Amazon is investing $10 billion in data centers in Ohio amid energy woes

• Amazon will invest another $10 billion in data centers in Ohio, Ohio Gov. Mike DeWine said.
• The company will consider locations outside of its power-saturated Columbus center.
• In exchange for tax credits, Amazon committed to creating more than 1,000 new jobs at its data centers in Ohio.

Amazon has committed to spending $10 billion to expand its data center operations in Ohio, adding to the billions of dollars it has already announced it will spend in that state, Ohio Gov. Mike DeWine said Monday.

The tech giant’s new facilities in Ohio, scheduled to be completed by the end of 2030, will help fuel its cloud computing unit Amazon Web Services’ push into AI.

Just last year, AWS announced it would invest $7.8 billion to expand its data center in Columbus and surrounding suburbs. The company began building data centers in the region in 2015 and has at least six different locations either operating or under construction.

Ohio is committed to spending more than $23 billion on data centers in the state, including funds already spent and committed investments, a spokesman for the Ohio Department of Development said.

The investment in Ohio is part of Amazon’s aggressive spending plan to build data centers to support AI demand. Amazon CEO Andy Jassy said on the third-quarter earnings call in October that the company plans to spend 75 billion dollars for capital spending in 2024, the bulk of which will go to cloud computing and data centers, and expects to spend even more next year.

Local politicians have dubbed central Ohio the “Silicon Heartland.” Gov. DeWine touted the AWS announcement this week as “strengthening the state’s role as a major technology hub.”

Most of Amazon’s data centers are located in Northern Virginia, the largest data center market in the world. This area is dotted with new facilities waiting to be connected to the grid. Over the past 18 months, Amazon and its competitors have announced plans to build data centers in states across the country. Just this year, Amazon announced plans to spend $11 billion on data centers in Indiana and $10 billion in Mississippi.

Creating jobs in Ohio

Ohio, which offers a generous range of state and local tax incentives including a sales and use tax exemption of up to 100% for data center equipment, has seen a surge in development.

For this latest investment, the Ohio Tax Credit Authority approved additional job creation tax credits in AWS’s existing economic development agreement with the state. In exchange for annual job creation tax credits, AWS has promised 1,058 “full-time equivalent” jobs with an average minimum wage of $101.37 million per year, an Ohio Department of Development spokesperson told Business Insider.

Ohio law defines “full-time equivalent employees” as the result of calculating or “dividing the total number of hours for which employees have been compensated for employment on the project by two thousand and eighty.” Employees must be employed directly by Amazon for the company to receive its tax credits. However, there is no requirement for the type of jobs Amazon must offer.

When BI contacted AWS and asked what types of jobs would be available at its new data centers in Ohio, an AWS spokesperson repeated the information listed in Governor DeWine’s press release, which described the jobs as “new” and “well-paying.” .

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The demand for electricity is increasing

AWS’s financial commitment to the state will depend on whether local utilities can provide the amount of electricity the company ultimately needs.

AEP Ohio, the Columbus-based utility that supplies Amazon, said earlier this year that it had received 30 gigawatts of service requests from data centers alone — an amount that would bring the region’s electricity needs close to New York City’s.

Much of that demand comes from the wealthy suburban enclave of New Albany, Ohio, where Meta, Microsoft, Google and QTS are all building large data center projects. The location of Intel’s future semiconductor chip factory is in neighboring Johnstown, Ohio. The New Albany Company, the real estate company founded by billionaire retail mogul Les Wexner, orchestrated many of the region’s large land sales to technology companies, including Intel.

According to a statement from Gov. DeWine’s office, AWS will look for locations outside of the Columbus area for its newest data centers, although no final locations have been determined yet. If AWS locates a data center outside of the Columbus region, it will likely be outside of AEP’s service territory.

AEP has asked Ohio’s public utility regulator to approve a tariff and a special rate class for data centers that would require power-hungry facilities to pay for most of the electricity they expect to need – even if they don’t end up using all of it Consume electricity.

The data center industry, including Amazon, is working to reject AEP’s proposal. In a November deposition filed with the Public Utilities Commission of Ohio, Michael Fradette, who leads Amazon’s energy strategy, called the proposal a “discriminatory structure” that “unfairly targets data center customers by targeting customers in certain industries.” “.

The issue has caused a split among corporate interests in Ohio. Opponents of the tariffs include the Ohio Manufacturers’ Association Energy Group, a lobbying arm of the state’s largest manufacturing trade group, and the Ohio Energy Leadership Council, which is represented by David Proaño, an attorney in BakerHostetler’s Columbus office, who also represents Amazon’s data center business before the Public Utilities Commission of Ohio.

Meanwhile, the Ohio Energy Group, whose members include Cargill, Ford, GE and Intel, has come out in favor of AEP’s proposed data center tariffs. Walmart, a large customer of AEP in Ohio, also supported the tariff.

AEP is planning new transmission infrastructure projects to supply data centers in the Columbus area and the Intel chip factory. The future of the chip plant, expected to create 3,000 advanced manufacturing jobs in central Ohio, is uncertain as the company debates spinning off its struggling foundry business.

The increasing energy demand of data centers in the Columbus area has triggered the need for new transmission infrastructure. Under AEP’s existing rate structures, the cost of new transmission lines to data centers could be passed on to other ratepayers.

Many of AEP’s residential, commercial and industrial customers saw transmission costs increase by $10 per month in April, the fourth rate increase approved by the utility in three years. Next year, average bill amounts will rise by another $1.50 per month to ensure grid reliability, the utility said.

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