Exterior view of data center building located in Silicon Valley, South San Francisco Bay Area, California

A data center in the San Francisco Bay area. Investors and tech firms are pouring hundreds of billions of dollars into data center construction to fuel its artificial intelligence-related products. iStock photo

Commercial real estate is notoriously boom and bust.

And when it comes to the next hot thing, biotech labs are out and data centers are in.

With tech companies going hog-wild on AI, the development and sale of data centers that make AI possible are picking up where the lab market dropped off a couple years ago.

Big Tech forked over $125 billion for these facilities in 2024 alone, according to New Street Research.

Global spending on AI-related infrastructure, including data centers, is expected to hit $300 billion, according to Gartner.

However, unlike the lab craze, where Greater Boston was flooded with proposals for tens of millions of square feet of new research space, we are in danger of being left on the outside looking in this time.

Why? When it came to lab space, we had huge, built-in advantages in our top-ranked universities, hospitals and research centers.

Yet when it comes to the electricity-hungry AI revolution, and the need for ever larger data centers to power it, we are losing to other states and regions that have something we don’t, and that’s nuclear power.

That’s right, tech companies need large amounts of reliable, non-carbon spewing power sources, and nuclear plants fit the bill.

AI data centers require far more power than the typical data center – by some estimates, ten times as much.

And thanks in part to its two nuclear plants and four reactors, Virginia has become the world headquarters for data centers, with 200 across the state, according to Virginia Public Radio.

More nuclear power is on the way as well, with Amazon inking a deal with the state’s top power provider to develop small modular reactors to help power its data centers.

Even Three Mile Island, which earned notoriety in the 70s after an accident that garnered headlines, is looking to reopen as part of a deal to help provide power for a Microsoft data center.

Left Out of Top 15 Markets

By contrast, despite being home to research powerhouses like MIT and Harvard, Massachusetts is nowhere to be found on the top 15 markets across the country for data centers.

Massachusetts closed its sole remaining nuclear plant, Pilgrim in Plymouth, back in 2019 – though “run out of town” might be a better description.

Even simply decommissioning the plant has become an agonizing process that has dragged on for years.

With the 2014 closure of the Vermont Yankee plant, that only leaves the Seabrook plant in New Hampshire and the Millstone plant in Connecticut as the region’s only nuclear power stations.

Instead, Massachusetts has put all its clean energy eggs in the solar and wind basket and given the struggles the off-shore wind industry has faced, it’s looking like an increasingly questionable move.

So far, the closest the AI data center boom has come to Massachusetts is Connecticut, where a major project is being planned next to the Millstone plant in Waterford.

Beyond capacity, there are also our electric rates, with Massachusetts stuck with some of the highest in the country – a major deterrent to tech companies looking to build data centers.

Why Data Centers Matter

So why care about data centers? Well, along with lots of tax revenue, building and operating them also creates lots of jobs, including skilled, blue-collar jobs that white-collar-heavy Massachusetts could certainly use more of.

During construction, this new breed of data centers – often with price tags north of $1 billion – generate lots of well-paid work for electricians and other construction workers, while also requiring considerable ongoing maintenance after they are up and running.

That’s the word from Mike Monahan, a top electricians’ union official and one-time board member of Boston’s powerful redevelopment authority.

Monahan an IBEW international vice president, and other electricians’ union leaders are scrambling just to keep membership numbers up in New England as an aging workforce hits retirement age.

By contrast, IBEW membership rolls in Northern Virginia are rapidly growing.

“The industry is growing across the country in those areas, but in New England we are staying with the same numbers we have,” Monahan told me in an interview last fall. “We have a lot of members installing solar panels, but it’s a one-and-done thing.”

 

(tag) Scott Van Voorhis is Banker & Tradesman’s columnist and publisher of the Contrarian Boston newsletter; opinions expressed are his own. He may be reached at sbvanvoorhis@hotmail.com.

Why It Matters that Mass. Is Missing Out on the Data Center Boom

by Scott Van Voorhis time to read: 3 min
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