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Gov. Bob Ferguson’s executive order establishing a data center workgroup cites the need to balance “economic development, state and local tax revenue, energy use, and environmental responsibility.” (GeekWire File Photo / Dan DeLong)
Washington Gov. Bob Ferguson announced that he’s forming a workgroup to dig into the impacts of data centers in the state. Tech giants including Amazon and Microsoft are deploying the computing facilities worldwide at a rapid clip, with plans to spend billions on construction in the next year alone.
In an executive order on Tuesday, Ferguson lists some of the pros and cons of data centers: While they help drive the state’s digital economy, they also require huge amounts of energy. The sites create jobs and boost tax revenue in rural communities, but environmental impact and sustainability challenges need to be considered.
The workgroup will need to make sense of shifting projections in data centers and AI. The Chinese company DeepSeek’s recent release of a much more computing- and energy-efficient AI chatbot has called into question the need for massive data center deployments. But the use of AI tools is certain to keep expanding.
In 2023, Washington ranked among the top 10 U.S. markets for data center leases, according to CBRE. The region is attractive for its renewable energy from hydroelectric dams and other sources; for its relatively low electricity rates; and for its sales and use tax exemption program targeting data centers.
But energy demand is outpacing supply in the state, and big data center operators, or “hyperscalers,” keep using more electricity, according to Washington utilities.
“We are short today. The hyperscalers are growing today,” warned Josh Jacobs, Puget Sound Energy’s vice president of clean energy strategy and planning at a conference in November. “They’re gobbling up available hydro [power] and carbon-emitting resources that are on the market today.”
It’s already getting harder to find spots for data center infrastructure in the Pacific Northwest, CBRE reports.
In Central Washington, “hyperscalers and data center developers continued to comb the region for suitable sites,” an August 2024 CBRE report states. “Data center owners are exploring alternative power sources, such as combinations of solar, batteries, wind and biofuels.”
The Washington Department of Revenue will convene and oversee the governor’s workgroup. It will include representatives from state departments including Commerce and Ecology; the Utilities and Transportation Commission; electric utilities; environmental, labor and industry groups; and others.
Under the executive order, the workgroup has until Dec. 1 of this year to submit its findings and recommendations.
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