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Why Do We Need Data Centers?
I was at a dinner and sitting between two opposites regarding the construction of new data centers. Kind of reminded me of being between two people that just felt they had to air their political grievances-even before the main course….. Let me try and take a more balanced approach.
Data centers are the core infrastructure of our digital world. They process, store, and manage the data that powers nearly everything: from cloud storage, online banking, and streaming services to artificial intelligence, telehealth, e-commerce, and smart city technologies.
As society becomes more interconnected and digital-first, data centers provide the scalability, reliability, and speed that individuals, businesses, and governments depend on. The rise of AI, cloud computing, remote work, 5G, and IoT (Internet of Things) has dramatically increased demand for real-time data processing and storage. Without data centers, technologies like autonomous vehicles, global communication platforms, and secure financial systems wouldn’t function. Even me, who started my career when thermal fax paper was all there was (that means I have been working since the 1970’s), recognizes the inevitability of more data centers.
In short, the more data, and the need for faster data, means more data centers. Data centers are enabling innovation, economic growth, and global connectivity—but their rapid growth also presents sustainability and community challenges that must be addressed.
Balancing Growth With Responsibility
Data centers consume an enormous amount of electricity—to power their servers and to keep them cool. This energy demand can place significant strain on local power grids, particularly in regions already dealing with limited infrastructure. When powered by fossil fuels, data centers become a source of greenhouse gas emissions, raising concerns about their long-term environmental impact.
One evolving aspect of the ESG (Environmental, Social, Governance) conversation is the use of carbon credits—mechanisms that allow companies to offset emissions by investing in green projects like reforestation or solar farms. While useful, these credits are not a substitute for actual reductions in energy use and emissions. They should be used alongside direct sustainability efforts such as renewable energy integration and more efficient data center design.
The ‘Social’ in ESG: Community Opposition
As more data centers are built near suburban and rural areas, community concerns are on the rise. Residents often cite:
- Noise pollution from cooling systems and backup generators
- Visual disruption from large, industrial buildings
- Increased energy and water usage
- Lack of transparency or local engagement
Real-world Examples:
- In Loudoun County, Virginia, residents have reported persistent low-frequency noise and diesel generator testing, prompting the county to consider stricter noise ordinances¹.
- Prince William County, also in Virginia, saw major public opposition to the proposed Digital Gateway Project, with concerns about noise and loss of open land².
- In Amsterdam, the city placed a moratorium on new data centers in 2019 after citizens raised concerns over noise and environmental impact³.
Even when noise levels comply with regulations, the constant hum of industrial equipment can erode quality of life—especially in quiet, residential areas.
The Utility and Water Footprint
Data centers require massive resources—not just power, but also water, especially in facilities using evaporative cooling systems.
Electricity Demand:
- A single large-scale data center can consume 20 to over 100 megawatts (MW)—enough to power 15,000 to 80,000 homes.
- In Ireland, data centers are projected to consume nearly 30% of national electricity demand by 2030, forcing regulators to limit new grid connections in high-demand areas⁴.
Water Use:
- Data centers may consume 300,000 to over 1 million gallons of water per day for cooling.
- In Mesa, Arizona, Google’s proposed data center was estimated to use 1.25 million gallons daily, sparking concern in an already water-stressed region⁵.
- In The Dalles, Oregon, Google faced legal pressure over efforts to conceal that its facility was using over 250 million gallons of water annually⁶
Toward Responsible Data Infrastructure
These challenges underscore the need for comprehensive ESG planning. Key strategies for building responsible, community-friendly data centers include:
- Locating facilities near renewable energy sources
- Investing in energy-efficient design and AI-powered cooling systems
- Using air- or closed-loop liquid cooling to minimize water consumption
- Installing sound barriers and quieter generator technology
- Engaging local communities early through public consultation and benefit-sharing
By embedding these principles into development strategies, data centers can continue to power digital progress while minimizing their impact on people and the planet. As the reader can tell, building data centers is not just a site selection exercise, but a comprehensive forward- looking analysis.
Conclusion: Designing a Smarter Data Future
Data center buildouts are inevitable. As our reliance on digital services grows—from AI to cloud computing to real-time connectivity—the need for robust data infrastructure will only accelerate.
However, a one-size-fits-all strategy won’t work. Building data centers without consideration for local environments, community concerns, and resource availability risks undermining both public trust and long-term sustainability. Each location presents unique challenges—from water scarcity and grid limitations to noise sensitivity and environmental impact.
The future of data infrastructure must be flexible, transparent, and accountable—rooted in community engagement, guided by ESG principles, and supported by technological innovation. The government should proactively support technology advancements to support more efficient and ESG friendly data centers. With smarter planning and shared responsibility, we can ensure data centers remain engines of progress—without compromising the health of the planet or the well-being of the people who live near them.
I have a staff dinner coming up. I am banning political and data center discussion, at least until after dinner drinks….
About the author
Gary Sumihiro is the founder of Sumihiro Investments LLC, a global strategic advisor, and board member of several companies, including EDGE Partners LLC. Recently, Sumihiro Investments entered into a strategic relationship with EDGE Partners LLC. For more information about Sumihiro Investments and EDGE Partners see the linked article.
Footnotes / Sources
- Loudoun County, VA – Washington Post, “Data Centers Bring Jobs—and Noise—to Northern Virginia” (2023)
- Prince William County – InsideNoVA, “Data Center Gateway Faces Community Opposition” (2022)
- Amsterdam moratorium – Reuters, “Amsterdam halts data center construction over environmental concerns” (2019)
- Ireland electricity grid strain – BBC, “Ireland data centres could use 30% of electricity by 2030” (2021)
- Mesa, Arizona – AZCentral, “Google data center to use over a million gallons of water daily” (2021)
- The Dalles, Oregon – The Oregonian, “Google faces legal fight over secretive water use in The Dalles” (2022)