Arizona Data Centers: Start With the Facts
Data centers raise fair questions about water, power, and local impacts.
They also bring investment, jobs, and tax revenue. Arizona should weigh all of it.
Arizona can grow.
And get this right.
Three numbers worth knowing.
Start with water, power, and what Arizona gets in return.
WATER
UNDER 0.2%
Estimated share of Arizona’s annual water use
Bluefield Research estimates Arizona data centers drew about 10,200 acre-feet from local water systems in 2025. That’s about 0.15% of Arizona’s total annual water use.
Source: Bluefield Research, via The Arizona Republic
POWER
15.2¢ vs. 18.3¢
Arizona vs. U.S. residential electricity rates
Arizona households still pay less per kilowatt-hour than the national average. We can keep it that way by making major new users cover the costs they create.
Source: U.S. Energy Information Administration, June 2026
GROWTH + ECONOMY
$1B+
State and local tax revenue in 2024
Arizona’s data center industry contributed more than $1 billion in state and local tax revenue and supported more than 20,000 direct jobs in 2024.
Source: PricewaterhouseCoopers (PWC)
Water
Arizona has grown. Its water use hasn’t.
Arizona has added roughly 6.5 million people since 1957 and uses less total water today than it did then.
Phoenix delivers less water today than it did in 2000, despite adding hundreds of thousands of residents.
Arizona could close every data center tomorrow and still face mandatory cuts on the Colorado River.
All Arizona water, 100 dots
Each dot represents 1% of Arizona’s annual water use. Bluefield Research puts data centers’ current draw from local water systems at about 0.15% — roughly a seventh of a single dot. All commercial, industrial, and institutional uses combined account for about 15 dots.
Real project water use and 2 expert quotes
Arizona, 1957 to 2019: population up, economy up, water use slightly down
What real projects actually use
There’s no single number for data center water use. It depends largely on how each facility is cooled. But let’s look at some Arizona examples:
Project Blue
15,000–20,000
estimated gallons per day at Project Blue
Project Blue is expected to use a closed-loop, air-cooled system. You could build 3,000 facilities that size, and their combined on-site water use would still be less than 1% of all the water Arizona uses in a year.
Project Baccara
About 9
acre-feet a year for three years to fill its cooling system
The developer says the closed-loop system will operate with near-zero evaporation once filled. During the three-year fill, it would use about as much water each year as 30 Arizona homes.
Data center water use in the Phoenix, Pinal, and Tucson active management areas is “not a concern” right now.
Sarah Porter, Director, Kyl Center for Water Policy, ASU
On Arizona’s broader water challenge: “This is not a demand problem that we’re facing. It’s a supply problem that we’re facing.”
Max Wilson, Water Resources Management Advisor, City of Phoenix
Sources: Arizona Department of Water Resources · Arizona Public Media · U.S. Energy Information Administration (2012 data) · Project Baccara · Sarah Porter, Pinal County Board of Supervisors, April 15, 2026 · Max Wilson, GPEC webinar, August 19, 2026
Power
More demand doesn’t automatically mean higher household bills.
Large new users require new infrastructure. When it comes to household bills, the key question is who pays for it.
“Growth should pay for growth. It’s that simple.”
Ted Geisler, Chief Executive Officer, APS
Residential electricity, cents per kWh
The APS proposal and 3 quotes from utilities and regulators
What APS is proposing
45%+
proposed rate increase for extra-large energy users
APS says the increase and updated cost allocation are designed to keep growth-related costs with the customers driving them.
What Arizona’s utilities and regulators say
Growth pays for growth
Major utilities and Corporation Commission members agree that large users should cover the costs they create.
In their own words
“Large commercial and industrial customers, including data centers, pay the costs… so those costs are not shifted to residential customers.”
Salt River Project“Large industrial customers pay rates designed to recover the full cost of serving them.”
“TEP’s pending request for new rates is unrelated to any new data center project.”
Tucson Electric Power“We must ensure new growth continues to pay for the demands large users place on our system… making sure residential and small business customers are not on the hook for large development that taxes our grid.”
Kevin Thompson, Commissioner, Arizona Corporation CommissionSources: Arizona Public Service pledge · Arizona Public Service rate case · Salt River Project · Tucson Electric Power · Arizona Corporation Commission large-load workshop
Growth + Economy
Arizona gets something in return for growth.
Data centers bring challenges Arizona can manage. They also bring revenue, investment, construction, and jobs.
Whether Arizona should offer incentives is a fair debate. Whether the industry generates substantial tax revenue is not.
Arizona data center taxes, 2024
$1B+
in combined state and local tax revenue generated
PwC’s estimate reflects revenue collected after incentives, credits, and abatements.
See the 2023–2024 tax breakdown
One year of growth
Up ≈10%
combined state and local tax revenue
From $916 million in 2023 to more than $1 billion in 2024.
State and local tax revenue, 2023 to 2024
| 2023 | 2024 | |
|---|---|---|
| State taxes | $554M | $607M |
| Local taxes | $362M | $397M |
| Combined | $916M | $1.004B |
Project Baccara
$52M
in projected annual taxes
The developer projects $41 million annually for Maricopa County schools, $7 million for Maricopa County, and $4 million for special tax districts, plus about 100 permanent and 1,400 induced jobs.
