Data Center Watch: 45 US data center projects blocked in Q2 2025 due to local opposition, representing $68 bln in investment

Local opposition to data center construction in the United States is evolving from isolated project disputes into more systematic permitting and policy restrictions, according to new data from research firm Data Center Watch.

Key Data on Project Delays

Between April and June of this year, 45 data center projects were blocked or delayed due to local opposition, involving a total investment of approximately $68 billion, Data Center Watch reported.

These 45 affected projects represent more than half of all new large-scale data center projects tracked by the firm during the second quarter. While the number and investment scale declined compared to the first quarter, local government permitting suspensions, state-level regulations, and organized community opposition continue to expand.

In the first quarter of this year, 75 data center projects were blocked or delayed, involving approximately $130 billion in investment. This means that in the first half of 2024 alone, at least 120 projects saw their original development timelines affected by local opposition.

Opposition Networks Spread Across 49 States

Data Center Watch identified 843 organizations opposing data center construction across 49 states, with Hawaii being the only exception. Miquel Vila, chief analyst at the firm, noted that new local groups continue to emerge, opposition activities are spreading across more states and local jurisdictions, and online petition signatures are growing steadily.

Local government actions are also shifting from targeting individual projects to preemptively modifying development rules. Some communities are pushing for construction bans or permitting moratoriums before data center developers formally submit applications. According to Data Center Watch, legislatures in approximately 30 states have introduced or passed regulations concerning data center siting, electricity, and water usage.

Growing Uncertainty and Community Concerns

This shift is increasing the time and uncertainty involved in data center projects—from land acquisition to final grid connection. Large-scale data centers require not only land and building permits but also substantial electricity supply, transmission infrastructure, and, in some cases, water resources.

Key resident concerns include:

• Rising electricity prices
• Water consumption
• Noise pollution
• Property values
• Loss of green space

If projects require on-site power generation, they may also face opposition to new energy infrastructure.

Some local protests have achieved significant online mobilization. In the second quarter, a Change.org petition against a data center project in Tennessee garnered over 500,000 signatures, accounting for more than one-third of all related petition signatures on the platform during that period.

Tech Giants Continue Investment Despite Resistance

This resistance has not halted large-scale infrastructure investment by the tech industry. Major companies including Amazon (AMZN.O), Meta Platforms (META.O), Microsoft (MSFT.O), and Alphabet (GOOGL.O) continue to expand AI data center capacity. These companies argue that the rapid growth of generative AI requires more computing infrastructure, and that the U.S.'s ability to build data centers and power supply in a timely manner is critical to its AI competitiveness.

However, data center development is increasingly intersecting with local politics and public utility regulation. A core debate centers on how much of the cost for new power generation, transmission, and distribution investments should be borne by data center operators—and how much will be passed on to ordinary residents through electricity rates.

Regulatory Pressure Drives Policy Changes

The U.S. House of Representatives passed the Ratepayer Protection Act last Wednesday with a vote of 417 to 3. The bill requires state utility regulators to assess whether large electricity customers, including data centers, should bear the incremental costs of building new power infrastructure to serve them.

The bill subsequently faced procedural hurdles in the Senate. Senator Martin Heinrich blocked a Republican attempt to fast-track the bill through unanimous consent on Thursday, arguing that the current approach relies too heavily on voluntary action by states and data center developers.

President Donald Trump continues to explicitly support data center expansion, viewing it as critical infrastructure for maintaining U.S. leadership in AI. He stated last week that he is discussing the electricity cost bill with Senate Majority Leader John Thune.

Virginia Tightens Regulations

In Virginia, the largest data center market in the U.S., regulatory pressure is already translating into concrete policy. Governor Abigail Spanberger announced tighter data center management last Friday, including plans to:

• Prohibit large projects from using confidentiality agreements
• Strengthen permitting requirements
• Encourage greater use of clean energy by data centers

Virginia hosts one of the world's most concentrated data center clusters, making local policy changes highly relevant to the broader industry.

Shifting Development Models

Project uncertainty is also reshaping data center development models. According to The Information, the timing of grid power connection has become one of the most unpredictable variables for large AI infrastructure projects, with local opposition and regulatory processes further increasing uncertainty.

Jensen Huang, CEO of Nvidia, said this month that the company is tracking global land, power, and building resources available for data centers. Beyond large gigawatt-scale projects, the industry is increasingly focusing on smaller, modular facilities and existing office buildings and industrial sites with pre-existing power connections to shorten project timelines.