![\"LEFT:](\"http:\/\/www.agencywebdesigners.com\/wp-content\/uploads\/2025\/06\/TDP-L-data-centers-rjs-comp-01.jpg\")
\u201cThe speed at which the demand is increasing is scary,\u201d said Joshua Darrin, the chief operating officer of Data Canopy, which operates 16 data centers across the country, including one in Denver.<\/p>\n
Already, an \u201cabsolute arms race\u201d among data center developers has prompted the state\u2019s largest electricity provider to stop offering lower rates for the facilities, according to Xcel Energy executives. If all of the data centers\u2019 requests to the utility for power were to come to fruition, Xcel would need to double its current generating power.<\/p>\n
When completed, the Aurora data center will be a 160 megawatt hyperscale facility that, at max capacity, could consume as much power as 176,000 homes. The northern Denver data center, once completed in the Elyria-Swansea neighborhood, could use a maximum of 805,000 gallons of water a day for cooling \u2014 the same as 16,100 Denverites\u2019 average daily indoor water use.<\/a><\/p>\n Regulators, environmental advocates and data center representatives all say Colorado faces a critical moment: Can the state balance the desire from some government leaders\u00a0for the economic development brought by data centers with Colorado\u2019s climate goals and water realities? And can it do that while protecting electric customers from bearing the costs of the burgeoning industry?<\/p>\n \u201cWhat we\u2019re seeing in Colorado is (that) we\u2019re really trying to be thoughtful and get ahead of this \u2014 and make sure we\u2019re doing this in the right way,\u201d said Rebecca White, the director of the state\u2019s Public Utilities Commission<\/a>.<\/p>\n Dozens of smaller data centers already operate across the Front Range. But the two new, much larger data centers under construction will require more resources, reflecting the needs of a pivoting industry that needs more power.<\/p>\n \u201cIf a state doesn\u2019t enact policies to deliberately mitigate environmental impacts, you can have really serious environmental repercussions from data centers,\u201d said Matt Gerhart, a senior attorney for the Sierra Club focused on the clean energy transition.<\/p>\n A bill that would have granted state tax incentives to data centers<\/a> died in the statehouse after its first committee hearing this spring, but lawmakers and those watching the industry said the topic will resurface in coming years.<\/p>\n \u201cI expect that we\u2019ll see something similar next year,\u201d said Justin Brant, the utility program director at the Southwest Energy Efficiency Project<\/a>, which advocates for greater energy efficiency and clean transportation across the Southwest. \u201cIf the projections are to be believed, a lot of new data centers are coming to Colorado in the next five years, and I think it\u2019s important to think about how we intentionally bring that new electric load to the state.\u201d<\/p>\n In a Centennial office park last month, rows of servers sat in a nondescript, windowless building that neighbors a volleyball training facility and a pilot school. The whirring and clicking of fans dominated the clinically bright room as the building\u2019s cooling system worked to whisk the palpable heat away from the servers.<\/p>\n Nine 30-ton air conditioning units were ready to go if needed, but only two were needed for Expedient\u2019s data center that day.<\/p>\n The 2-megawatt facility is typical of Denver\u2019s current industry: a relatively small center that provides cloud services and leases out space for other companies to securely store their servers.<\/p>\n For decades, data centers were seen simply as infrastructure or a commodity \u2014 stable, almost boring, said Brian LaComb, the company\u2019s area vice president.<\/p>\n \u201cBut we\u2019ve seen an exponential growth in the past five years,\u201d said LaComb, who has worked in the industry for more than 15 years.<\/p>\n Data center servers function as the main infrastructure for the digital world. They crunch financial data, store patients\u2019 health information, process online shopping, register sports betting and \u2014 increasingly \u2014 make possible the heavy data demands of AI.<\/p>\n \u201cOur entire digital life is housed in data centers somewhere \u2014 whether it\u2019s TikTok, Facebook, Instagram, email, Google Maps, all of AI,\u201d said Darrin of DataCanopy. \u201cEverything that we do in our digital lives is being stored in data centers somewhere.\u201d<\/p>\n The Denver Post identified 28 companies operating 50 data centers across 38 campuses in Colorado\u00a0\u2014 all located on the Front Range. Most of those data centers are relatively small facilities whose maximum power needs amount to less than 20 megawatts.<\/p>\n Hyperscale facilities, like the 65-acre Aurora project, are needed to meet the computing demands of AI.\u00a0A February analysis by Goldman Sachs found that the global power demands by data centers<\/a> will increase 55% by 2027, fueled primarily by an increase in AI workloads. The international investment bank and finance firm estimated that AI currently uses 13% of global data center power, a share that will more than double to 27% in the next two years.