Luckett Road
$15M
in projected annual town tax revenue at Phase 1 buildout
Marana also projects approximately 4,500 phase-one construction jobs and about 400 permanent jobs.
Sources: PricewaterhouseCoopers · Town of Marana · Project Baccara presentation
Other Concerns
Zoning can address local impacts.
Noise, heat, lighting, site design, and proximity to homes are legitimate local concerns. Zoning can set reasonable standards for each.
Set the rules before approval.
Enforce them after.
What zoning can address
- NoiseAcoustical studies, property-line sound limits, equipment placement, sound barriers, testing hours, and post-construction monitoring.
- HeatCooling equipment layout, exhaust height and direction, setbacks, buffers, and strategically placed landscaping.
- NeighborsDistance from homes and sensitive uses, landscaping, screening, and enforceable operating conditions.
- Appearance and lightingBuilding design, equipment screening, landscape buffers, height, and outdoor lighting standards.
What the ASU heat study actually found
What the ASU heat study actually found
Critics often cite this ASU study as evidence that data centers are heating up the Valley. Across five measurement runs at four Phoenix-area facilities, average downwind temperatures were 1.3 to 1.6 degrees Fahrenheit warmer than corresponding upwind areas, with a maximum observed difference of 4 degrees.
The warming was observed 100 to 500 meters downwind of facility perimeters, meaning the measured effect was localized rather than Valley-wide. The researchers also described the findings as “initial observations.”
The impact can be reduced
Researchers observed an apparent cooling effect near irrigated green space and said equipment design and site layout could reduce a facility’s thermal footprint.
How far the measured heat effect reached
In 2025, Ceres looked at 124 data centers around Phoenix — the ones running now plus the ones announced — and counted the water used on site along with the water used to generate their electricity.
Under 1%
of Arizona’s annual water use
Even with every announced facility running, the total comes to roughly 0.8% of what Arizona uses in a year.
That doesn’t mean every project belongs everywhere. Water source, cooling system, and local conditions all still matter. But we should be honest about the scale.
Sources: Ceres, “Drained by Data” · Arizona Department of Water Resources
DATA CENTER HOTLINE
Got a question about data centers in Arizona? Ask us.
Water. Power. Noise. Tax incentives. A project in your neighborhood. Call and leave a message, send a text, or email us. We’ll research your question and get back to you with the facts.
Below are some of the common questions we get.
Frequently asked questions
What you’ll hear vs. what the facts show.
These are some of the most common claims about data centers in Arizona.
Here are direct answers, backed by sources you can check yourself.
Not the driver | “Data centers are draining Arizona’s water.”
Data centers use water, but the scale is far smaller than the rhetoric suggests. Bluefield Research estimates that Arizona data centers drew roughly 0.15% of the state’s annual water use in 2025. A separate Ceres analysis found that even with every operating and announced Phoenix-area facility running, on-site use plus water used for electricity generation would remain under 1% statewide.
The broader record matters too: Arizona has added roughly 6.5 million people since 1957, and we use less total water today than we did then.
Arizona should require efficient cooling, better disclosure, and projects suited to local supplies. But data centers aren’t driving the Colorado River shortage. Arizona could close every data center tomorrow and still face mandatory cuts.
Sources: Bluefield Research, via The Arizona Republic · Ceres, “Drained by Data” · Arizona Department of Water Resources · Cronkite News
Real project numbers | “Nobody will say how much water they actually use.”
Water use varies by facility, cooling system, water source, and operating design. Project Blue’s developer estimates it will use approximately 15,000–20,000 gallons per day once fully operational. Project Baccara’s developer estimates about nine acre-feet a year for three years to fill its cooling system, with near-zero evaporation once the closed-loop system is filled.
Sources: Arizona Public Media · Project Baccara
Not automatically | “They’re going to raise my power bill.”
Arizona’s residential electricity rates are below the national average. Virginia has more than four times as many operating data centers as Arizona, and its residential electricity rates are also below the national average.
There’s no automatic rule that a data center raises household power bills. The outcome depends on how rates are designed.
In Arizona, utilities, regulators, and consumer advocates have agreed on the basic principle: large users should pay the costs they cause. APS’s pending rate case proposes a more than 45% rate increase for data centers and other extra-high-load customers to help prevent those costs from shifting to families and small businesses.
Sources: U.S. Energy Information Administration · Pew Research Center · Arizona Corporation Commission · Arizona Public Service
Growth should pay | “Ratepayers will end up paying for the buildout.”
Arizona utilities already use upfront payments, minimum bills, and termination protections to keep infrastructure costs with the large customers creating them.
Salt River Project requires qualifying large-load customers to pay certain upgrade costs upfront and minimum bills based on committed demand. Tucson Electric Power’s Project Blue agreement requires full-cost service, minimum monthly payments, and financial protections if the project terminates early.
