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Amazon sets aside about $200 million a year for the towns that host its data centers

Amazon will spend about $200 million a year for five years in US towns hosting its data centers, roughly 0.1% of this year's projected $220 billion capex. AWS chief Matt Garman tied it to more than 100 local moratoriums he warned could cost the US its AI lead.

The Product Desk · Product desk

Photograph accompanying Amazon sets aside about $200 million a year for the towns that host its data centers
Photo: geekwire.com

What happened

  • Amazon says it will stop using NDAs with government agencies on data center projects, a change GeekWire reported applies only to new deals.
  • The company also committed to cleaner backup generators at new sites, a yearly report on its energy and water use, and paying enough for power to keep local bills from rising.
  • The program covers community college costs for an estimated 300,000 students, adds 16 training centers, and funds energy upgrades in more than 30,000 homes.
  • Microsoft promised in January not to seek local tax breaks for its data centers, but Amazon told GeekWire it may still pursue them in some cases.

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Why it matters

  • constraint Counties that signed NDAs with Amazon before this pledge get no new disclosure from it, so state rules like Pennsylvania's remain their main lever.
  • decision With incentives still negotiable, a host town's largest number is its tax deal; Garman put Amazon's expected taxes in St. Joseph County, Ind., at more than $3 billion.
  • precedent Once Amazon publishes yearly energy and water figures, towns negotiating with other operators have a public benchmark to ask those operators to match.

This year people in 42 states have protested data centers over power bills, water use and secrecy, TNW reported [1]. In late August an Economist/YouGov poll found that 63% of Americans would oppose a data center in their own community [2]. Built Together is written for those residents and for the county boards they elect [3].

Amazon describes the same residents differently. Garman asserted that the opposition is stoked by "misinformation and outright lies," GeekWire reported [4]. He also pointed to "widespread reports of various countries intentionally seeding misinformation in the U.S. about data centers to trick us into slowing down" [5]. PolitiFact reported last month that the role of foreign influence in the opposition has been exaggerated, with little sign the accounts reached a wide audience [6]. On water and pollution, Garman wrote that Amazon's average data center uses less than 13,000 gallons a day and that its backup generators sit idle 99.9% of the time [7].

"We understand why there is apprehension in some communities where data centers are being built," Garman wrote [8]. The commitments in his post line up with the complaints protesters list [1][10]. Garman described them as a way to codify practices Amazon already follows [9].

Opposition already costs the industry time [11]. Data Center Watch, a group that tracks these disputes, counted at least 75 projects worth about $130 billion blocked or delayed in the first three months of this year [11]. Amazon's projected capital spending this year is more than the cash its business generates annually, according to GeekWire [22].

The headline figure is less itemized than it sounds. Amazon told GeekWire it expects to put more than $100 million into community college endowments and about another $100 million into its training centers [16]. Together those come to roughly a fifth of the $1 billion [1]. The company did not give a full breakdown, GeekWire reported [15]. Local nonprofits and community foundations will hand out the rest for projects such as roads, parks and fire equipment [14].

A county official weighing a project can sort the package with two tests. The first is whether an item leaves a figure the town can check a year later, such as enrollment counts or the annual energy and water report. The second is whether the item is written into this town's agreement or sits in a program Amazon runs and can resize. The reports do not say how Amazon would measure its pledge on local power bills [10]. I'd treat it as passing the first test only after the county and its utility agree a baseline. Foundation grants handed out later pass neither test until the county gets them in writing, and items that pass both are the ones worth trading a permit for. Pressing for written terms slows the deal, and Amazon has other counties to talk to [3].

What to watch

  • Whether Amazon's first annual energy and water report breaks figures out by site or gives only a company total.
  • How Amazon defines the baseline for its pledge to keep local electricity bills from rising, and who measures it.
  • Whether any of the more than 100 moratoriums Garman cited pass in a county where Amazon has a project pending.
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