Anchorage is taking steps to manage the potential impact of a growing industry: data centers. The Anchorage Assembly recently approved an ordinance establishing regulations for these facilities, anticipating increased demand for energy and resources as artificial intelligence and cloud computing continue to expand. The move comes as other communities grapple with the benefits and challenges of attracting these large-scale operations, and as Alaska itself considers becoming a hub for data storage.
The ordinance, passed by a 10-2 vote earlier this month, formally defines “data centers” within the municipality’s zoning code. This definition triggers a new review process for proposed projects, requiring public input and assessment of the capacity of local utilities to handle the substantial energy and water demands. Assembly members Scott Myers and Keith McCormick were the dissenting votes, records show.
The proactive approach was driven by lessons learned from other areas, according to Vice Chair Anna Brawley, who sponsored the measure alongside member Daniel Volland. “By learning from other places and emerging best practices around data centers, Anchorage is being proactive and ensuring the right questions are asked during the application process,” Brawley said in an email. The goal is to balance economic opportunity with responsible resource management.
Addressing Potential Impacts
The new regulations aim to mitigate potential downsides associated with data center development. The ordinance requires landscaping buffers and enclosed power equipment to minimize noise and visual impact, limiting construction to commercial and industrial zones. Critically, developers must obtain written confirmation from local utility providers demonstrating sufficient capacity to meet the facility’s power and water needs. This is a key component of the Assembly’s effort to avoid straining existing infrastructure.
The energy demands of these facilities are substantial. According to research from the Pew Research Center, a large, artificial intelligence-focused data center can consume as much electricity annually as 100,000 households – roughly the number of homes in Anchorage. The study projects that data centers’ share of U.S. Electricity consumption could double or even triple by 2030.
These concerns are not hypothetical. Smaller data centers are already emerging in rural Alaska. California-based Greensparc, for example, completed a data center in Cordova in 2024 and is pursuing a second project in Wrangell. The state government has actively encouraged this development, citing Alaska’s cool climate, abundant land, and water resources as attractive features.
Balancing Growth and Infrastructure
While acknowledging the potential strain on resources, proponents also point to opportunities. A January study by The Alaska Center suggests data center development could strengthen the state’s electrical grid and address existing excess capacity. The report notes that increased demand could help distribute system costs more efficiently.
Although, the Alaska Center also cautions about potential negative consequences. Jenny Hyde, the organization’s federal infrastructure coordinator, emphasized the risks of increased pollution, noise, and energy bills for communities hosting these facilities. “We know that’s something right now that Alaskans cannot afford to take on,” Hyde said.
The debate isn’t limited to Anchorage. Elected officials in the Matanuska-Susitna Borough recently considered a plan to promote data center development on borough-owned land. A March 17 resolution established a two-year partnership with Terra Energy Center Corp. To attract potential developers to areas like Port MacKenzie and Big Lake. The Assembly ultimately overrode a mayoral veto to move the plan forward, citing potential economic benefits like increased property tax revenue and job creation.
Mat-Su Borough Considers Data Center Partnerships
Despite the potential benefits, the Mat-Su Borough has yet to receive any formal data center proposals, according to Borough Manager Mike Brown. “From a planning perspective, we are looking at public policy related to data centers from other municipalities,” Brown said in an email. “We will be sure to glance at Anchorage’s ordinance.”
The differing approaches between Anchorage and Mat-Su highlight the complexities of attracting and regulating this emerging industry. Anchorage’s preemptive ordinance aims to establish clear guidelines before large-scale projects are proposed, while Mat-Su is taking a more exploratory approach, seeking potential developers and then adapting its policies accordingly.
The growing demand for data storage, driven by advancements in artificial intelligence and cloud computing, suggests that these discussions will continue. The Anchorage Assembly’s recent action represents a significant step toward ensuring that any future data center development aligns with the community’s long-term interests and resource capabilities.
The next step for Anchorage will be monitoring the effectiveness of the new ordinance and adapting it as needed based on real-world applications and evolving industry standards. The Assembly is scheduled to review the ordinance’s impact during its annual zoning code update in the fall of 2027.
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