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Data centers descend on needy Upstate NY towns. Is anyone looking out for us?
Tim Knauss, 5.6.26

Across New York, the owners of vacant industrial properties are turning to data centers.

An old gun factory in the Mohawk Valley. A dormant industrial park in Genesee County. A vacant aluminum plant in the North Country. A former coal plant near Niagara Falls.

In these and other communities, developers and civic leaders are testing whether relics of long-dead industries can be replaced by one of the hottest new technologies.

New York has been slow to the exploding market in data centers, but our turn is here.

As big-money players move in, who will look out for New Yorkers?

Data centers are ready to scarf up huge quantities of New York electricity, but key decisions about their development have been left to small-town officials. They’ll be tempted by a jolt in local property tax revenue and asked to overlook that the projects create relatively few jobs.

It is a critical moment. More than 30 so-called hyperscale data centers have rushed into New York seeking permission to connect to the grid. If they all get built, they would use more power than Ireland.

That could tax a power grid that already shows signs of stress. It could raise energy prices that already run high.

But state officials are just beginning to study how to accommodate them. Gov. Kathy Hochul in February ordered the state Public Service Commission, which regulates electric utilities, to start a year-long review of potential data center regulations. The PSC staff has until next February to put suggestions out for public comment.

For now, it’s up to the volunteers on rural planning and development bodies and the non-profit organization that runs the grid to decide whether these projects are good for New Yorkers.

The path to approval for a data center requires little public disclosure or state oversight compared with, say, a generating station of similar size. Developers do not have to reveal who will actually operate the data center. Anonymous limited liability companies can apply to connect to the grid without revealing who controls them.

Without a statewide approach, the destiny of data centers in New York will be left to development-starved small communities, like one in the Mohawk Valley.

That’s where Herkimer County lawmakers agreed to loan $2.5 million to help a tentative data center plan at the former Remington Arms gun factory.

“We’re trying to stay positive here in the Valley,” said Legislator Greg Malta, who chairs the planning and development committee. “We have to try and spur something up and get investors in here.”

Enough power for millions of homes

Data centers are buildings that house large numbers of computer servers and related equipment that store, process and transmit digital information. They can serve a variety of functions, from internet service and email to streaming media and artificial intelligence.

Small data centers have been around for decades. New York has dozens. But in the era of artificial intelligence, the size of data centers has grown exponentially. The giant facilities known as hyperscale data centers – usually drawing 100 megawatts or more – are relatively new.

The bigger the electric connection, the more computing power and the more valuable the data center.

They are called “hyperscale” for good reason. They cost billions to build. They take up acres of space. And they consume oceans of electricity.

In Western New York, for example, a Texas company is working to build a data center at a county-owned industrial park near Batavia. It would use 500 megawatts of electricity, enough for more than half a million average Upstate households.

Stream Data Centers plans to spend $19.5 billion – billion with a B – to build the 2.2 million-square-foot data center at the Science, Technology and Advanced Manufacturing Park, or STAMP.

That’s big, but not the biggest. A developer in St. Lawrence County is looking to site two data centers totaling 2,800 megawatts, enough power for 2.8 million Upstate homes.

New York’s electric grid is already expensive and under strain. Without significant new power supplies to balance demand, the system will become increasingly unreliable and prone to price spikes, according to the New York Independent System Operator.

Twice during the past year, extreme weather events have pushed the electric system to the brink, spiking wholesale prices and forcing grid operators to bring in expensive power from out of state.

In both cases – a June heat wave and a January cold snap – geriatric generating plants failed to come online when called upon.

“Based on how the system behaved this winter and last summer, the need for new resources is now,” said Kevin Lanahan, a vice president at NYISO.

‘We’re making rushed decisions’

Even without data centers, New York utility customers face the likelihood of gradually increasing bills. Shoring up the aging electric grid will require new power supplies, substations and transmission lines that don’t come cheap.

The rush to build data centers threatens to multiply those costs, and soon. Each project brings an appetite for electricity comparable to a small city, ratcheting up demand at a time when supplies are stagnant.

But the people who approve data centers have no obligation to consider the energy costs we all pay.

The nonprofit that manages the electric grid, the New York Independent System Operator, studies data center requests and advises the local utility on whether it’s safe to connect a data center. The NYISO mandate is to evaluate the physical effects on moving power across the system, not the cost.

When a town board or county development agency reviews a data center’s site plan, they look at how it will affect local neighbors and taxpayers, not statewide utility costs or air emissions.

At a time when large data center loads require focus and planning, the responsibility for regulating them is disjointed.

The Public Service Commission’s investigation could eventually result in tighter regulation. The case has attracted a staggering amount of public comment. In less than three months, and before there are any proposals on the table, more than 10,000 comments have been filed.

But it could take a year or more for the PSC to act. For now, critics say, it’s not clear that the rules for building data centers are sufficient to protect New Yorkers.

