Your guide to data centers in Tennessee and how they could affect you
Artificial intelligence is fueling a rapid expansion of data centers across Tennessee, bringing billions in investment while raising concerns about electricity demand, water use, air pollution, and local control. Several communities have enacted moratoriums or permanent bans, leading to legal challenges. The Tennessee Valley Authority and state lawmakers are also addressing the growing energy demands and infrastructure costs associated with this growth.
Artificial intelligence (AI) is driving a significant expansion of data centers across Tennessee, attracting billions in investment but also raising concerns about the immense electricity and water demands, potential air pollution, and local government control. John Quigley, a senior fellow at the University of Pennsylvania's Kleinman Center for Energy Policy, highlights that AI is fundamentally changing the scale of data centers, requiring unprecedented amounts of power.
Tennessee offers developers advantages such as inexpensive land, access to Tennessee Valley Authority (TVA) electricity, tax incentives, and a central location. The state's limited land-use regulations, with nearly half of its 95 counties lacking countywide zoning, give local governments broad authority but also create fewer hurdles for large projects in unincorporated areas. In response, communities like McMinnville, Coffee County, Knox County, Cedar Hill, Washington County, Grundy County, Johnson City, Jonesborough, Hamilton County, and Bristol have enacted data center moratoriums. Nashville and Gallatin are also considering similar measures, while Hawkins County implemented a permanent ban, now facing a lawsuit from the Beacon Center.
Major projects include xAI's Colossus campus in Memphis, planned to expand to nearly 2 gigawatts; Meta's 900-acre campus in Gallatin, projected to use 300 megawatts; and Google's 1,300-acre campus near Clarksville. Proposed Nashville projects, though smaller, still raise concerns, such as DC BLOX's 50-megawatt campus near the Nashville Zoo, RadiusDC's 12-megawatt facility, and Fisk University's Innovation Center with a 70,000-square-foot data center.
The rapid growth of data centers accounts for 18% to 20% of TVA's industrial electricity demand, projected to double by 2030, raising worries about costly infrastructure investments. TVA has proposed new rate structures, and in 2026, Tennessee lawmakers approved legislation requiring data centers using 50 megawatts or more to pay for their electrical infrastructure. Environmental concerns include significant water consumption for cooling, with a 100-megawatt AI data center potentially using as much water daily as 2,600 households. Additionally, backup diesel or natural gas generators emit nitrogen oxides, particulate matter, and greenhouse gases, though oversight for air pollution from data centers remains fragmented across state and local regulators.