Alec Willis moved to Monrovia, Indiana, weeks before learning he would soon have a new neighbor: a 390-acre Google data center campus that will require twice the electricity of all Indianapolis households combined when operational, according to a consumer advocacy group’s analysis.
Willis and other residents didn’t understand how the project would benefit them. Data centers provide few direct jobs and require massive amounts of energy and water. When county officials went full steam ahead, even sweetening the deal with local tax abatements, Willis felt betrayed.
What happened in Morgan County is far from unique. In the past decade, bigger and more demanding data centers have sprouted across the Midwest as companies seek cheap electricity, land and generous tax incentives. Illinois, Ohio, Kentucky, Michigan and Indiana have a combined 592 data centers either planned or operational, according to Data Center Map.
The latest companies to join the fray are tech titans forking over billions in the race to develop more sophisticated artificial intelligence. Amazon, Meta, Microsoft, Google and OpenAI have at least 34 projects planned or operating in Indiana and its border states, according to an IndyStar analysis of data from Data Center Map. The sheer size and demand of these facilities come with a hefty price tag as data center investment is anticipated to crack $1 trillion by 2027.
By 2028, the number of facilities, and their energy demand, will nearly double in regions like Chicago and Columbus, Ohio, according to a report from S&P Global. Meanwhile, data center markets in Michigan and Kentucky are just beginning to grow.
But many of the residents living among the sprawling fields and farms don’t want their idyllic rural lifestyle to change. They’ve seen cornfields transformed into shiny, humming warehouses in just a few years, propped up by new electricity infrastructure that threatens to inflate their power bills.
Take Minooka, Illinois, for example — a village on the outskirts of Chicago. A data center may soon join its nearly 13,000 residents, gulping 3 million gallons of water per day and enough electricity to power half of Chicago households.
Data center companies say they’ve helped revitalize the communities they invest in, providing direct and indirect jobs as well as pumping money into the local economy. The offer is hard to refuse: Minooka’s potential data center could bring in tens of millions in tax dollars per year.
That kind of deal isn’t worth it for skeptics like Bryce Gustafson, an organizer for the consumer advocacy nonprofit Citizens Action Coalition. He recalled advice he’d heard on a visit to Virginia’s “Data Center Alley,” which holds the highest concentration of data centers on the globe.
“Don’t let them get their foot in the door,” he said, “because they’ll come bursting through.”
What are data centers?
Data centers have been around for decades, but they’ve become bigger and more demanding in the past few years. What exactly happens behind the walls of those steel warehouses?
When you search for information online, the computational power to deliver the results comes from advanced processing units — each with the power of 100 personal computers — stored in a data center potentially thousands of miles away. In the past, people could only perform digital functions if they owned the computational resources. Now, nearly everyone can access some level of computing resources through cloud computing, where resources are pooled together and stored remotely.
Demand for more Midwest data centers skyrockets
What are data centers and why are they needed?
The demand for these data centers skyrocketed when generative artificial intelligence tools like ChatGPT became available to the public. Generative AI consumes massive amounts of energy, experts told IndyStar, because it must be fed a lot of data to work.
That could change, said Walid Saad, an electrical and computer engineering professor at Virginia Tech. The eventual goal with AI is to teach it to do more with less data, he said, bringing it closer to true intelligence rather than software that recognizes patterns to mimic intelligence.
In the meantime, for data centers to help the internet and AI run smoothly, many must be built all across the country.
“How it’s supposed to work is that this giant network all talks to one another and wherever it’s the fastest, it will send that computational task to that area, kind of like the internet itself,” said University of Virginia professor Lauren Bridges, who studies cloud computing.
Why data centers are flocking to the Midwest
As former data center hotspots like northern Virginia near saturation, the Midwest may just be the next frontier.
Chicago was identified as a primary data center market, according to a report from commercial real estate company CBRE released earlier this year, with investment in Indiana also expected to grow.
While Kentucky and Michigan are in the beginning stages of data center buildout, the pace of investment may soon transform the two states: A company announced plans to build Kentucky’s first large-scale data center earlier this year, and Michigan will soon see a multibillion-dollar investment from OpenAI and Oracle in the form of Project Stargate, which Gov. Gretchen Whitmer has called the “largest economic project in Michigan history.”
Data centers generally thrive when there is easy access to power, water, affordable land and fiber optic cables, experts said. Companies also look for states with a favorable tax and development climate, Bridges said.
Most Midwestern states offer partial or full sales tax exemptions from 20 to 50 years. The region has also shown an openness to expanding electricity generation. Indiana, Illinois and Michigan have all passed legislation to encourage nuclear power development this year.
Those three states border the Great Lakes, which Bridges said makes them particularly attractive for data centers since they usually require a lot of water for cooling.
Another likely explanation: “Once a market has been established as being favorable for the conditions of building and approving new data centers,” Bridges said, “then I think more will come.”
The Midwest is also a central location with a dense network of transmission lines and record levels of investment in electric grid upgrades — though grid operator executives admitted last year that more would be needed to meet expected surges in power demand.
In some cases, data center demand is pressuring utilities to build new fossil fuel infrastructure or delay retirement of aging, coal-fired power plants — the most polluting form of energy and a major contributor of U.S. greenhouse gases — even as the world’s leading scientists are urging a rapid reduction in fossil fuel use.
That’s not the only environmental impact, either — while data center companies are trying to reduce water usage, the process of generating electricity also requires a lot of water.
Is the data center boom doomed to bust?
