Five Myths About Data Centers in Colorado
Colorado has become a focal point in the debate over data centers. As projects emerge along the Front Range, opponents have raised a familiar list of concerns: data centers will deplete water supplies, seize private land through eminent domain, drive up electricity rates, lower property values, and make nearby neighborhoods unlivable with noise and light.
Some concerns deserve discussion. Others are based more on misconceptions than facts. Here’s a closer look.
Myth #1: Data Centers Will Drain Colorado’s Water
Water is always a sensitive issue in Colorado, but context matters. While data center water use is expected to grow across the West, agriculture still accounts for roughly 85% of Colorado’s water consumption. A single golf course can consume more water annually than many modern data centers.
Today’s facilities are also far more efficient than many assume. Closed-loop cooling systems recycle water instead of continually consuming it, and because data centers purchase water through municipal systems, their usage is metered and transparent. Water use should be monitored, but claims that data centers are major water wasters simply don’t match the evidence.
Myth #2: Data Centers Can Take Your Land
Data centers themselves have no eminent domain authority. Utilities do, and they have exercised that authority for generations to build transmission lines that serve the public.
Colorado’s electric grid requires upgrades regardless of whether data centers are built. Population growth, electrification, and rising energy demand all require additional transmission infrastructure. Concerns about eminent domain should be directed at utility law—not at individual data center projects.
Myth #3: Data Centers Will Raise Your Electric Bill
This is the most legitimate concern—and the one policymakers are actively addressing.
Xcel Energy projects that data centers could account for much of Colorado’s future electricity demand. In response, the Colorado Public Utilities Commission directed Xcel to create a dedicated tariff requiring large customers to pay upfront fees, sign long-term contracts, provide security deposits, and cover their own infrastructure costs. These protections are designed to prevent residential customers from subsidizing data centers.
There is also potential upside. Adding large industrial customers can spread fixed infrastructure costs across more users, potentially reducing costs for everyone. If Colorado drives these projects elsewhere, other states will receive the jobs and tax revenue while regional grid impacts remain.
Myth #4: Data Centers Destroy Property Values
Despite frequent claims at community meetings, evidence that data centers broadly reduce nearby property values remains limited.
What they do generate is significant tax revenue. Project Taurus in Colorado Springs, for example, was projected to produce roughly $20 million annually in sales tax revenue. Data centers also contribute substantial property taxes while placing virtually no additional students in local schools, providing communities with resources to improve infrastructure, public services, and education without raising taxes.
Myth #5: Data Centers Create Unlivable Neighborhoods
Noise and light deserve careful consideration, but they are engineering challenges—not reasons to halt development altogether.
Modern facilities rely primarily on battery backup systems, with diesel generators reserved for rare emergencies. Shielded lighting, sound barriers, setbacks, landscaping, and operational standards can significantly reduce impacts on neighboring communities.
The goal should be thoughtful siting and enforceable design standards—not blanket opposition to an industry that is becoming essential to the modern economy.
Colorado doesn’t have to choose between economic growth and responsible development. Data centers should be expected to pay their own way, respect neighboring communities, and meet clear environmental standards. But public policy should be guided by evidence rather than fear.
As Colorado competes for investment in the digital economy, separating fact from fiction will help ensure decisions are based on sound policy instead of the loudest talking points.
