It took just one signature from Gov. Wes Moore last year to accelerate data center development in Maryland.

Now, developer Scott Plank’s War Horse Cities firm, which already builds data centers in Virginia, is reportedly considering similar projects in Maryland. Baltimore Peninsula, an urban development spearheaded by his brother, Under Armour CEO Kevin Plank, may add one.

There’s a proposal in Prince George’s County to redevelop the Landover Mall site into 4.1 million square feet of data centers, and a $1.2 billion development in Frederick County is underway.

Maryland has many of the same characteristics that made Virginia an appealing location for the rapidly growing cluster in Loudoun County known as “Data Center Alley.” Both states are close to vital transoceanic fiber cables and the federal government.

Data centers hold plenty of allure for policymakers. Their construction creates trades-related jobs, and annual revenue from their property taxes can ease local budgetary woes.

But some Marylanders aren’t convinced that data centers would make good neighbors, pointing out that they strain local water systems and energy grids. And the backup diesel generators that help power them are noisy and polluting.

“People are really scared about what this development means and what is being pushed out because we are choosing a data center over some other type of mixed-use development,” said Angie McCarthy, the Maryland conservation advocate at Nature Forward. The 125-year-old nonprofit is based in Chevy Chase and was formerly the Audubon Naturalist Society.

Some 20,000 Prince George’s County residents signed a petition to fight the $5 billion project that would put five facilities on 87 acres. In September, the Prince George’s County Council paused all data center permits and applications until an impact study is complete.

Virginia’s Data Center Alley

Data centers are multiplying globally because all those family photos and business documents in “the cloud,” and conversations with ChatGPT, are actually stored in physical locations.

The biggest data centers — often referred to as “hyperscale” — can contain 5,000 or more servers in a facility that’s around 100,000 square feet, about the size of a Manhattan city block.

Each facility can draw something like 100 megawatts of electricity — enough to power between 40,000 and 90,000 homes per year, according to the U.S. Nuclear Regulatory Commission.

Google, Amazon, Microsoft and Apple are dominating the industry. Amazon is investing nearly $150 billion over the next 15 years in its cloud computing services, Bloomberg reported last year. Microsoft needs so much power that it has a deal with Constellation Energy to reopen a long-dormant nuclear reactor at Three Mile Island, the site of a partial nuclear meltdown in 1979.

Across Northern Virginia, more than 545 of these plain concrete buildings, each around 20 feet high and acres wide, pepper the landscape. Another 65 underway are identified by the tower cranes hovering above them and the sounds of their construction interrupting otherwise sleepy suburban neighborhoods.

And many more data centers are planned there.

Some sit mere feet from townhomes, parks and areas once covered in trees. Each facility could have a dozen or more diesel generators to maintain power in the event of a blackout.

Lydia Lawrence said she has watched the landscape of Loudoun County transform, and she wants to warn other states about what they’re getting when they pursue data centers.

The Virginia resident and director of conservation at Nature Forward is leading an effort to teach communities about the impacts of data centers.

Nature Forward launched the Maryland Data Center Reform Coalition this year and recently took community advocates, local county officials and reporters on a tour of data center developments in Ashburn and Sterling, Virginia. The tour attracted people from Anne Arundel, Prince George’s and Montgomery counties — and from as far away as Arizona and Florida.

Maryland’s data drive

Maryland officials see data centers as a way to power up sales, property, corporate and personal income taxes. That’s even more attractive as the state grapples with a $3 billion deficit.

The construction of a 800,000-square-foot data center could support 5,000 jobs and generate an estimated $18 million in annual state tax revenues, according to a report from the Maryland Tech Council. Once operational, it would drop to 500 permanent jobs and $14 million in annual state tax revenue, the report says.

“There are local jurisdictions that are dealing with the same types of revenue crunches that the state is dealing with that are looking for possibilities of increased commercial support within their ecosystems,” said Kelly Schulz, CEO of the Maryland Tech Council.

Schulz also served as the secretary of the Maryland Department of Commerce and Department of Labor under Republican former Gov. Larry Hogan.

The Maryland Tech Council, the largest technology and life science trade association in the state, launched the Data Center Alliance of Maryland last month, signaling data centers as a political priority for the business community.

Moore removed a major roadblock for data centers last year with the signing of the Critical Infrastructure Streamlining Act of 2024. The bill reduces regulatory restrictions on backup generators for data centers and hospitals.

The legislation was in response to development company Aligned Data Centers abandoning its 3.3 million-square-foot project in Frederick County after the Maryland Public Service Commission rejected its request to install 168 diesel backup generators. It had a unanimous vote from both the state’s House and Senate.

“This bill is going to supercharge the data center industry in our state so we can unleash more economic potential to create more good-paying union jobs,” Moore said during the bill signing in May 2024.

The Democratic governor also vetoed a data center study bill this year that would have explored the environmental and financial costs of data centers.

In a statement to The Banner, Moore’s office said the governor “has always maintained that this industry’s growth should be managed responsibly and does not burden Maryland families and small businesses.”

Virginia is decades ahead in data center development and all of the economic advantages it brings, and opening the door for them in Maryland is how the state is “going to win the decade and own the future,” said Stephen Rice, deputy secretary of the Maryland Department of Commerce.

“Data centers create tax base without creating a lot of demand for public services,” said economist Anirban Basu during a business panel discussion at The Banner’s Impact Maryland event this week.

But the tax benefits might be smoke and mirrors, some say. Most data centers are awarded tax exemptions on sales taxes in favor of property taxes. That’s already the case in Maryland.

Good Jobs First, a nonpartisan nonprofit watchdog on tax subsidies and incentives, found in a report in April that at least 10 of 32 states with data centers have lost more than $100 million per year in tax revenue from these facilities. The loss stems from exemptions on sales and use taxes for some of the necessary and most expensive components of a data center.

“If Maryland were to exempt sales taxes, but let local governments tax on property taxes, there’d be a net loss and kind of a shell game within the state,” said Greg LeRoy, executive director of Good Jobs First.

What could be coming

With 41 data centers across Maryland and three more under construction, according to Baxtel, thousands of Marylanders are already neighbors to data centers.

About half are concentrated in Frederick County, and at least 14 are in the Baltimore metro area. More data centers are coming, and likely sooner and closer in proximity than some Marylanders are aware.

Scott Plank, CEO of War Horse Cities, told the Baltimore Business Journal last month that he would use some of the funds from the recent sale of the Sagamore Pendry hotel to develop more data centers in the state. Plank did not respond to requests for comment.

In August, MAG Partners, the New York City-based development company behind the Baltimore Peninsula, where Under Armour recently moved its headquarters, said it was considering changes to the master plan that could include more townhomes, a stadium and a data center.

Regardless of how many new projects come to Maryland, residents already pay for data centers’ pressure on energy infrastructure through their utility bills.

That’s because PJM Interconnection, the power grid operator for Maryland and parts or all of Virginia and a dozen other states, plus Washington, D.C., is planning for the overall completion of $6 billion worth of transmission investments over the next four years.

The grid operator projected a major increase in electricity demand in the region due to the rapid development of data centers — and specifically those in Data Center Alley.