“They’re under-regulated,” said Mandy DeRoche, an environmental attorney for Earthjustice who has fought data centers in court. “We’re making rushed decisions without enough information, about so much.”

In theory, data center companies could help strengthen the grid. They have plenty of money to invest. They’ve shown a willingness to pay extra for power.

In Wisconsin, the Public Service Commission last month approved a special “very large customer” utility rate that obligates data centers for 15 years to pay 100% of the cost of new generation and transmission investments required to serve them.

Officials at National Grid say that, if done thoughtfully, data center development could be tapped to pay for new power plants and beefed-up infrastructure that would benefit all New York customers.

“Data centers are customers that want an upgraded, reliable system and have the means to support infrastructure improvements and offset costs that would have otherwise been paid by other customers and communities,” said Matthew Satterwhite, head of U.S. policy and regulatory strategy for the utility.

Among options to be considered by the PSC, data centers could be forced to pay special high rates, or to stop operating whenever power supplies run short.

But where will all the extra power to serve them come from?

The answer in Wisconsin and many states is natural gas. Enormous new natural gas power plants are being built to meet the demand, a trend that will add new greenhouse gas emissions for decades to come.

New York, which has aggressive climate goals, has discouraged gas plants. Hochul this year declared the future to be nuclear plants. But those are potentially costly and likely a decade away from operation.

In a state where the governor and legislators are fighting over how to secure the state’s energy future, data centers heighten the need for a consistent policy. Satterwhite, the National Grid executive, said future economic development depends on having a clear strategy.

No business wants to build “in a location if they suspect that the rules of the road will be changed along the way,” he said.

‘Very not-transparent’

Hyperscale data centers have submitted more than 30 requests to connect to the New York grid. That’s the first step in getting permission to build.

The NYISO studies each request to determine whether the load can be accommodated without throwing the system out of balance.

Because of the size of the data centers, connecting to the grid may require new infrastructure such as substations or transmission lines. Utilities are required to make the data centers pay for those.

The second step for a data center is to get a site permit. In most cases, the review falls to a rural town government, many of which have never dealt with anything of the same magnitude as a data center.

Throughout the review process, the ultimate operator of the data center may be secret.

The developer of a planned 300 MW data center in Lysander, Jim Ranalli, said he is precluded by a non-disclosure agreement from revealing the data center company he plans to sell the site to. In Genesee County, Stream Data Centers has refused to identify the ultimate user of the 500 MW data center it is pursuing at STAMP.

Meanwhile, the NYISO treats applications for interconnection as protected information and will only disclose the name of the applicant.

As a result, it’s unclear who is seeking to build the largest data center in the state. St. Lawrence Infrastructure LLC, a company registered in August 2025 in Delaware, has asked to connect two sites totaling 2,795 megawatts. Planners and economic development officials in St. Lawrence County last month said they don’t know who the company is or what site they are targeting.

“It’s very not-transparent,” said DeRoche, the Earthjustice attorney.

Tax breaks for billionaires

At the local level, data centers are often treated as traditional economic development projects. That means tax breaks.

At the STAMP industrial park, the park owner, Genesee County Economic Development Center, is planning to provide massive tax breaks to the $19.5 billion project. The development agency has proposed a $1.4 billion exemption from sales tax that funds state and local government. That works out to be more than $11 million in tax breaks per job.

Scott Logan is incredulous.

Logan, a chief of the Tonawanda Seneca Nation, was among dozens of opponents who spoke during a six-hour public hearing in March. The nation’s land abuts the site.

“Billionaire companies are coming in and getting a tax break,” Logan said, according to the hearing transcript. “I mean, come on. I mean, they don’t need it. Out of anyone in this world, they don’t need it.”

Stream Data Centers, the developer, is owned by Apollo Global Management, an investment and insurance company that manages assets totaling more than $900 billion.

But Genesee County economic development officials like the deal. Building the facility would employ about 1,200 workers a year over five years. Stream would pay $146 million in fees to the development agency and $284 million over 30 years in PILOT payments to the town and school district.

The PILOT payments would be 15% higher than the company would pay in regular taxes, said Mark Masse, CEO of the Genesee County Economic Development Center.

“This project does not propose to take money from taxpayers’ pockets,” he said. “Rather, it will help the county and town avoid tax increases to pay for necessary services.”

The developer promises to create 125 permanent jobs. Compared to the massive capital investment, that’s not many. But in some areas of Upstate, it’s not nothing.

St. Lawrence County has been targeted by more data centers than any other area of the state, thanks to its robust electric infrastructure and availability of land. Sheet metal manufacturer Arconic, for one, is looking to use some of its excess space in Massena to build a 933 MW data center. Apollo Global Management, which owns Arconic, also owns Stream Data Centers, the data center developer near Batavia.

Patrick Kelly, CEO of the St. Lawrence County Industrial Development Agency, said the agency will evaluate any proposed data centers on a case-by-case basis, weighing the costs against the benefits.