<\/p>\n QTS \u2014 a global data center company with 40 facilities across the U.S., the United Kingdom and the Netherlands \u2014 declined an interview about its Aurora hyperscale facility<\/a> near the intersection of Interstate 70 and E-470 unless The Post provided interview questions ahead of time. Company spokeswoman Karen Cohen instead sent a statement that highlighted the company\u2019s generation of millions of dollars in tax revenue, its creation of construction jobs and its commitment to environmental stewardship.<\/p>\n Increasingly, data center companies are looking favorably at Colorado, according to real estate companies<\/a> and industry groups. A report last year by a real estate firm found that Denver and Colorado Springs had potential to see a significant increase in the number of data centers.<\/p>\n \u201cThe industry is chasing cheap power; they\u2019re looking for cheap power and land,\u201d Darrin said.<\/p>\n Compared to states like Virginia and Georgia, Colorado has a relatively small market and has not yet seen the large-scale developments of other states. But it has many qualities that companies are looking for, said Dan Diorio, the senior director of state policy for the Data Center Coalition<\/a>, the membership association for the industry.<\/p>\n \u201cColorado has a lot of things working for it right now: the infrastructure, the workforce, access to energy and access to land,\u201d Diorio said.<\/p>\n Colorado\u2019s largest utility fields requests from data centers almost weekly, Xcel Energy executives have told the Public Utilities Commission.<\/p>\n The data center market has shifted drastically in the last two years, and after years of relatively flat growth, the industry is the main driver of increased demand, said Amanda Rome, Xcel\u2019s executive vice president and group president for utilities. While smaller data centers remain in the mix, the utility is hearing from more potential hyperscale customers.<\/p>\n Xcel estimates that new requests from data centers and manufacturers\u00a0 \u2014 called large-load customers \u2014 could generate the need for 1,923 megawatts of power by 2031, according to its filings with the PUC. That\u2019s enough electricity to power 2.1 million homes and would be a 31% increase to the current power supply.<\/p>\n \u201cIt\u2019s going to require all the generation we have,\u201d Rome said.<\/p>\n That estimate is a small fraction of the total 6,181 megawatts of power requested by large-load customers to come online by 2031.\u00a0But not all of those requests will become reality, so Xcel used a probability formula to estimate how much demand will likely materialize, a projection the utility called conservative.<\/p>\n If all of the 6,181 megawatts were to come to fruition, it would nearly double the utility\u2019s current power needs.<\/p>\n About 70% of new large-load customers seeking power from the utility are data centers, most of which are looking to develop in Aurora and Denver, according to Xcel documents provided to the PUC.<\/p>\n The utility crunched those numbers in the spring of 2024. If it were to do the analysis again, the expected increased load would be closer to the high end it calculated a year ago, Rome said.<\/p>\n While Xcel has previously negotiated lower electricity rates with data center customers \u2014 like QTS \u2014 it is far less likely to do so now in the face of so much demand, Rome said. The AI boom sparked an \u201cabsolute arms race\u201d between hyperscale facilities looking to get power as quickly as possible, she said.<\/p>\n \u201cIt\u2019s just not where the market is today, versus where it was two (or) five years ago,\u201d she said.<\/p>\n The increase in data center interest has prompted the PUC \u2014 the state\u2019s utilities regulator \u2014 to contemplate a new, streamlined regulatory process to evaluate data centers. The commission does not have the perfect process to review new data centers\u2019 power needs in the way it needs to, PUC director White said. The development of data centers moves quickly, she said, while the commission\u2019s processes can take years.<\/p>\n \u201cUnder current law, utilities have to deliver two things: reliable and safe power for their customers, while maintaining progress toward the climate requirements and getting to the 85% reduction in greenhouse gas emissions\u201d by 2030, White said. \u201cWe\u2019re holding them to both those standards.\u201d<\/p>\n Colorado lawmakers have set several goals to reduce the amount of climate-changing greenhouse gas emissions<\/a> in the state. By 2050, the state aims to reduce greenhouse gas emissions to net zero, which means reducing emissions to a point where the remaining amount can be offset by carbon removal efforts like carbon capture and tree planting.<\/p>\n The state is making progress, though it is projected to fall short of achieving interim benchmark goals<\/a>.<\/p>\n Environmental advocates worry that an influx of data centers will necessitate the generation of more power through carbon-emitting plants<\/a>, or require a delay in the planned retirements of coal power plants.<\/p>\n Sierra Club Colorado is not opposed to data centers, but it\u2019s \u201cskeptical and concerned\u201d about their potential environmental impacts, said Garrett Royer, the group\u2019s senior government affairs and political advocate.