U.S. Data Center Buildout Hits Obstacles--Speed Bumps or an Iceberg?

Written by John Egan for Industrial Info Resources (Sugar Land Texas)

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Summary

Local opposition has caused the planned construction of a small percentage of planned U.S. data centers to be cancelled or delayed. The pushback is at an early stage, but it may expand. Companies can work to defuse local opposition by practicing authentic stakeholder engagement.

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Data Center Buildout Changing Communities

It turns out that not every U.S. community is welcoming large industrial campuses of low, flat, grey buildings that hum 24/7 with the sound of thousands of servers performing millions of calculations every second, accompanied by the round-the-clock sound of industrial cooling systems needed to keep the servers cool.

Data center campuses come in all shapes and sizes, but the largest of them, Meta's (Menlo Park, California) Hyperion data center in Louisiana, will stretch out over an estimated 1,700 football fields. Removal of that much land from the rural Louisiana community of Richland Parish (population 20,000) means higher tax payments to state and local governments, probably, but a lot less land left over for parks or high school athletics.

Data centers use huge amounts of electricity, water and land. The largest data center campuses can change the face of entire communities.

Big Tech and data center developers reportedly plan to pour over $400 billion into building data centers in the U.S. this year, an amount so large that analysts, bankers and industry observers have started to speak of an overbuild that could lead to a glut and a meltdown. For more on that, see October 13, 2025, article - Data Centers: Is the Buildout Starting to Become a Bubble? More than a few observers have said a large plurality, if not a majority, of planned data centers will never get built in the U.S.

And, in fulfillment of Newton's Third Law of Motion--for every action there is an equal and opposite reaction--local opposition to data centers has sprouted up across the U.S. More Not in My Backyard (NIMBY)-ism than hostility to tech, per se, communities that oppose data centers are doing so for the same reason they opposed oil and gas fracking, construction of wind farms or building new power plants or transmission lines: land use, water availability, noise, lights and the impact all of it could have on the price they pay for electricity. Above all, opponents say they are worried about the future of their communities.

New Report Details Local Opposition

A new study from Data Center Watch, a project of 10a Labs (Washington, D.C.), an artificial intelligence (AI) research firm, said proposed data center projects have been blocked or delayed in Indiana, Kentucky, Georgia and South Dakota, among other states. In the second quarter alone, researchers there tracked "active opposition efforts" in 17 states, with 53 different groups taking action against 30 projects. Those opposition groups were successful in blocking two out of every three projects they protested, the report said, "underscoring the growing impact of organized local resistance."

"Q2 2025 marked a turning point in data center development risk," said the report, "Q2 2025 Update," issued last month. Between late March and the end of June, it said, "20 projects were blocked or delayed amid local opposition, affecting $98 billion in potential investment -- more than all disruptions tracked since 2023. Political, regulatory and community opposition is accelerating in both scale and frequency."

The report continued: "The rollback of tax abatements is emerging as a critical political risk for hyperscale data centers. Lawmakers are increasingly questioning the value of data center subsidies, citing concerns around energy use, fairness and infrastructure impact. This shift has contributed to the suspension of major projects in Minnesota and South Dakota."

Dozens of Projects Cancelled or Delayed

In recent months, consumers have expressed rising concern over affordability issues, including electricity. In the just-concluded off-cycle election season, candidates with strong "affordability" messages last month were elected in New Jersey, Virginia and Georgia. The 10a Labs report suggests that opponents increasingly are coordinating efforts across projects and state lines, using "affordability" as one of several rallying cries.

Industrial Info is tracking 112 data center projects in the U.S. that have been cancelled or delayed. The value of these projects, which were scheduled to begin construction between January 2025 and December 2027, is about $58 billion. The states with the largest dollar value of cancellations or delays are Arizona, Virginia, Ohio and Kentucky. Other states with cancelled or delayed projects include Colorado, California, Georgia and Florida.

Click on the image at right to see a graphic of the states with the largest dollar value of data center cancellations or delays.

Other Data Center Projects Steaming Forward

Although the number and dollar value of cancelled or delayed data center projects is meaningful, far larger is the number and value of planned data centers that are moving forward.

Industrial Info is tracking about 1,697 active data center projects with a planned construction kickoff date between January 2025 and December 2027. The total investment value (TIV) of these projects is slightly over $1 trillion.

The states with the largest dollar value of planned data center construction projects are Texas, Virginia, Georgia and Arizona.

Click on the image at right to see a graphic of the states with the largest dollar value of active data center construction projects.

Industrial Info does not expect all of those planned data center construction projects to be built according to their schedules. Some will drop out for one reason or another, such as inability to secure financing, land, equipment, water rights, skilled labor or local permits. But in this hot sector, other projects will be proposed.

Regulators Vigilant, Long-Term Outlook Positive

State utility regulators, who must review utilities' requests to increase prices, have been keeping a close eye on utility capital spending plans, particularly those tied to serving proposed data centers. Presumably they also hear local residents' concerns about the affordability of electric service. As of late 2025, regulatory reforms are gaining traction: over 12 states now require large loads to cover 80-100% of marginal costs via prepayments and exit fees, thus ensuring residential customers don't get stuck with a disproportionate share of the costs to serve new data centers, or pay for projects that were abandoned.

These regulatory changes, made to protect existing customers, could further winnow the more speculative proposed data center plans by forcing developers to make a financial commitment where they had not had to do that before.

David Pickering, Industrial Info's vice president of research for Industrial Manufacturing, takes a long-term view on data centers.

"Do they have the capacity to transform every aspect of our lives, like the introduction of the automobile, the computer and the internet? Yes, absolutely. Will there be missteps and bumps in the road? Without question. Are we in a data center bubble? I believe so."

"But it's not so much what happens to Big Tech, data center developers and the Trump administration as how they respond," continued Pickering, who has 36 years of experience with Industrial Info. "Will they try to kill a mosquito with a howitzer? Or will they take the hint that maybe, just maybe, they need to do a better job engaging the local stakeholders, even working with them in a collaborative manner to co-create the future of the affected community?"

"In the beginning, data centers were welcomed with open arms: billions of dollars of local investment creating lots of construction jobs and a small number of high paying permeant jobs," he reflected. "However, as the movement to more data centers has grown rapidly, reservations have cropped up primarily around energy usage more than anything else. Especially in those regions of the country where clusters of data centers have been built, or are proposed to be built, like in Northern Virginia."

Pickering said significant change of any kind is like a pendulum: First it goes too far in one direction, then goes too far in the other, but eventually it settles down in middle.

"In the race for gather sufficient quantities of advanced computer chips, engineers and programmers," he said, "those who want to develop data centers in the U.S. should think harder about bringing stakeholder engagement professionals on board. Social license to operate is real, as some firms already have learned."

Key Takeaways

• Development of data centers continues to be the hottest sector of the U.S. economy.
• But more than 100 planned projects have been cancelled or postponed due to local opposition.
• This opposition comes as U.S. consumers continue to be in a sour mood over the cost of living and, increasingly, the price of electricity. This mood may predispose some to join protests against plans to build new data centers.
• Companies can address this concern by practicing authentic stakeholder engagement.

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About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 trillion (USD).