The city of Atlanta is swiftly emerging as a major hub for data centers in the South — notwithstanding efforts from local officials to ban development in certain areas out of fear that they could strain the power grid.
The controversy is the kind of struggle that is likely to occur in cities and states around the nation as electrical grids are strained to accommodate the large facilities, filled with hundreds of thousands of computer servers holding and processing data, that power Zoom meetings, social media posts, and recipe queries in ChatGPT.
Earlier this month, the Atlanta City Council approved two pieces of legislation limiting data center development. Developers are now barred from building data centers within half a mile of rail stations for metro Atlanta’s transit system MARTA and along the Beltline, a 22-mile trail and transit loop around the city.
The legislation was first introduced in May by Councilmen Matt Westmoreland and Jason Dozier, who claimed the data centers shortchanged residents. Specifically, they argued that facilities fail to generate jobs and reduce opportunities for housing and green spaces while also placing stress on the local electric grid.
At the time, Dozier said the goal was to foster a place for people in Atlanta, rather than machines. It falls in line with similar bans approved by the City Council in recent years, including prohibiting storage facilities, drive-thrus, and gas stations near the Beltline.
“By prohibiting new data centers near the BeltLine and transit areas, we are taking a stand to ensure that Atlanta’s growth is balanced, sustainable, and centered on the well-being of our residents, Westmoreland said in a statement obtained by the Washington Examiner. “This legislation reflects our commitment to preserving the unique character of our neighborhoods, protecting our environment, and ensuring that our city’s development prioritizes the needs of the people who live and work here.”
As artificial intelligence technology has boomed in the last few years, construction of these data centers has followed suit. However, worries have also grown nationwide over the amount of resources that the facilities consume, especially energy. Federal and local politicians have begun raising the prospect of measures to prevent these data centers from overburdening the national electricity grid as demand appears to be outpacing energy production.
Rapid growth, increased demand
Northern Virginia has long dominated as the largest market for data centers in the country, but cities like Atlanta are gaining as demand rises in the age of artificial intelligence.
Between 2022 and 2023, the capital of Georgia saw the highest growth of data center projects under construction growing — 211%, according to real estate research firm CBRE. The first half of 2024 saw 76% growth. Atlanta would be the second-largest data center market, behind northern Virginia if all construction was finished tomorrow. According to CBRE’s latest trend report, the city ranks seventh with its completed projects.
Industry experts have touted this growth, with Mike Lash, first vice president of CBRE’s Data Center Solutions team in Atlanta, calling the city the “tech Mecca of the South.”
“Georgia is poised very well for this development,” Lash told the Washington Examiner. “There’s a tremendous amount of infrastructure in place that was in place due to other industrial booms like textile plant manufacturing.”
But with the growth comes fears that the city’s electricity and water supply could be strained. In May, the Electric Power Research Institute estimated that data centers could use up to 9% of electricity generation in the United States by 2030, over double the amount these facilities currently consume.
During the first half of 2024 in Atlanta alone, CBRE estimated that under construction activity for data centers increased to 1,289.1 megawatts. By comparison, one megawatt is considered to be roughly the same amount of energy consumed by 400 to 900 homes in one year.
Georgia Power, which provides electricity to the majority of the state, made a request earlier this year from regulators to generate more electricity as residents saw energy bills sharply increase since the end of 2022. The utility company pointed to data centers and other “large load projects” as the driving force behind a 17-fold increase in projected demand from new businesses in the state.
Experts have warned that this rapid demand for electricity will only continue to place strain on the national grid, affecting supply and consumer costs. Some even say that in the grid’s current state, it is not prepared to handle such demand. “Oh gosh no,” Tony Clark, who served on the Federal Energy Regulatory Commission from 2012 to 2016, said to the Washington Examiner. “I mean that amount of load coming online that rapidly would be very, very difficult to serve in the short term.”
PJM Interconnection, the largest grid operator in the country, has also issued a warning about the reliability of the grid as power sources like coal decrease and the demand for energy grows at a faster rate than renewable energy is produced.
When pressed on the increased demand from data centers in the Peach State, Georgia Power told the Washington Examiner, “Georgia Power works together with the state and other partners from the early stages of economic development to attract, retain and/or expand operations of a wide variety of customers who contribute to Georgia’s communities and economy, including data centers.
“In particular, Georgia Power’s grid performance, reliability and resiliency options, affordability, as well as its highly regarded engineering expertise have been key factors in meeting the high standards of many data centers and contributed to significant growth in this industry choosing Georgia for their mission-critical operations,” the utility company continued.
Necessary infrastructure
As the Atlanta City Council has taken action to limit where data centers can be built, some say these facilities are necessary to support digital life in the city.
Lash told the Washington Examiner that while he understood why the council would pursue the ban, calling it “good natured in a sense,” it will undercut the expansion of data center infrastructure directly in Atlanta. While there are much larger facilities located outside of the city that he described as the “lifeblood” for data storage, Lash indicated that there needs to be more to accommodate growth.
“The way that the law was written, there’s absolutely no — there’s no variances or ability to build any type of data center … no matter what size or how important it might be to the technology backbone of Atlanta,” Lash said.
He pointed to major events coming to the region in just a few years’ time that will attract millions of tourists, including eight matches in the 2026 men’s World Cup. During the weekslong tournament, Lash warned that the city will need data center infrastructure to handle the “tremendous” amount of cell phones that will be in the area.
Rather than banning data centers from these major transit hubs, Lash said, there needs to be a balance. “If there was a way to allow the city to intelligently and strategically allow these network data centers to get approved, I think that would be advantageous to keep Atlanta, really, the Silicon Valley of the south and not lose that title,” he said.
Exceptions to the rule
Despite the ban, some of these transit centers in Atlanta may still see large data centers built within the restricted zones.
Keyetta Holmes, the director of Atlanta’s Department of City Planning’s Office of Zoning and Development, told the Atlanta Journal-Constitution that applications for a special administrative permit (needed to build a data center) filed before the ban was approved will still be honored.
City data shows that at least two applications for proposals to build data centers between 300,000 and 400,000 square feet were filed at the end of August. One of the proposals, which is looking to develop a data center at 10 Forsyth St., is located only 200 meters away from a MARTA depot. The second proposal, looking to develop at 1611 Ellsworth Industrial Blvd. NW, is within the half-mile radius of the Beltline’s Westside trail, per the Atlanta Journal-Constitution.
While these two projects have not yet been formally approved per city data, it remains unclear how pedestrian access to the city may be impacted by these proposed facilities.
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The city’s Department of City Planning declined to comment on the situation.
When pressed on the planned projects possibly skirting past the ban, Westmoreland and Councilman Jason Dozier, who also co-sponsored the legislation, declined to provide additional comment.