Ferguson orders assessment of data center impacts

OLYMPIA— Earlier this month, Gov. Bob Ferguson signed an executive order to create a workgroup aimed at assessing the impacts of data centers on energy use, state tax revenue, and the environment.

The order stemmed from concerns about the sustainability of data centers – large warehouses filled with stacked computers that power the modern internet – which consume significant amounts of energy putting a strain on Washington’s power grid.

“We must ensure Washington remains a leader in technology and sustainability – these experts will help us do that,” Ferguson said in a public statement. “This group will help us balance industry growth, tax revenue needs, energy constraints, and sustainability.”

Grant County, known for its high deserts, small farm towns, and hydropower fueled by the Columbia River, is now home to at least 49 data centers, according to industry website Baxtel.

“(Data centers) have provided lots of investment in the communities, lots of above family wage paying jobs, and they’re great community partners,” said Brant Mayo, executive director of Grant County Economic Development Council.

Since the early 2010s, Washington lawmakers have provided tax incentives to internet giants such as Microsoft and Yahoo, hoping to facilitate economic development in rural counties, particularly those east of the Cascades.

According to the Washington State Department of Revenue, data centers received sales and use tax exemptions, allowing them to purchase server equipment, power infrastructure, and labor services at a reduced rate.

Rep. Alex Ybarra, R-Quincy, explained that these tax breaks were necessary to attract industries to Quincy rather than out of state. Since their introduction, data centers have increased the city’s taxable value to about $6.1 billion in 2025, as verified by the Grant County Assessor’s office.

“That’s why we have a brand-new high school, brand-new roads, brand-new sidewalks, brand-new City Hall, fire station, library, you name it. It’s all-new,” Ybarra said.

He also noted these data centers have created vast job opportunities beyond technical positions, including contractors, electricians, security guards, and janitors.

“The people that are doing that work used to be farm workers,” Ybarra said. “So they were getting a paycheck with no benefits. Now they get a paycheck with medical, dental, vacation, holidays, and retirement.”

A 2014 study from investment firm CBRE highlighted that while data centers do not directly create large employment opportunities, they create significant high-end construction employment that can run for about two years.

According to Microsoft, each data center hires 50 full-time employees, with additional staff hired as they build subsequent buildings, employing 50 staff members per building.

Microsoft is developing more data centers in Malaga and East Wenatchee to support the accelerated growth of artificial intelligence.

Grant Public Utility District Senior Manager of Large Power Solutions Andy Wendell said that artificial intelligence is the biggest culprit in the drastic increase in energy demands in recent years.

“Up until this year, we’ve been able to satisfy the demand for both our non-data center loads as well as our data center loads, primarily utilizing our hydroelectric projects,” Wendell said.

Wendell said the Columbia River, which powers the Wanapum and Priest Rapids dams, provides large amounts of affordable, clean energy, producing an average of 1,100 megawatts a year.

The Grant PUD website states that as of 2024, data centers account for the highest interest in growth in the application queue, requesting 1,548 megawatts.

Wendell explained that to keep up with demands, the utility district will soon have to purchase and import power from the electric grid. Although the grid contains renewable sources such as wind and solar power, maintaining a steady supply of reliable electricity requires adding in natural gas.

He stated that importing wind and solar energy on a daily basis will have a higher cost than sourcing traditional energy generations.

“Energy is generally available; we may have to pay more for different types of energy,” said Wendell.

Ybarra also emphasized the need to build more transmission lines to bring energy directly to both companies and local residents from either the dam or the grid. However, he explained that the permitting process can take up to 12 years before construction can begin, as lines often cross federal land.

He argued that the dilemma is not simply a lack of sustainable energy sources but rather the infrastructure the county needs to meet demands, especially within the time frame of Washington’s energy goals.

The Clean Energy Transformation Act, which passed in 2019, requires public utility districts to provide carbon-neutral electricity by 2030 with the goal of transitioning to 100% clean energy by 2045.

Ybarra believes the state is nowhere near achieving those goals.

“Find a new replacement first, and then get rid of natural gas,” he said. “Because if you take it away too quickly, then everybody will suffer.”

Wendell emphasized that Grant PUD has an application queue of about 3,000 megawatts of power, three times their peak demand.

“We think that data centers do have a place in both Grant County as well as the state of Washington. The fact of the matter is that we have to find a balance.”

He hopes Grant PUD has a seat at the table in Ferguson’s workgroup to support industry growth while ensuring sustainability to meet community needs.