Democrats’ midterm gains put US data centre boom under pressure

Democratic gains in the midterm elections have put the US data centre boom under pressure as incoming governors promise stricter regulations and voters widely supported measures in favor of data centre restrictions during the elections. Democrats gained five governorships in Texas, Georgia, Ohio, Iowa, and Nevada, which together hold 37% of planned US data centre capacity, according to Cleanview data.

Texas, with the largest share at 22.8%, has a Democrat, Gina Hinojosa, who has pledged a moratorium on construction and more community input into site selection. Georgia and Ohio also have Democrat incoming governors, Keisha Lance Bottoms and Amy Acton, who have also proposed data centre construction pauses. Governors hold significant influence over data centre locations and construction, appointing utility regulators who control electricity prices and grid connections, and influencing tax incentives for investment.

They also shape state-level infrastructure and development policy, though local authorities have important planning powers. Democrats' victory in seven Senate seats in states holding 32% of planned data centre capacity gives them more oversight of the AI sector. However, analysts expect gridlock rather than significant change during President Trump's remaining term.

The data centre debate is now intertwined with other issues like the cost of living, groceries, and healthcare. While data centres alone did not decide the elections, the results signal a national wave of skepticism towards data centres in political offices, which is crucial for an industry racing to expand. For tech investors, the new governors in states like Texas will have a significant impact.

Despite growing opposition, the pace of data centre construction in the US has remained high, with a 48% increase in construction between December and June, according to Cushman & Wakefield. The extent to which this pace can continue is now a pressing political question.