<\/p>\n \u201cWe know we can\u2019t draw a line in the sand about data centers and just say they\u2019re bad. But this needs to be done in ways that don\u2019t harm communities,\u201d he said.<\/p>\n Data centers could help the transition toward clean energy, such as by using excess wind power at night or providing investments for new green energy sources like geothermal, White said.<\/p>\n But in other states, increased demand from data centers has also extended the operation of coal power plants and spurred further investment in natural gas, she said.<\/p>\n \u201cWe need to make sure we get this right,\u201d White said. \u201cI generally have a lot of optimism that we\u2019re going to get this right. We\u2019ll figure this out and do it in a way that makes sense for Colorado.\u201d<\/p>\n In addition to power, some data centers use massive amounts of water for cooling. Environmental groups say those demands must be considered in a state where water is already scarce and climate change is expected to shrink supplies.<\/p>\n \u201cThe water impact is really, really important, especially for Colorado,\u201d Royer said. \u201cWe are very familiar with droughts and water usage and know that is one of our most important and valuable resources.\u201d<\/p>\n The amount of water used by a data center varies widely depending on its location, its size, its computing density and the cooling technology installed, according to the Data Center Coalition. Air cooling uses less water but more power, while liquid cooling uses less power but more water.<\/p>\n A report compiled for the Virginia General Assembly<\/a> found that \u201cmost data centers use about the same amount of water or less as an average large office building, although a few require substantially more, and some require less than a typical household.\u201d<\/p>\n Records obtained by The Post through a records request to Denver Water and Aurora Water show that data centers in Denver and Aurora use a wide range of water every year. Average annual water use among the 14 facilities ranged from 1 acre-foot to 40 acre-feet per year. An acre-foot is enough water for two families\u2019 annual water use.<\/p>\n One of the larger facilities under construction will be much thirstier.<\/p>\n CoreSite\u2019s data center in Denver\u2019s Elyria-Swansea could use up to 805,000 gallons of water a day, company officials have said, though the average daily use would be less. About 80% of the water that will go through the system will be lost to evaporation. What remains can be chemically treated and reused.<\/p>\n The QTS hyperscale facility in Aurora, however, will use \u201cwater-free\u201d liquid cooling, according to the company.<\/p>\n In a 2023 interview with DataCentre Magazine, the company\u2019s vice president of energy and sustainability, Travis Wright, said the cooling system \u201cuses a low-pressure, pumped, refrigerant system that uses outside air economisation to deliver world-class energy efficiency metrics, as well as using minimal water.\u201d<\/p>\n Demand for water for municipal and industrial uses across the state is expected to outpace supply by 2050, according to the Colorado Water Plan<\/a>. In dry years, the supply gap could range from 230,000 acre-feet to 740,000 acre-feet.<\/p>\n Proposed data centers must be assessed through the state\u2019s water adequacy laws and local water policies, said Katie Weeman, spokeswoman for the Colorado Water Conservation Board. State law<\/a> requires that local governments deny an application for development unless the company has demonstrated that there is enough water supply.<\/p>\n Any future laws or state policies about data centers must further consider their water usage, said Royer, from Sierra Club Colorado.<\/p>\n \u201cWe live in a state that has a really fraught relationship with water, which is a resource that is absolutely something to protect,\u201d he said.<\/p>\n Aside from their resource needs, Colorado officials also are eyeing the positive economic impacts of data center development.<\/p>\n People considering the future of Colorado\u2019s data center industry fall into two camps: Those who believe tax incentives are necessary to lure the companies here and those who believe the companies are coming, incentives or not.<\/p>\n \u201cThere\u2019s no boom without an incentive structure \u2014 we\u2019re just not competitive on the cost side as to what other states are,\u201d said Sen. Nick Hinrichsen, a Pueblo Democrat who sponsored this session\u2019s tax incentive bill. \u201cCompanies have been pretty clear that right now we\u2019re not a serious option that\u2019s being considered because of that hurdle.\u201d<\/p>\n![\"Brian](\"http:\/\/www.agencywebdesigners.com\/wp-content\/uploads\/2025\/06\/TDP-L-Expedient-data-RJS-03008.jpg\")
Front Range could be hot new market<\/h4>\n
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![\"A](\"http:\/\/www.agencywebdesigners.com\/wp-content\/uploads\/2025\/06\/TDP-L-Expedient-data-RJS-02610.jpg\")
Drastic shifts in market, power demand<\/h4>\n
![\"Coresite](\"http:\/\/www.agencywebdesigners.com\/wp-content\/uploads\/2025\/06\/TDP-L-data-centers-RJS-03359.jpg\")
Impacts on clean-energy goals, water supplies<\/h4>\n
![\"QTS,](\"http:\/\/www.agencywebdesigners.com\/wp-content\/uploads\/2025\/06\/TDP-L-data-centers-RJS-03022.jpg\")
Are tax breaks needed?<\/h4>\n