- The U.S. government wants to open 16 federal sites for data center development and sought feedback on how to lure in builders
- Tax breaks and power procurement were in high demand
- Faster, more efficient permitting for both data centers and new power sources was also a common ask
The U.S. government wants to build an AI empire so badly that it is willing to contribute its own land to do it. But land alone doesn’t make a data center. OpenAI, hyperscalers and other interested parties told the government it’ll have to do more – much more – to sweeten the pot.
What exactly is it that they want? Tax incentives, favorable lease terms, easy power procurement, a robust workforce and streamlined permitting are a few of their favorite things.
Nothing major.
In its seven-page response to the government’s request for information (RFI) on AI infrastructure, OpenAI noted that when selecting sites for AI supercomputer deployments, it is looking for at least 300 buildable acres to support campus-style developments. It wants those acres to have easy access to roads (duh), water, plenty of short-term power supply and a local workforce with plenty of construction laborers, electricians and engineers of all stripes.
OpenAI said the 16 government sites on offer (which we talked about here) could get bonus points if they offer a pathway to co-location of new long-term power generation facilities and accelerated permitting for construction, environmental reviews and running new transmission lines.
Oh, and they also wouldn’t sniff at “targeted tax incentives ensuring deductibility of R&D expenses and 100% bonus depreciation for qualified property” or “financial instruments to shore up project balance sheets.”
Piling on
Lest you think OpenAI is alone in presenting a lengthy list of demands providing detailed feedback on buildout incentives, the Data Center Coalition (DCC) and INCOMPAS – both of which represent the interests of major hyperscalers and data center operators – submitted comments in a similar vein.
DCC, for example, pushed for favorable land leases, asking the government for 99-year lease terms or – if that’s not legally allowed – for “easy and no-competition” renewals.
It also oh so helpfully pointed out that “the availability of sales and use tax exemptions on data center equipment is a critical factor for the data center industry in considering markets to locate and expand.” Just in case the government wants to consider that. INCOMPAS made the same argument about tax incentives, adding that it would be great if the federal government would help fight the industry’s PR battles so data centers can get more state and local support in the form of tax breaks.
“The Department can help attract industry to certain locations by advancing positive rhetoric about the benefits AI infrastructure will have on local communities,” INCOMPAS wrote.
Given the government wants data center construction to start on federal lands by the end of 2025, DCC also said the feds should provide more information on how they plan to “fast-track permitting for data center construction and energy infrastructure projects” and help procure “long lead time materials” necessary for construction and operation.
But perhaps the biggest thing the government can do to lure in data centers, according to OpenAI, DCC and INCOMPAS, is help with power procurement in both the short and long term. And nuclear power – particularly in the form of small modular reactors (SMRs) that can be co-located on data center campuses – are a huge part of what they’re gunning for.
“Not only is this an opportunity to reshore American manufacturing of goods needed to deploy this infrastructure, but the country can establish an all-of-the-above energy policy for traditional energy, natural gas, and renewables, as well as permitting and licensing policies for new SMR and nuclear technologies that will ensure energy generation that will power the growing data center market for decades to come,” INCOMPAS concluded.