Louisiana policy-makers, from Republican Gov. Jeff Landry to the Legislature to the Public Service Commission, can’t blow the huge generational economic opportunity that, whether entirely intended, has come the state’s way.
In the past three months, two separate data center campuses have hit the drawing board in the state. The projects by Meta and Hut 8 (which may team up with Meta) if completed (scheduled within the next year or two) will change and in quantum fashion the state’s high technology sector. It’s part of a sweeping trend in the industry that plays exactly to the state’s strengths.
As cloud computing and artificial intelligence gain wider penetration into the global economy, areas that have three assets will win economic development based on these that in each instance attracts billions of dollars in investments and creates hundreds, even thousands, of well above-average paying jobs: lots of relatively inexpensive land, loads of relatively inexpensive energy sources, and a workforce enabled to service it all. And in these, Louisiana has hit the jackpot.
Plenty of land options exist. Telling is that the large property bought by Meta was going for a song only a year ago, and there are many more like it across the state. Given the state’s abundance of natural gas especially, processing facilities, and pipeline concentration that makes for short distances among source and processor and customer (those two sometimes being the same), this has produced the cheapest gas-fired powering in the country. A workforce educated in information services is the weak point, but the good news there is this kind of knowledge can be ramped up quickly and labor can be imported if needed – and quite willingly, given the state’s population hollowed to some extent under the governorship of Democrat John Bel Edwards that will lower the cost of living and leave plenty of slack for the workforce whether home grown or enticed to relocate.
Expect more deals and massive positive spillover effects. For context, given the present array of data center campuses worldwide, just the two announced projects would vault Louisiana into second place in the U.S. for capacity, and each would rank in the top ten worldwide in terms of power consumption. Indeed, the two together will take as much energy as is consumed by every household combined in the state for now.
This requires creative government and utility policy to fulfill. As an example of the latter, state utilities should reexamine plans to increase relatively renewable energy sourcing to other sources. No analysts seriously believes that power needs, which may quadruple in share of load going to data centers over the next 15 years, even can be close to met by renewable sources.
As an example of the former, policy-makers could enact a variety of tax incentives, loan programs, and reduction of regulatory burdens to leverage Louisiana’s existing competitive advantage. The worst thing that could happen would be losing projects because energy access can’t be guaranteed. From things such incentives to explore for and extract natural gas, building pipeline capacity and transmission lines, and even financial incentives to build electricity generation on site, including the nascent modular nuclear reactor industry, state government can facilitate assurances of power available to the end user.
The more detailed regulatory authority of the PSC can assist in this task. Already climate alarmists have signaled they will try to force deal-killing restrictions into place, such as guarantees of levels of renewable energy use. The PSC in approving power use must give providers as free hand as possible in sources and transport, but as well limiting other consumers from covering any costs. Climate alarmists may go into apoplexy as the deals roll in an it becomes clearer and clearer the state will experience a huge jump in fossil fuel use, but they will fight and create distractions, such as asserting scenarios where providers will spread out costs to ratepayers generally, to try to sink any project that depends upon more than a modest increase in fossil fuel use.
Louisiana policy-makers, such as through sales tax rebates for data centers and reorganization of the Department of Energy and Natural Resources and Landry ordering the easing of red tape, already have kickstarted this process. They can’t let up now as a wave of game-changing economic development seems afoot.
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