LAS VEGAS (KTNV) — You've probably been hearing a lot about data centers. The issue is complex, and the concerns are mounting. There's a lot of information out there, and if you live in Southern Nevada and you've been wanting to learn more about what data centers are but don't know where to begin, this series is for you.
All week long from Sept. 7-11, KTNV climate reporter Geneva Zoltek and I are taking a look at the state of data center development and regulation in Southern Nevada, in our series we're calling "Data vs. Desert." Tune in for our daily reports on Good Morning Las Vegas and later editions of Channel 13 News.
Today, let's start with — what are data centers, why here and why now?
WATCH | DATA VS. DESERT: PART 1
Demystifying data centers
Data centers, while a hot-button issue now, have actually been around for years.
You've probably driven by Switch, just off the 215 in the southwest Las Vegas valley. It's the largest data center campus in Southern Nevada. Switch has around a dozen data centers in Southern Nevada — and counting — and it's been around here since the early 2000s. Google's Henderson data center was built in 2019. Those two are perhaps the more recognizable names around, but they're not the only data center players here, and more are looking to set up shop in Southern Nevada.
Market intelligence and advisory firm Baxtel counts about 75 data centers currently operating in Nevada, divided largely between the Reno and Las Vegas areas, with more in the works.
So what are these giant, nebulous facilities? Traditional data centers are typically server warehouses, storing everything from corporate databases and financial records to your personal cloud photos and videos.
IBM notes the new AI-tailored data centers we're starting to see more of do bear some similarities to conventional ones, in that they also house hardware like servers, storage systems and networking equipment. However, the workloads are much different. These AI facilities demand complex cloud computing capabilities, and that means advanced storage, networking, energy and cooling. So AI data centers are often much larger and can be more resource-intensive.
Data centers not only vary by function, but also by how they operate. Hyperscale data centers are exactly what they sound like; they're essentially data storage on a huge scale, and those can often better support AI workloads. Colocation is when companies rent out space in hyperscale data centers for their data storage and computing, allowing a company to have those benefits without the cost of building and maintaining their own standalone structure.
Southern Nevada is home to a variety of data centers. We tried to simply get a look inside a local data center, but struggled to even get a response from several data center companies operating in Southern Nevada. Experts describe it as an "opaque" industry that we're still trying to learn more about, but transparency is an ongoing challenge.
Why here?
Data centers and the desert seem like two things that just don't go together, but Nevada has been largely welcoming them in for years now.
We sat down with Erik Henzl and Sean McKenna with the Desert Research Institute to find out what makes Nevada attractive to data center developers, especially at a time when so many locals feel these developments just don't belong here.
"Available and cost-competitive land and energy are huge factors that attract data centers," Henzl said. "Nevada has tax abatements as well, so 75% off of personal property taxes for 10 or 20 years, contingent upon approval from the Governor's Office of Economic Development, and smaller sales tax abatements as well."
According to the Governor's Office of Economic Development, data center developers can get their sales and use taxes reduced to as low as 2% for up to 10 or 20 years on qualified capital equipment purchases, pending two-thirds approval by the GOED Board.
The larger incentives, though, involve personal property, as the DRI scientists mentioned. Data centers can get up to 75% off personal property taxes over a maximum of 10 or 20 years. Under a 10-year abatement deal, the data center must employ 10 full-time NV resident employees within five years, pay at least 100% of the statewide average wage, and invest at least $25 million in cumulative capital expenditures between the applicant and tenants. Under a 20-year abatement deal, the data center must employ 50 full-time NV employees, pay at least 100% of the statewide average wage and invest at least $100 million in cumulative capital expenditures.
In order to qualify for those abatements, the data center must maintain business in Nevada for 10 years, offer medical insurance and pay at least 65% of the insurance premium costs, and ensure that at least half of the workers building the data center are NV residents.
Along with the tax incentives, Henzl also mentioned that Nevada's proximity to the Bay Area is another draw for data center developers, particularly to the Reno-Tahoe area, which has seen a boom in data center development.
"High-bandwidth fiber optics from Northern Nevada to the Bay Area makes it very attractive," Henzl said.
With these perks, there's been a proliferation here in recent years.
"Suddenly realized we were one of the top five data center areas for growth in the country, and really I don't think anyone had made much noise about it a year ago," McKenna said.
Why now?
Since data centers have been around for a while, why are they suddenly getting so much attention now? It's because we're seeing more projects being proposed here and across the country — and large ones, at that.
Artificial intelligence is a huge driving force behind that push, as more complex technology demands more advanced data storage and processing.
According to a nationwide survey by Gallup and Telescope, 99% of Americans use at least one product with AI features weekly. Yet 7 out of 10 Americans say they oppose the construction of AI-specific data centers in their area.
It's a complicated contradiction. Think about it — AI has become a part of our daily lives, whether we're aware of it or not. Google now often provides an "AI overview" at the top of your search results page. My local doctor's office uses a virtual AI assistant to schedule my appointments, even simulating background office chatter and typing sounds to mimic a real doctor's office environment.
AI is ubiquitous now, and not only is it driving rapid data center development, but also a different type of data center — one that requires far more than the ones that were built decades ago, particularly when it comes to energy.
"So 10 years ago, let's say a 5 to 20 megawatt facility was more standard, and today we're seeing more and more of these hyperscale facilities for the large workloads of cloud computing and AI. So these hyperscale facilities are around 100 megawatts or larger, potentially much larger," Henzl said.
"I think we've seen some being planned now on the order of 4,000 megawatts, which is astronomical size," McKenna added.
With the nature of the data centers we're seeing built rapidly changing, and what they demand evolving, that leads us into the next portion of our coverage: water — the most common concern we hear about from locals in the Mojave Desert when it comes to this topic.
More data centers mean a growing need to keep more servers and equipment cool. How do you balance that with a precarious water situation in the desert southwest?
As our "Data vs. Desert" series continues, on Tuesday, Sept. 8, Geneva Zoltek will show you some of the biggest data center water guzzlers in our community, the policies in place to protect our water, and who's getting creative with cooling.