Sources: Salt River Project · Tucson Electric Power
$1B+ after incentives | “They get tax breaks and barely pay anything.”
PricewaterhouseCoopers estimates that Arizona data centers contributed more than $1 billion in combined state and local tax revenue in 2024, including $607 million in state taxes, after incentives, credits, and abatements.
Scale matters. Gov. Hobbs’ FY2027 budget estimated the state incentive at about $38.5 million annually, while a Phoenix audit estimated the city forgoes a little over $12 million a year.
Whether Arizona should offer incentives is a fair debate. But those incentives should be weighed against the tax revenue and private investment they help attract.
Sources: PricewaterhouseCoopers · Phoenix Business Journal · The Arizona Republic
Construction and permanent jobs | “They cover hundreds of acres and barely hire anyone.”
Permanent employment is lower than at a factory of the same footprint. That’s a fair point, but it’s not the whole picture.
The approved data center project on Luckett Road in Marana is projected to support about 4,500 construction jobs during Phase 1 and roughly 400 permanent jobs. Project Baccara separately projects about 100 permanent jobs and roughly 1,400 additional jobs in the surrounding economy.
Statewide, PricewaterhouseCoopers still estimates that Arizona data centers directly employ over 20,000 people.
Sources: Town of Marana · Project Baccara · PricewaterhouseCoopers
Localized, not Valley-wide | “An ASU study found data centers are heating up the Valley.”
The ASU study found a real but localized heat effect, not Valley-wide warming. Across five measurement runs at four Phoenix-area facilities, average downwind temperatures were 1.3 to 1.6°F warmer than corresponding upwind areas.
The effect was measured 100 to 500 meters downwind of facility perimeters. Researchers described the findings as “initial observations.”
They also observed an apparent cooling effect near irrigated green space and noted that equipment design and site layout could reduce a facility’s thermal footprint.
Source: Journal of Engineering for Sustainable Buildings and Cities
Zoning’s job | “Data centers are too loud to put near homes.”
Noise is a legitimate local concern. Zoning can address it through acoustical studies, property-line sound limits, equipment placement, setbacks, screening, and post-construction monitoring.
Phoenix and Marana already use these kinds of tools to regulate data center noise and siting. The question is how to manage local impacts responsibly, not whether every data center is inherently incompatible with a community.
Sources: City of Phoenix Ordinance G-7396 · Town of Marana Ordinance 2024.029
Local rules already exist | “Nobody has set any rules for these things.”
That’s no longer true. Here are just six Arizona cities, towns, and counties that have adopted data center-specific zoning or development standards.
Arizona rules already on the books
- ChandlerNoise studies, neighborhood notification, sound mitigation, and generator limits.
- MaranaResidential setbacks, noise standards, utility requirements, and cooling-water restrictions.
- MesaCity Council approval, plus location, design, screening, noise, and operating standards.
- PhoenixSpecial permits, utility-capacity requirements, design standards, and additional residential noise protections.
- Cochise CountySpecial-use approval, water-use plans, noise analysis, and power protections.
- TucsonSeparation distances, noise limits, water and power requirements, landscaping, and public review.
The details vary, but the principle is the same: communities can set clear standards before approving projects and enforce them afterward.
A statewide moratorium would not strengthen local control. It actually overrides it.
Sources: City of Chandler · Town of Marana · City of Mesa · City of Phoenix · Cochise County ordinance · City of Tucson
No express lane | “They get fast-tracked while everyone else waits.”
Across Arizona, data centers still face local zoning, permitting, and safety requirements. In Phoenix, a new data center requires a special permit, a Planning Commission recommendation, and City Council approval. The city also sets requirements for location, utility service, site design, landscaping, equipment screening, setbacks, and noise review near residential areas.
Those local approvals do not replace standard building and safety permits. Arizona should want a faster, more predictable permitting process for everyone. Data centers don’t just get to skip it.
Source: City of Phoenix Ordinance G-7396
Nearly four hours in public | “This is all being decided behind closed doors.”
Take Marana’s Luckett Road rezoning, approved January 6, 2026. It went through the Planning Commission before reaching the Town Council. The council meeting featured a public presentation, extensive questions from council members, public comment, testimony from the developer and electric utilities, and a discussion of the project agreement and its requirements.
Nearly 50 people signed up to speak, and the data center discussion ran close to four hours. The full meeting was longer than any other in Marana’s online video archive, which dates back to 2017.
People could watch the meetings, read the filings and project agreement, and speak for themselves. Public meetings don’t mean every decision will satisfy everyone, but that doesn’t mean the public had no say.
Sources: Town of Marana · Arizona Public Media
Project 48’s view | “Just pause everything until we figure it out.”
Arizona communities are already setting their own standards for water, power, noise, heat, and siting.
A statewide moratorium would override local decision-making by treating every community and every project the same, including those that meet locally adopted standards.
Arizona should set strong rules where needed, enforce those already on the books, and judge projects on their merits.
See the evidence: Water · Power · Growth and Economy · Other Concerns
Arizona can grow responsibly.
Set standards. Make growth pay for growth. Let the facts decide.