Illinois study highlights benefits, challenges of hosting data centers as Central Illinois weighs regulations

CHAMPAIGN (25News Now) -A new study by the University of Illinois’ Climate Jobs Institute examined the costs and benefits of hosting data centers in three Illinois communities.

The report, titled “Hosting Data Centers: Lessons from Three Illinois Communities,” found that Aurora, DeKalb and Elk Grove Village have benefited economically from hosting data centers. However, the communities also faced challenges that could serve as lessons for other municipalities and state lawmakers considering regulations.

According to the report, data centers in the three communities paid more than $140 million in combined taxes from 2022 to 2024. In DeKalb, the school district used its share of the tax revenue to build a new school without having to borrow money.

Other benefits of hosting data centers include temporary construction jobs and a limited number of well-paying permanent positions. In Elk Grove Village, for example, builders estimated approximately 1,000 construction jobs per day through 2030, while companies reported a combined 542 full-time employees earning more than $120,500.

However, the study also highlighted concerns surrounding a lack of publicly available information, regional costs and limited local government control.

Despite the presence of multiple data centers across Illinois, the state does not maintain a comprehensive list of operating facilities.

According to the study, “only Meta’s DeKalb campus reports how much water and electricity it uses. Aurora is the only one of the three communities that requires data centers to report on electricity and water use, and none of those reports have been published yet. No public source measures what any facility emits.”

As for energy costs, the report cited findings from state energy agencies identifying data centers as the primary driver of rising electricity demand. It also highlighted projections that the PJM regional electric grid could face a power supply shortfall by 2029.

The report also found that while local governments can adopt regulations governing data center development, their authority to address certain resident concerns is limited. In Illinois, electricity rates and regional grid costs are subject to decisions by state regulators and regional grid operators, rather than local governments alone. Those are the Illinois Commerce Commission and PJM.

Beyond rising expenses, local governments also face challenges when negotiating with large technology companies.

Johnathan Hettinger, communications director for the Climate Jobs Institute at the University of Illinois Urbana-Champaign, said that although the study focused on communities in northern Illinois, its findings and lessons could apply anywhere a data center is proposed.

In Central Illinois, Woodford, Tazewell and McLean counties currently have data center moratoriums in place and are working to draft ordinances regulating future developments.

“The communities should ask the hard questions early— how much water will the facility use? How loud will it be? Who will pay for the power and grid updates? And what will the company commit to in writing up front?” said Hettinger.

“The towns that we studied had to figure it out on their own, but Central Illinois communities can learn from them.”

Hettinger said Aurora officials consulted with more than 15 municipalities while developing their regulations.

In DeKalb, he said the city manager described feeling overwhelmed when a team of lawyers representing Meta arrived, bringing significantly more expertise and resources to the negotiations.

“…These communities can become overwhelmed fairly easily by these large tech companies. So, it’s important for them to look to other communities as resources,” said Hettinger.

Established by the Illinois General Assembly, the Climate Jobs Institute conducts research on the state’s clean energy transition, with an emphasis on workers and their communities. The institute is also calling on state lawmakers to consider data center legislation during next week’s veto session.

In its report, the institute outlined several recommendations aimed at giving local governments additional resources and protections when considering data center developments.

In its report, the institute outlined several recommendations aimed at giving local governments additional resources and protections when considering data center developments.

Those recommendations include requiring standardized public reporting on energy and water consumption, grid impacts and employment; banning nondisclosure agreements; requiring new clean energy generation to be built in Illinois; reviewing the cumulative air quality impacts of data center clusters; and requiring project labor agreements and binding community benefits agreements.

“What residents are concerned about, like electricity prices, like water usage, like noise, like tax brakes. A lot of those things are decided at the state level,” said Hettinger.

“The communities are the ones making the decisions, but really the state plays a very significant role in things like electricity prices, who pays for the infrastructure, whether the data centers are required to hire people locally…”

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