By Micheal White for SPECTRUM NEWS 1
Gov. Josh Stein is questioning the value of incentives North Carolina put in place two decades ago to bring data centers to the state.
The Democrat said recently on social media that data center developers stand to receive $450 million in annual sales tax exemptions if they complete their planned projects. This comes at a time when “state revenue is especially precious,” he said.
“Do we really want to subsidize energy consumption by data centers when they are making everyone else’s power bills go up?” Stein said in a post on X on Wednesday. “It doesn’t make much sense to me.”
The development of power-hungry data centers has burgeoned across the country to meet the demands of artificial intelligence, cloud computing and other digital services. That growth is raising worries in nearby communities about increasing use — and rising costs — of electricity and water.
To ease concerns, Microsoft offered last month to pay for its own infrastructure as it seeks to build a data center on 1,300 acres in Person County. And in a Catawba County proposal in February, the tech giant said it would replenish water supplies and pay the difference in the electricity prices.
But utility costs aren’t the only worries. In Stokes County, a project by Engineered Land Solutions on 1,800 acres approved in January faced pushback from residents concerned about health risks, environmental damage and destruction of historical assets.
Scores of data centers are operating across North Carolina, drawn by low power costs and strategic location along major East Coast fiber routes, according to industry data. The state has 108 facilities operated by 56 providers, according to market research and advisory company, Baxtel.
Stein on Wednesday (April 8th) asked an energy task force he created in 2025 to come up with alternatives to the sales tax breaks for the centers, according to media reports. He has noted the facilities’ demand on the state’s power grid and the potential to drive up power bills.
The aims of the North Carolina Energy Policy Task Force include keeping utility costs affordable for state residents and promoting clean power, Stein said last year in setting up the advisory group.
The data center sales tax breaks were established in 2006, Stein said. They apply to equipment, computer software and electricity purchases. A data center has to invest at least $75 million, meet county wage standards and provide health insurance for full-time workers, according to the state Department of Commerce.
The state is losing out on $50 million in annual revenue by offering the sales tax incentive, Stein said, but that amount could balloon because of projects that have yet to be built.