Democrats’ midterm gains put US data centre boom under pressure

Democrats' recent victories in midterm elections have cast a shadow over the rapid expansion of US data centres, as incoming governors pledge stricter regulations and voters favor measures related to data centre construction. The party secured five governorships in Texas, Georgia, Ohio, Iowa, and Nevada, states collectively housing 37% of planned US data centre capacity.

Notably, Texas alone contributes 22.8% of this capacity. The incoming leaders in these states have indicated intentions to impose moratoriums on new data centres and seek greater community involvement in their placement. This development is significant, as governors wield substantial influence over data centre location, power infrastructure, and tax incentives.

Their decisions, however, are often subject to gridlock due to President Trump's veto power. While Democrats gained control of seven Senate seats in states accounting for 32% of planned data centre capacity, analysts anticipate limited change until the new Congress gains full authority. The backlash against data centres was also reflected in the direct ballot measures, with voters in 38 local jurisdictions across 10 states approving 41 measures, primarily moratoriums.

Despite data centres not being the primary concern for voters, who focused on issues like the cost of living, groceries, and healthcare, the debate surrounding data centres has become intertwined with these concerns. Rising electricity bills and who ultimately finances infrastructure to support the AI boom have emerged as key issues.

This shift in political landscape poses challenges for an industry in a race to expand. Investors might now be more interested in the actions of the new governors in states such as Texas, as the pace of data centre construction, which surged 48% between December and June, remains a contentious political matter.