
puts new digital coins into circulation and enters transactions on the
blockchain.
Powering these data centers is costly, consuming large amounts of water
and energy. The growth of this business has prompted concerns about the
impact on the environment and the electricity grid, including rising
costs for rate-paying consumers.
State Sen. Steve Stadelman, D-Rockford, chair of the Senate Committee on
Energy and Public Utilities, has filed legislation that aims to gather
data on the industry to determine the impact on energy and water usage
and prevent them from putting too much strain on Illinois’ power grids.
“As data centers continue to multiply, they are putting an incredible
strain on the grid,” he said. “And this legislation is trying to ensure
that residents are not bearing the rise of this energy cost caused by
the booming of this industry.”
Under Stadelman’s Senate Bill 2181, companies that operate data centers
in Illinois would need to report their annual water and energy
consumption to the Illinois Power Agency beginning next spring under
threat of $10,000 fines for non-compliance. The IPA would then
synthesize the data into annual reports to answer the question of
whether residential ratepayers in Illinois are, in effect, subsidizing
data centers, along with the environmental impacts of the industry.
Across the U.S., utilities and grid operators are worried by the
increased demand of electricity needed for data centers, and some have
proposed delaying the closure of fossil fuel plants to support that
demand, setting back environmental goals.
A January study by Frontier Group, a coalition of environmental and
consumer groups, found at least 17 units at seven fossil fuel plants
have seen their planned closures delayed — or are at risk of being
delayed — due in part to increased demand from data centers. Most of it
is happening in Virginia, where “Data Center Alley” is located, and
nearby Maryland and West Virginia.
Stadelman cited similar environmental concerns about Illinois’ goals
under the 2021 Climate and Equitable Jobs Act (CEJA), which requires the
state to shift to 100% clean energy by 2050. He worries that
indiscriminate expansion of data centers could hamper Illinois’ ability
to meet that deadline.
“When we passed CEJA, no one anticipated the impact of data centers,”
Stadelman said. “That is going to have an impact on our ability to meet
our energy demands with these data centers.”
The proposal also calls for the agency to suggest legislative solutions
“to mitigate any negative impacts of data centers on rate-paying
customers.”
But SB 2181 has not yet received a hearing — or any co-sponsors —
despite agreement from fellow state Sen. Laura Ellman, D-Naperville,
that data centers’ resource usage could become a problem for Illinois.
Trying to regulate the business, though, could be “somewhat tricky,”
according to Laurance Lewis, senior advisor at Metro Edge Development
Partners, a Chicago commercial real estate firm focused on data center
development.
All data centers are not the same, Lewis pointed out. There are both
“hyperscalers” and “colocation” centers. Hyperscaler data centers are
usually owned and operated by one company, such as tech giants like
Google or Amazon. Colocation centers, on the other hand, rent out space
to smaller companies, which could make it difficult to collect data on
resource usage.
“If you are a data center landlord of a retail colocation facility, you
have multiple tenants. Some of their energy and water consumption may
not be metered precisely” Lewis said, noting that poorly crafted
legislation could be “unduly burdensome.”
An October study published by the Center for Secure Water at the
University of Illinois found that hyperscalers can use up to 550,000
gallons of water per day, while smaller data centers can consume up to
18,000 gallons per day.
However, Lewis argued that many critiques on water consumption are
“overblown,” claiming the data center industry is “self-regulating” and
trying to find solutions, “such as a closed-loop water system that does
not require millions of gallons of water.”
Recently, the need for such large expenditures of resources by U.S. data
centers has been called into question with the emergence of new Chinese
AI large language model “Deepseek,” which reportedly consumes less water
and power than Open AI and other competitors.
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Expansion underway at a data center owned by CyrusOne in Aurora.
(Capitol News Illinois photo by Andrew Adams)
Cushman and Wakefield, a global real estate services firm with a Chicago
office, assesses that Chicago’s metro area currently hosts 1.2 gigawatts
of operational capacity, with 169 megawatts under construction and about
2.6 gigawatts already planned in upcoming years.
Nevertheless, a comprehensive study to estimate data centers’ impact on
the electricity grid is difficult to find. The rapid boom of data
centers in recent years means their impact is still up for
interpretation.
In the meantime, data centers are multiplying. The Chicago Tribune
reported last month that a new data center in Minooka, 40 miles
southwest of Chicago, could be opened by California-based Equinix Inc.
by 2034. The new structure, the Tribune reported, will need 3 million
gallons of water per day and 700 megawatts of power.
Weighing the economic benefits
As in many other municipalities, local leaders and residents are
weighing the economic benefits of the project — including new jobs and
tax revenue — against possible environmental tradeoffs. But absent state
action like the data collection called for in Stadelman’s bill, those
environmental factors are currently difficult to quantify.
Andrew Chien, director and founder of the Center for Unstoppable
Computing at the University of Chicago, believes that in the meantime,
“planning is always important.”
“In Virginia, for example, they are building fossil fuel generators
alongside renewables because they did not have an adequate plan to
support the demand of power data centers required through renewable
energy,” said Chien, a professor at the University.
But he pointed out that Illinois has a different mix of energy sources
than Virginia, owing to the state’s 11 reactors at six nuclear plants —
the most of any state — “and ample wind and solar resources.”
On this note, Lewis agrees with Chien: Illinois is different from other
states, as Illinois’ energy market deregulated nearly 30 years ago,
opening it up “to the entire country to procure energy,” he said.
“Going back to fossil fuels is less likely to happen in Illinois than in
a regulated state,” Lewis said. “There are solar projects in DeKalb, for
example, some wind projects and new technology coming in the market like
hydrogen fuel cells and Dairy Renewable Natural Gas. There is a general
sense that fossil fuel can only take us so far.”
While the coexistence of technological innovation amid the shift towards
renewable energy has proved problematic in other parts of the country,
Illinois legislators think it is still early enough to tackle this
issue.
Rep. Carol Ammons, D-Urbana, chair of the House Energy and Environment
committee, said it’s “critical” for state policy to “achieve this
balance” allowing those two sectors cohabitate.
But environmental concerns are not the only possible pitfall for data
centers. Another concern is their impact on energy customers, who could
see the cost of their rates spike in upcoming years. Sarah Moskowitz,
executive director of the Chicago-based consumer advocacy group Citizens
Utility Board, said she worries that Illinois’ energy capacity may be
monopolized by data centers in the near future.
“In Illinois, we have put together solutions to ensure adequate energy
supply for citizens through ratepayer support for nuclear power plants,”
Moskowitz said, referring to fees approved by the General Assembly in
the last decade that support the continued operations of nuclear plants
in the northern half of the state as a bridge to expanding more
renewable energy.
“Those supports do not expire for a couple of years, but now is the time
to start working on strategies to ensure that the power generation that
citizens need is not all gobbled up by these single, powerful
customers.”
Moskowitz warned that the growth of data centers could cause higher
prices for energy for consumers and cautioned that “the entities that
control the information about data centers are the entities that benefit
the most from inflating demand projections.”
“Suppose those data companies can outbid everyday ratepayers for
electricity generation,” she said. “In that case, that is removed from
the overall markets and exacerbates real or perceived energy supply
shortages that drive up market prices.”
Leonardo Pini is a graduate student in journalism
with Northwestern University’s Medill School of Journalism, Media,
Integrated Marketing Communications, and a fellow in its Medill
Illinois News Bureau working in partnership with Capitol News
Illinois.
Capitol News Illinois is
a nonprofit, nonpartisan news service that distributes state
government coverage to hundreds of news outlets statewide. It is
funded primarily by the Illinois Press Foundation and the Robert R.
McCormick Foundation. |
