OPINION: Is the driest state in the U.S. prepared for data centers' unquenchable thirst?

There are a few ways to look at Wednesday's legislative discussion of the future of data center development in Nevada, the nation's driest state.
The easiest way is to focus on the growing challenge to manage a water and power supply problem associated with data center expansion across the country — and head for the hills. History is not exactly on the side of the citizen. In Nevada, when the powerful need more power — and in this case, water too — they usually find a way to get it.
But giving in to dystopian despair and end-of-times scenarios isn't much fun. It also makes for a pretty brief column. And, so, we return to the March 25 meeting.
Those who attended in person or watched the livestream, as I did, experienced a long but informative and almost painfully polite series of presentations to the Joint Interim Standing Committee on Natural Resources. Experts in the water and power fields and stakeholders from the industry and the community were present, some bringing with them dandy charts and graphs.
It was a day for considerable questioning, one filled with statistics, projections, disclaimers, polite best guesses and some nonanswers.
Nevada's water scarcity poses a particular challenge, but the Legislature isn't alone as it wrestles for control of the issue. This year, more than 300 data center-related bills are pending across the country. At least nine states have introduced data center moratorium bills. I learned there is a shift from incentive-focused priorities — for which Nevada lawmakers and the state's promoters have long been such suckers — to a regulatory oversight model.
Setting special rates and increasing demand for developers to foot the cost of infrastructure are being considered in many areas. In Nevada, with its large investment in renewable energy grids suddenly unpopular during the Trump administration, a pay-as-you-go system called the Clean Transition Tariff provides hope for a future not choked by diesel exhaust.
The Public Utilities Commission of Nevada is working with various stakeholders, including the Sierra Club Toiyabe Chapter, on a comprehensive plan to codify regulatory standards and safeguards already being used in other parts of the country, areas that are likely to have more available water for data centers than Nevada. Sierra Club Toiyabe Chapter Executive Director Olivia Tanager told a reporter, "Nevada is unfortunately falling behind in regulating this industry. It has impacts on our water, our air quality and on your utility bill, so we want to make sure people are protected as the AI (artificial intelligence) rush continues and data centers continue to come here."
Although the major players from NV Energy, the Desert Research Institute (DRI) and Southern Nevada Water Authority commanded the most attention during the meeting, they didn't always provide definitive answers to complex questions, especially those calling for forecasts from one season to the next.
Sean McKenna, executive director of DRI's Division of Hydrologic Sciences, reminded a legislator with Nevada's puny snowpack on her mind that, "I think one thing I would point out here is that all data centers are local, right? So, where the water is being sourced, where the electricity is coming from … that all depends. I think it's difficult to look at this year's snowpack and say for any particular data center whether they have issues or not."
The rush for development moves swiftly, and legislators are scrambling. The meeting was not without skeptics. I was reminded why Assm. Howard Watts (D-Las Vegas) is considered among the alert and studied minds in the Legislature. He asked good questions in a long meeting that remained focused.
A contingent of 10 locally owned and operated power utilities represented by the Nevada Rural Electric Association (NREA) was also in attendance. Its presentations provided a reminder of the possibility of offering clarity and independence on this issue. Some of the association's member utilities have already rejected entreaties from data center developers. For small communities in Nevada, it's clear the potential rewards of economic development are outweighed by the risks of potentially overwhelming infrastructure and available water.
"One thing that this does demonstrate is that it's constantly changing," NREA Executive Director Lisa Levine said. "Every single year the forecast increases significantly. So, it's really hard to tell right now what the forecast for energy demand really will be in the future."
Data center power usage has been described as being similar to large mining operations and other intensive manufacturing industries, but it's a shallow comparison. Post-construction job creation is nominal.
"Certainly, data centers are a local issue, but the challenges are on a global scale," Levine said. "We see that from supply chain issues, manufacturing, permitting backlogs which are already the case currently, workforce shortages in rurals, which I'm sure all of you are very versed on."
Add to that federal land issues, property tax questions, infrastructure and public safety challenges, and it should remind all of us that rushing into a future of data center proliferation in the nation's driest state makes questionable sense.
As newcomers and longtime residents know, that doesn't mean it won't happen.
John L. Smith is an author and longtime columnist. He was born in Henderson and his family's Nevada roots go back to 1881. His stories have appeared in New Lines, Time, Reader's Digest, Rolling Stone, The Daily Beast, Reuters and Desert Companion, among others.
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