Data centers are a key element in fight over electricity costs in northern Illinois
By Andrew Adams
A Texas-based company broke ground on a new data center in Aurora on Wednesday, the latest in a boom of data storage facility developments in northern Illinois.
Gov. JB Pritzker at the groundbreaking hailed the project as another victory for his administration’s economic development strategy and noted the project will bring with it hundreds of union construction jobs.
Data centers are large facilities used for housing computers that digitally store, process and distribute information. They can either be developed for a single client – like Microsoft or Facebook’s parent company Meta – or function as “colocation” centers like the one being developed in Aurora. Those rent out space and equipment to a variety of clients.
The development by CyrusOne – the company’s second in Aurora – is expected to be complete in two years, according to the governor’s office. It is set to receive a tax incentive package as part of the state’s “Data Centers Investment Program.”
That program provided more than $650 million of incentives to other data center projects between 2020 and 2023 – including $25 million for a different CyrusOne development in 2022.
Those tax breaks, according to the Department of Commerce and Economic Opportunity, have resulted in $6.5 billion in required investments, $11 billion in total investments and 469 new permanent jobs.
“We have chased down every potential dollar of private investment we could find and leveraged every incentive and grant at our disposal to attract and build up existing and new industries,” Pritzker said.
Eric Schwartz, the CEO of CyrusOne, credited the tax incentive program and Pritzker’s support of it as a key factor in why his company is setting up another data center in Illinois.
“It really does drive the decision making, both for the investments we make, as well as our customers,” Schwartz said.
The move plays into the Pritzker administration’s broader economic development strategy. Business incentives, like those offered to CyrusOne, featured prominently in the Department of Commerce and Economic Opportunity’s five-year plan released in August.
The Data Centers Investment Program, which has provided tax incentives to CyrusOne, is one of several programs developed in recent years to attract business to Illinois.
Other programs include the Reimagining Energy and Vehicles program, which has granted around $1 billion of incentives since 2021, and programs focused on startups, quantum computing and film production.
But data centers in particular pose a unique challenge to the state due to the amount of electricity necessary to keep them running 24 hours a day.
Pritzker on Wednesday positioned Illinois’ grid as an asset to attract data center investment by saying electricity in Illinois is “readily available and reliable.”
But CMRE, the world’s largest real estate services and investment firm, noted in a June report on data center markets that procuring electricity in the Chicago region “poses a significant challenge” to data center development.
Data centers – as well as other energy-intensive developments like electric vehicle battery manufacturing – often require months to years of work with utility companies to ensure that enough electricity can be delivered to new facilities.
Commonwealth Edison, the electric utility for most of northern Illinois, serves every single data center that’s received state backing since 2020.
ComEd CEO Gil Quiniones was at CyrusOne’s groundbreaking ceremony and noted an “explosion of data center investment” in northern Illinois.
The utility is currently in the process of requesting approval for a revised grid plan with state regulators at the Illinois Commerce Commission which details some of the costs of building new data centers.
The company’s proposed plan, filed earlier this year, includes $430 million of spending to support data centers – about 24% of their total “new business investments.” Under the plan, that spending would contribute to increased costs for electricity bills in ComEd’s service territory.
In that filing, the company noted a “steep increase in proposed large load projects.” These projects often require hundreds of times more electricity than big box stores like Wal-Mart.
Officials in the Illinois attorney general’s office and by the staff of the Illinois Commerce Commission criticized ComEd’s proposed allocation of funding toward data center developments in ICC filings made public in September.
The Illinois Commerce Commission will decide how ComEd should handle paying for these new demands on the electric grid by the end of the year.
Capitol News Illinois is a nonprofit, nonpartisan news service that distributes state government coverage to hundreds of news outlets statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation.