LANSING, Mich. (Michigan News Source) – As Michigan communities debate whether to welcome data centers, a new report from the nonpartisan Citizens Research Council of Michigan suggests both supporters and opponents may be overstating their case.
The report concludes that data centers are neither the economic jackpot often advertised by developers nor the environmental catastrophe sometimes portrayed by critics. Instead, the reality falls somewhere in the middle.
The jobs aren’t as impressive as advertised.
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One of the report’s biggest findings is that data centers provide relatively modest long-term economic benefits compared to other major developments. While construction projects can employ hundreds or even thousands of workers for a period of time, the facilities themselves require surprisingly few permanent employees once they are operational. Unlike manufacturing plants, they also generate limited supply-chain activity and fewer spin-off jobs in the surrounding economy.
That doesn’t mean communities receive no benefit. Local governments can collect considerable property tax revenue, and some projects include community benefit agreements that fund parks, public safety, housing initiatives, or other local priorities. But the report cautions policymakers against viewing data centers as a long-term economic development cure-all.
Water and electricity concerns may be overstated.
Opponents of large data centers often raise alarms about water consumption and power demand. The report acknowledges those concerns but concludes Michigan is generally well-positioned to handle both. Researchers found Michigan’s water resources are unlikely to face significant threats from data center development because the state is not generally water-stressed and already has regulations designed to prevent unsustainable withdrawals.
The report says that many facilities also use closed-loop cooling systems that consume very little water. A closed-loop cooling system in a data center continuously circulates the same water or coolant through sealed pipes, reusing it to remove heat while minimizing water consumption and evaporation.
In addition, while hyperscale data centers can consume enormous amounts of electricity, the report says Michigan’s regulatory framework and utility planning processes are currently designed to prevent new developments from causing widespread reliability problems or unfairly shifting costs onto other customers.
How hyperscale data centers get their electricity
Powering a hyperscale data center often requires a direct connection to the high-voltage transmission grid – the bulk-power system that supplies electricity across entire regions – rather than the local distribution lines that serve homes, schools, and most businesses. Because these facilities can consume as much electricity as a small city, utilities may require dedicated infrastructure such as new substations, transmission upgrades, or additional generation capacity. Supporters say this approach helps protect local electric systems from heavy demand while allowing utilities to require data center developers to bear much of the cost of grid improvements that can increase overall capacity and reliability for the broader region.
Not all data centers are alike.
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Hyperscale data centers are the very large, highly scalable data centers built to support massive amounts of computing, storage, and networking capacity. They are typically operated by major cloud and internet companies such as Amazon Web Services, Microsoft, Google, and Meta.
While these massive projects have attracted recent attention, they represent only a small segment of Michigan’s data center industry. The report notes that about 70 commercial data centers are already operating in the state, many for more than a decade, while hundreds of additional smaller “enterprise” data centers may be housed within government agencies, universities, hospitals, and private companies that operate facilities exclusively for their own use.
The report calls data centers a “critical component of the global economy” and “indispensable to society.” The report goes on to say that the task for policymakers is to “evaluate trade-offs to best capture the benefits of these tools while minimizing harm.”
The noise issue is real.
Where the report does raise a red flag is noise pollution. Unlike concerns about water or electricity, researchers describe noise as the most significant negative impact associated with large data centers. Residents living near facilities often report a constant low-frequency hum that operates around the clock. The sound can be felt as much as heard and may persist even when facilities comply with traditional noise standards.
The report notes that prolonged exposure to this type of noise can contribute to chronic stress and related health problems. Because many existing local noise ordinances were written before the rise of hyperscale data centers, they may not adequately address the unique and constant sound produced by these facilities. As a result, researchers recommend that local governments pay particularly close attention to noise mitigation during the permitting process and adopt stricter standards when necessary.
A case-by-case decision.
The report’s overall message is simple: don’t panic, and don’t buy the hype from either side. Rather than treating all data centers the same, researchers recommend evaluating each proposal on its own merits. Smaller data centers, which often resemble ordinary office buildings, have operated in Michigan for years with little public attention, while larger hyperscale developments may warrant closer scrutiny because of their size and resource demands. Ultimately, the report suggests communities should focus less on worst-case scenarios and broad promises and more on the specific details, impacts, and benefits of each individual project.
