Colorado is in the middle of a data center boom. You may or may not notice it as you travel along the Front Range, but the world’s digital infrastructure is rapidly taking root here.
Warehouses full of hyper-efficient computers powering everything from email to artificial intelligence. Denver alone projects nearly a 200 percent increase in data center growth, while utilities like Xcel Energy warn they will need $22 billion in new infrastructure to meet the rising demand for electricity.
Some are calling the Interstate 25 corridor “Data Center Row.” Others see potential for jobs and an increased tax base. And many Coloradans are asking a reasonable question: What does all this development actually mean for our communities, our water, our climate, and our energy bills?
As a researcher who studies the political and environmental dimensions of emerging technologies, the reality is this: Data centers are reshaping Colorado’s environmental and economic landscape in real time, and we need smart, transparent policy to guide that growth.
The scale is new, and enormous
A single AI-oriented data center can use as much electricity as 175,000 homes. Colorado has more than 60 data centers already, most clustered along the Front Range. Dozens more facilities, some exceeding 160 megawatts of power capacity, are planned or under construction.
This growth isn’t happening in isolation. Two federal executive orders issued this year removed environmental guardrails and fast-tracked data center construction nationwide. Colorado, eager not to lose investment to competitors like Texas, Iowa and Wyoming, has responded with tax incentives and the proposed “Data Center Development and Grid Modernization Act,” which sought to trade subsidies for basic energy and water stewardship requirements.
But even with efficiency improvements, the sheer scale of AI adoption means electricity demand is rising steeply, and the 1970s-era infrastructure we have isn’t built for the capacity of demand. Xcel projects that by 2040, data centers alone could require 8.5 gigawatts of power, roughly the equivalent of adding another Denver metro area to the grid.
The environmental impact is complex
Data centers are frequently criticized for their significant water needs and potential to strain local utilities. And it’s true that some proposed facilities in Colorado could consume hundreds of thousands of gallons per day if they rely on conventional evaporative cooling, putting a significant strain on an already scarce regional water supply.
But some newer facilities are adopting lower-water or water-free cooling technologies, such as liquid cooling, adiabatic systems and air-side economization. Still, these technologies are not yet industry-wide, and the cumulative effects of rapid data center growth could place real pressure on Colorado’s limited water supplies.
Energy use is also a key concern. Data centers currently account for 4.4 percent of U.S. electricity demand, and with rapid AI growth, that number could triple within a few years. Utilities may pass infrastructure costs on to ratepayers. And Colorado’s grid is still far from fully decarbonized. More load without more clean energy risks prolonging fossil fuel reliance.
Social impacts
Communities across the country have pushed back on data center proposals because of noise, diesel backup generators, light pollution, and secrecy around energy and water use. Colorado is starting to see the same concerns, particularly concerning the 600,000 square-foot center under construction in Denver’s densely populated Elyria-Swansea neighborhood.
Transparency remains a major problem. Some companies claim that disclosing energy or water use gives competitors an edge, leaving neighbors and local governments in the dark. And local officials, eager for economic development, may grant tax breaks without fully understanding long-term costs: increased grid infrastructure needs, potential rate hikes and land-use tradeoffs.
Meanwhile, the jobs picture is mixed. Construction jobs are plentiful, but once built, even massive data centers often employ fewer than 100 workers.
What can Colorado do?
Data centers are not going away; they are the backbone of the growing digital economy. But without effective policy, we risk letting the industry set the terms. Colorado can lead nationally by pursuing three principles:
- Require full transparency on water, energy and emissions. Every data center should publicly report annual water use, cooling methods, electricity consumption and backup generator operations. Communities deserve to know what is being built in their backyard.
- Tie incentives to real climate commitments.
• 100 percent clean electricity procurement
• Water-efficient or water-free cooling technologies
• Investments in grid modernization that don’t fall solely on ratepayers
Colorado’s recent attempt — SB-280 — moved in this direction before collapsing under pressure. It should be revived and strengthened. - Plan for regional impacts, not project-by-project approvals. A single data center is manageable. Dozens clustered together can reshape electricity demand, land use and noise levels for an entire region. Colorado needs coordinated regional planning to avoid the chaotic landscapes seen elsewhere.
The reality is, data centers are foundational to how we live in the world today, and more so in the future. We know how to build them better, with community input and more sustainable resource use. We should demand that the infrastructure powering AI and the broader digital economy operates within Colorado’s environmental limits and contributes to a livable, resilient future.
If we get this right, Colorado can be a national leader in responsible AI infrastructure. If we get it wrong, we’ll spend decades trying to retrofit the consequences.
This article was originally published at coloradonewsline.com. Colorado Newsline is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Colorado Newsline maintains editorial independence. coloradonewsline.com