“People say it’s only 100 jobs, or it’s only 200 jobs. Well, you know, when you live in a small town that has decades of economic challenges, 100 or 200 is not a small number,” Kelly said.

Projects ‘don’t need the subsidies’

Other economic development agencies have provided subsidies to data centers.

The Greenidge Generation data center on the west shore of Seneca Lake, for example, was awarded a sales tax exemption on construction and a 10-year payment-in-lieu-of-taxes deal by the Yates County Industrial Development Agency in 2019. The facility has 32 employees, according to SEC filings.

Greenidge repowered a shuttered coal plant with natural gas in 2017 and generates 106 megawatts, most of which it devotes to cryptocurrency mining or artificial intelligence computing.

Even with the PILOT, Greenidge’s payments are significant to Yates County. In 2023, the company’s PILOT and sales tax payments totaled $3.7 million, 9.5% of the county’s tax revenues, company and local officials said.

One of the biggest data centers operating in New York is Lake Mariner Data, built atop the ruins of a shuttered coal plant in Niagara County. The operation has been a roaring financial success and keeps growing.

When Lake Mariner started up in 2022 as a cryptocurrency mine, the New York Power Authority awarded it discounted power in return for a promise to create 165 jobs.

TeraWulf Inc., the owner, reports paying between 3.2 cents and 6 cents per kilowatt-hour for electricity during the past three years, according to its public filings. That’s well below average rates in New York, according to the U.S. Energy Information Administration.

Lake Mariner Data has shifted from crypto to focus on high performance computing, or HPC, which is the backbone of artificial intelligence. In August, the company announced a deal worth up to $9.5 billion over 25 years to host cloud provider Fluidstack, a major A.I. company. Google helped finance the deal in return for a 14% stake in Lake Mariner’s owner, TeraWulf Inc.

TeraWulf’s stock price at the end of April was nearly eight times higher than it was a year earlier.

“These data centers just don’t need the subsidies,” said Sarah Howard, an environmental consultant to the Tonawanda Seneca Nation. “They will locate where … they have access to the two things they need, which is land and electricity.”

‘It’s like vibrations’

At the local level, concerns about data centers often focus on noise. They typically emit a low-level hum around the clock.

Neighbors of a suburban data center in North Tonawanda filed a federal class-action lawsuit a few weeks ago seeking compensation for the noise.

“The non-stop noise and vibrations generated by Defendant’s mining operations are pervasive, inescapable, and unbearable,” according to their petition. The owner, Digi Power X, has not yet filed an answer.

Neighbors of a proposed Tompkins County data center also cite noise as one of their chief concerns. TeraWulf is trying to open its second New York data center at the site of a closed coal plant in the town of Lansing.

According to an engineering study commissioned by TeraWulf, data center operations are expected to create noise of about 51 decibels at 1,500 feet — “comparable to normal background noise inside a quiet commercial office building.”

Opponents of data centers say their 24/7 noise can be oppressive even at low decibel levels.

“The noise from data centers is different than industrial noise. It’s low frequency,” said DeRoche, the Earthjustice attorney. “It’s like vibrations, kind of. Some of it, you can’t hear it but you can feel it. That has different health impacts on humans.”

Increasingly, even the whisper of a proposed data center mobilizes an intense local backlash. In the town of Lysander, where the developer of a planned 300 MW data center has yet to submit an application, more than 2,000 people have signed a petition to block it by asking the town board for a moratorium.

Unlike traditional manufacturers – of car parts, candy bars or even computer chips -- massive data centers don’t employ hundreds of people or produce anything you can see or touch. Howard, the environmental consultant, said that’s part of the reason dozens of opponents have turned out for hours-long public hearings to rail against the STAMP data center.

“A lot of people resent the fact that it won’t actually be making anything,” she said.

Guns to AI?

In the village of Ilion, developer Kristen O’Neill faces a big challenge. She is trying to repurpose the shuttered Remington Arms gun factory, a complex of more than 40 buildings that once employed 1,300 people in the Mohawk Valley.

Desperate for revitalization, Herkimer County lawmakers agreed to loan $2.5 million to help O’Neill’s company, Turin Management, purchase the property. Turin was the only bidder.

On her application for tax breaks, O’Neill told the local industrial development agency she aimed to develop “a mixed-use space potentially featuring offices, residential, commercial and hospitality spaces.’’

But a few months later, O’Neill sought a different option: a data center.

Turin Management applied last summer to join the state power grid with a 500-megawatt data center. The massive server farm would use enough electricity for roughly half a million homes.

O’Neill said she has no experience developing data centers and did not buy the property specifically for that. But the A.I. industry wields the kind of money that might be needed at the site, a contaminated brownfield. The cleanup costs have been estimated at $50 million or more, she said.

“We worked into it backwards,” she said. “Like, what industry could actually pay for this $50 million-plus cleanup?”

O’Neill said she does not have a data center operator lined up, and the development plan might go a different way. But she is looking for a partner with deep pockets.

“What will make sense?” she said. “If it is a data center, so be it.”