One of the forces driving the data center boom is their massive economic impact, though critics speculate the boom may actually be a bubble.
The country’s annual rate of GDP growth in the first half of 2025 was just a tenth of a percent without data center and information technology processing investment, according to calculations by a Harvard economist.
Experts and even industry leaders like Amazon founder Jeff Bezos and OpenAI CEO Sam Altman have expressed concern the AI market is a bubble. Some have likened it to the dot-com bubble of the late 1990s, which burst in 2000.
While there’s evidence that the sheer amount of data center investment has buoyed state economies, the benefits to local communities are hard to quantify. Jobs in data centers are few and far between, with the exception of larger projects, and often require advanced training. Roles can include security guards, operators and technicians.
But there’s an indirect job gain, too — one of many perks companies like Amazon have touted when advocating for their projects.
Will the Midwest become a new data center hotspot?
Tech titans are bringing hundreds of data centers to the Midwest.
“The amount of investment that’s going into our economy related to data center infrastructure is unprecedented,” said Shannon Kellogg, vice president of public policy at Amazon.
Amazon’s data centers in New Carlisle, a town in northwest Indiana, will employ 1,000 people and additional temporary construction jobs. The 1,200-acre campus will consume more than 2 gigawatts of electricity — which could power 1 million homes — to train AI models for the startup Anthropic.
The company will also receive a boon in tax incentives. Amazon could save up to $4 billion locally over 35 years thanks to an 85% technology tax exemption, according to calculations from the South Bend Tribune, with additional savings from a 50% property tax abatement. That’s before an estimated $4 billion in state exemptions over several decades.
But the community is benefiting too, Kellogg said. Besides the $11 billion investment in the data center campus, Amazon is contributing $7 million to local road improvements and has established a $100,000 fund to help the community with things like workforce development, STEM and homelessness. They will pay $1 billion in property taxes in the next 35 years, Kellogg said.
Preliminary evidence indicates states may be coming out on top even as they forfeit tax revenue. Between 2017 and 2024, data centers in Ohio, a state that’s seen significant data center investment, contributed $5.21 billion in taxes compared to the $2.5 billion in incentives received, according to a report by the Ohio Chamber of Commerce Research Foundation. Jobs and GDP roughly doubled during that period, the report found, while cutting the incentives would risk reducing investment and jobs by around a third.
But critics claim the sheer amount of revenue states are forgoing to attract data centers is ballooning budgets. In 2023, Illinois spent $371 million on state and local data center subsidies, according to a report by Good Jobs First — a 3600% increase from 2020.
It’s also murky exactly how much of a return on investment states are getting. Illinois spent an average of $1.4 million per data center job, according to another Good Jobs First report released in November. States are losing 52 to 70 cents per dollar spent on data centers, according to the few states who have calculated a return on investment.
There’s no guarantee jobs created by data center projects will go exclusively to community residents, either. Earlier this year, a union went on strike to protest the use of out-of-state construction workers for a data center development in Michigan City, Indiana.
‘A quiet revolt in the heartland’
Many communities are beginning to resist, too. From Chicago to rural Michigan, what was once a relatively niche concept has become a kitchen table issue.
In Michigan’s Howell Township, hours of opposition during public comment led the planning commission to recommend against a data center from a Fortune 100 company in September. A similar phenomenon took place in Kentucky, where Oldham County residents successfully thwarted a $6 billion data center project.
“Right now, we’re at the whim of some mysterious, gigantic (company) that we’re just supposed to trust, even though they won’t trust us with knowing who they are,” said Kristin Dennison, who recently moved to Howell Township.
The grassroots opposition has local officials there considering a data center moratorium.
“There’s kind of a quiet revolt in the heartland,” said Bryce Gustafson, an organizer with Citizens Action Coalition.
Between March and June, opponents across the nation blocked $98 billion in data center projects. Local officials may soon see political consequences for supporting data centers if residents choose to express their dissatisfaction at the ballot box.
It’s playing out already in Virginia, the “guinea pig” for data center growth. Several local officials who voted for data centers have been voted out of office, said John McAuliffe, a Democratic candidate recently elected to represent a part of northern Virginia that includes “Data Center Alley.” On Nov. 4, he flipped a seat held by Republicans for three decades after running on a platform critical of data centers.
“The problem is these customers are the richest companies on the planet,” he said. “So they should be paying their fair share, and they should not be expecting us to both foot the bill and then give them a hefty tax credit.”
At the heart of the backlash to data centers is a perception that limited resources are being diverted to an entity that won’t benefit communities directly. In that sense, data centers can feel like “digital gated communities,” said Bridges, the professor, where residents may bear the cost of supporting the facility without having special access to what it produces.
But for all of the criticisms of data centers, halting their growth prematurely could have consequences, too.
“What are we being sold?” she said. “What is the cost of both supporting that growth, and what is the cost of potentially not supporting that growth?”
Whether local governments welcome data centers or not, they’re coming — and they have an ally in President Donald Trump’s administration.
“There’s a pretty big push right now from the federal government to do things that will enable the U.S. to stay ahead in AI,” Kellogg said.
Rejecting data centers would hurt the U.S. economy, Kellogg said, but would also have implications for national security.
“That’s what’s at stake here,” he said.
Contact breaking politics reporter Marissa Meador at mmeador@gannett.com or find her on X @marissa_meador.
The Courier Journal’s Connor Giffin and the Livingston Daily’s Tess Ware and Makayla Coffee contributed reporting.
