Gov. Mike Dunleavy is courting major tech companies to establish data centers in Alaska at a time when the state is already facing an impending electricity crisis. The data centers, which are springing up throughout the Lower 48 states, require massive amounts of energy and water.

Dunleavy has invited more than a dozen big tech companies, including affiliates of Microsoft, Facebook and Amazon, to build data centers in Alaska, and accompanied one firm to view potential sites in the Fairbanks and Anchorage areas, according to reporting by Northern Journal. 

The governor believes the demand for energy from the data centers could boost the potential of building a trans-Alaska gas pipeline to the urban centers and spur the development of more “green” energy.

The governor seems to have left sight of one of the biggest problems now facing the state right now: the looming end to cheap Cook Inlet gas, which is critical to most Alaskans. In addition, he places too much faith in the tech giants, who are driven by the almighty dollar, not those damaged in the process.

A glance at what has happened in the Lower 48 is revealing. The explosion of data centers is driven by big tech companies eager to infuse artificial intelligence, or AI, into its programs and to help many affiliate companies become leaders in AI.

While initially welcomed for the promise of new jobs and economic development, residents and political leaders in many states are unhappy with the results.

The industry produces few jobs relative to the “incredible demands” it places on the power grid, Texas Republican Lt. Gov. Dan Patrick recently said. “Texans will ultimately pay the price.”  Residents in Northern Virginia are suing to block one complex, saying data centers are driving up the price of land.

Data centers consume about 4% of U.S. energy supplies, but one analyst speculates the figure will climb to 25% within five years unless more efficient technology is developed. Big Tech is turning to nuclear power to fill the gap, but micronuclear reactors or small modular nuclear reactors don’t provide enough electricity. Microsoft appears to be close to reactivating the Three Mile Island nuclear plant to satisfy its power needs.  

Oregon, a hub of AI data centers, is a good example of what not to do.

The small state has attracted big tech because of its moderate climate, cheap power costs, thanks to massive dams on the Columbia River, and, clearly, an enterprise incentive program designed for small manufacturers enacted in the 1980s. The property exemption program cost the state $227 million in 2023 and is expected to rise into the billions of dollars in the coming years. 

Hmmm. How do the world’s richest corporations qualify as “small businesses”?

The data centers currently consume 11% of Oregon’s electrical output. Regional energy forecasters expect data power consumption in the Northwest will certainly double by the end of the decade. Or maybe triple. Possibly, they say, it will quadruple.

Consumer advocates worry the data centers’ thirst for energy will hit the pocketbooks of ordinary Oregonians, who are already facing the prospect of rates climbing as much as 50% in a two-year period, according to the Portland Oregonian.

The building of data centers in the Railbelt at a time when it is facing a looming shortage of energy would only compound what already is described as a crisis. With the exceptions of Southeast and Kodiak, rural Alaska probably has the highest power costs in the nation.

The North Slope oil fields might be a good site for the data centers, which require much power to cool their machines. The oil fields could provide natural gas as needed and waste carbon could be pumped underground. Northern Journal reports that one company has been studying the concept for about a decade.

Gov. Dunleavy’s hope for the building the trans-Alaska gas pipeline to feed the energy-intensive data centers appears to be a pipe dream. Would big tech be willing to help finance the $43 billion gas line? Highly unlikely if you consider what has happened in the Lower 48.

Hopefully, the governor and Legislature will carefully consider the potential downsides of locating data centers in Alaska.