Build Energy Abundance or Lose the Future

Originally published on Substack.

America is in the middle of a quiet but consequential infrastructure race.

Demand for cloud computing, artificial intelligence, digital payments, telehealth, logistics, and cybersecurity is exploding.
The physical backbone of all of it is data centers.

Whether states attract that investment or drive it away will hinge less on technology and more on policy choices.

A new report from the Goldwater Institute makes the case clearly: data centers are not a threat to economic prosperity.

They are essential infrastructure for the modern economy. Yet lawmakers across the country are responding with restrictions, moratoria, and energy rules rooted in scarcity thinking rather than market realities.

This debate is not really about data centers. It is about whether states choose abundance or artificial scarcity.

Data Centers Power Everyday Life

Data centers are often discussed as if they were niche projects for “big tech.” In reality, they support daily economic activity most people take for granted. Navigation apps, cloud storage, online banking, remote work platforms, streaming services, and AI tools all rely on data centers operating continuously behind the scenes.

Artificial intelligence only heightens the stakes. AI systems require immense computing power to train and operate, and that capacity does not live on personal devices. It lives in data centers. States that want the productivity gains AI promises cannot reject the infrastructure that makes those gains possible.

As Goldwater explains, states with predictable permitting, clear land-use rules, and respect for property rights are attracting billions in private investment. States that politicize infrastructure are not stopping growth. They are redirecting it elsewhere.

The Energy Argument Is Backward

The most common objection to data centers is electricity demand.

Critics warn that growth will overwhelm grids and crowd out households and small businesses. That concern sounds reasonable until you examine the assumptions underneath it.

Most demand forecasts assume data centers must draw their full energy load from the grid. That assumption is wrong.
Many data centers already generate power on site or plan to do so. With the freedom to innovate, they can deploy small modular nuclear reactors, clean reliable energy systems, and other private generation technologies to meet their own needs and, in some cases, provide surplus power back to the grid.

This is where insights from a recent Cato Institute briefing paper are critical.

Cato explains how private electricity grids and consumer-regulated power arrangements offer a parallel path to reliability outside monopoly utility systems.

When consumers and firms are allowed to contract for power directly or generate it themselves, energy supply expands, innovation accelerates, and risk is better aligned with decision-makers.

If electricity demand estimates assume 100 percent grid dependence, they exaggerate the problem and ignore the solution.

Policy Is Creating the Scarcity It Claims to Fear

Unfortunately, some states are moving in the opposite direction.

Texas passed legislation last year that reportedly restricted data centers from producing their own electricity while simultaneously offering targeted tax incentives. That approach discourages self-generation while shifting risk onto captive ratepayers.

South Carolina and other states are now debating similar paths. At a recent FITSNews forum, participants asked how states should redefine economic development for the technology age. The wrong answer is to block or micromanage the infrastructure of that economy.

Polling from the South Carolina Policy Council shows voters care about affordability and growth, not symbolic regulation.
That skepticism is rational, especially in states still dealing with the fallout from failed government-run energy projects like V.C. Summer, where ratepayers were forced to subsidize political decisions that collapsed.

Ratepayers Should Not Be the Backstop

There is a legitimate concern buried in this debate: households and small businesses should not be forced to subsidize large private users if utilities expand capacity to serve them. That concern is valid. But bans and restrictions are not the answer.

The answer is competition.

Allow off-grid generation, private power contracts, and parallel electricity systems.

Let large users internalize their energy costs instead of socializing them. When firms pay for their own power, they invest in efficiency, reliability, and innovation.

Markets do that naturally. Monopoly utilities do not.

As I argued previously in Stop Blaming Data Centers. Start Fixing Energy Policy, data centers are not the cause of grid stress. They expose weaknesses created by decades of overregulation and centralized control.

Abundance Beats Regulation Every Time

The central lesson from both the Goldwater Institute and Cato Institute research is the same: competition is the best regulator.

Firms disciplined by markets respond faster, allocate resources more efficiently, and innovate continuously. Heavy-handed regulation freezes technology in place and locks in today’s inefficiencies.

The same logic applies to water use. Modern data centers recycle water extensively and are often more efficient than traditional industrial users. The evidence does not support claims that they pose a significant strain on water resources.

States that choose abundance expand supply, lower costs, and attract investment. States that choose scarcity ration growth and watch opportunity leave.

A Final Note for Lawmakers

Data centers are coming whether policymakers like it or not. The only real question is where they will be built.

States that embrace private energy generation, competitive electricity markets, and regulatory humility will win jobs, capital, and technological leadership. States that respond with fear-driven rules will export those benefits elsewhere.

The choice is not between growth and responsibility. The choice is between markets that adapt and politics that stall.

Let people build. Let energy supply expand. Let competition work.

Recap for Legislators:
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• Data centers are core economic infrastructure, and restricting them will not stop demand for digital services or AI — it will simply push investment, jobs, and tax base to other states.
• Electricity concerns are policy-driven, not technology-driven. Allowing private, off-grid power generation and competitive electricity supply prevents grid crowd-out and protects ratepayers better than bans or mandates.
• Energy abundance beats regulation. Expanding reliable supply through competition, private generation, and nuclear solves grid stress and supports growth without new bureaucratic control.