Why Massive Data Centers Are Targeting Rural Arizona

Residents Raise Alarm Over Water and Power Risks

Illustration: Bryce Pol

Across the country, the rapid rise of artificial intelligence (AI) has set off an unprecedented race for companies to store and manage ever-growing amounts of data, and Arizona has become a prime target for data center development. Rural communities, such as the towns of Eloy, Casa Grande and Maricopa City in Pinal County, are at the center of this target. These massive industrial facilities, often spanning hundreds of acres, are advancing through local processes before many residents have a clear understanding of what they are or what they could mean for the future of their towns.

Before going any further, it’s important to understand why the number of proposed data centers is rising so quickly and why so many developers are looking to the Arizona desert.

Data centers are large warehouses filled with servers that store and process large amounts of digital information for companies. These facilities power the digital world that most people interact with. Every time a company stores its files, a streaming service delivers a movie, or a business runs its online systems, that information has to live somewhere. As more and more companies adopt and develop AI-based tools, the amount of data they generate and rely on has grown dramatically, driving an urgent demand for new infrastructure. That surge has accelerated a push to build more data centers, and developers are looking to Arizona as a site for them. 

According to advocates from the Rural Arizona Engagement (RAZE) policy team, the reasons have little to do with community benefit and are rooted in convenience for developers. 

“Rural Arizona is being targeted because there’s land available, fewer regulations, and tax advantages”, shared Tom Prezelski, Senior Policy Advisor and long-time water advocate at RAZE.  

Arizona offers generous incentives, including sales tax exemptions for data center equipment, making the state far more attractive to developers than places with stricter rules or higher development costs. 

Illustration: Bryce Pol

Behind those incentives lie the true pressures these projects place on rural regions. Data centers consume large amounts of water and electricity to operate, raising major sustainability concerns in a state already facing severe drought and

energy shortages. 

According to a report shared with RAZE by the environmental nonprofit Ceres, data centers in the Phoenix area are expected to increase their direct water use from 385 million gallons a year to 3.7 billion gallons a year within six years, and their indirect water use will jump from 2.9 billion gallons to 14.5 billion gallons in the same timeframe. In rural counties, where groundwater protections are minimal or inconsistent, these numbers are even more alarming. Loopholes in state law allow industrial users in many parts of the state to pump significant volumes of water without oversight, and many rural aquifers are already strained.

Electricity demand brings additional implications. Data centers consume significant amounts of power, prompting utilities to upgrade and expand their infrastructure. Those costs typically do not fall on developers, but instead fall on everyday consumers. Arizona Public Service (APS), which is already seeking a rate increase of more than 14 percent, could see further upward pressure as more high-consuming facilities come online. RAZE warns that without protections, ordinary households may bear the financial burden. 

Transparency has become its own point of friction. Many of these proposals move through planning and zoning processes with limited public information and little opportunity for scrutiny. Prezelski pointed out the lack of clarity when discussing Tucson’s Project Blue, “Tucson Water could not tell the city how much they expected that the facility would consume”. The absence of this essential information made it nearly impossible for officials or residents to evaluate the project’s long-term impacts on water security.

Energy transparency has followed a similar pattern. Prezelski recalled that during the Tucson discussions, “there was this active effort to kind of not talk about how much its impact on the power grid” would be. Without that clarity, it becomes impossible for residents to understand how their own utility bills or local infrastructure might be affected.

In Pinal County, Tyler Stein, Research Analyst for RAZE, described attending a public meeting for the Vermaland proposal, the company behind the large data center planned in Eloy, where key questions went unanswered. “At the meeting, they were represented by their attorney,” he said. “The company wasn’t actually there.” This left residents without the opportunity to ask basic questions about cooling methods, water sourcing, or electricity demand. 

Prezelski noted that the City of Eloy proposed development appears to be moving forward “on speculation.” This means that developers intend to build the facility before identifying who the future tenant will be. For small town communities, “moving forward on speculation” means committing scarce resources prior to knowing what demands the eventual client might place on local infrastructure.

On November 19, 2025, the Pinal County Board of Supervisors presented information on the  Vermaland large data center complex proposed south of Eloy, a project that includes a gas plant as part of its cooling system. Prezelski attended the meeting and was part of the group that publicly urged the board to reject the proposal.

Despite opposition from RAZE and local residents, the Pinal County Board of Supervisors voted to approve the Vermaland project. 

 “It is entirely possible that within 10 years, the residents of Pinal County will find that they have nothing to show for their investment except for higher utility rates, dry wells and an empty 3000 acre complex,” added Prezelski. The long-term risks fall squarely on the community, while corporations can walk away.

For organizers working directly with residents, the conversations have taken a turn toward the potential impacts on the health of people living in rural communities. 

“Our environment, the ecology, and people’s health and livelihoods are also at risk with data centers,” said Andrea Varela, Organizing Director at RAZE. “People are being sold this idea when in fact, we know how bad gas plants can be,” she added, referencing long-standing concerns raised in communities like Randolph. A potential future Eloy can face if the Vermaland proposal’s plan to include a gas plant as part of its cooling system moves forward.

For her, the environmental and public health considerations are inseparable from community well-being. “It’s not good for the community in terms of the air they breathe or [we can] even run out of water.”

Organizing efforts have accelerated as more proposals move forward. Tyler and Tom have testified repeatedly before Pinal County bodies, but despite opposition, the project’s preliminary approval means the proposal and community efforts to stop it now move to the City Council and back to the Supervisors for further action early next year. “The opposition is going to get a lot stronger and so is our organizing here [Pinal] because it is catching wind and residents are becoming aware of the proposals,” Varela said.

RAZE is collaborating with Worker Power and No Data Centers in the Desert to deepen outreach, prepare residents to testify, and ensure community presence at key meetings. A town hall is planned for early January to help residents understand what’s at stake, what questions to ask, and how to participate. Varela noted that many residents assume they’re stepping into an issue they should already understand, but in reality, “data centers are kind of a new development,” she said. Education, she emphasized, is the first step toward effective action.

“Rural Arizona is not a place that people can just come and buy,” she said. “Just because we have space or land doesn’t mean it should be developed.” She urged people to look beyond the promises attached to large-scale projects. “Sometimes things that seem too good to be true are too good to be true,” she said. Protecting water, air, and natural resources, she noted, is essential to protecting the long-term well-being of rural communities. “It affects our health. It affects our breathing. It will impact our pockets. It affects our very livelihood.”

To get involved in the fight against data centers in rural Arizona, visit raze.org/get-involved.