As data center proposals accelerate across Northwest Indiana, residents are packing council chambers and planning meetings to raise concerns about water use, energy demand, noise and environmental impacts — issues local officials must weigh as developers seek approvals for projects tied to the region’s growing role in the digital economy.
The massive facilities that store, process and transmit digital information are expanding rapidly nationwide to support artificial intelligence, or AI, as well as streaming, e-commerce and cloud services. Northwest Indiana has emerged as an attractive location because of its access to power, water and industrial land, putting local governments on the front lines of decisions that could reshape land use, utility systems and environmental oversight for decades.
Experts say the impacts of data centers can vary widely depending on their design and scale. Many of the largest proposed projects are hyperscale data centers built to support the rapid growth of artificial intelligence, said Isak Nti Asare, executive director of the Indiana University Cybersecurity Clinic. Other types include colocation data centers rented by multiple companies, edge data centers designed to reduce latency, and private facilities that serve individual organizations such as hospitals. Dimitrios Nikolopoulos, the John W. Hancock Professor of engineering at Virginia Tech, whose state is home to one of the country's highest concentrations of data centers in what's become known as Data Center Alley, said data centers aren't one-size-fits-all.
"They range from sprawling hyperscale campuses — think the size of several football fields — to compact, container-sized outdoor installations or enterprise sites. Hyperscale facilities can draw 100 MW or more, comparable to the electricity use of tens of thousands of homes, and can reshape land use, soak up local grid capacity, and place big demands on water supplies," Nikolopoulos said. "On the other end of the spectrum, smaller, distributed 'mini' or outdoor centers can tuck into industrial parks or campus corners, with a lighter physical footprint and more modest infrastructure needs. Personally, I think we should encourage a shift toward many smaller, nimble facilities that sit close to where data is generated and used— not just a handful of mega-farms isolated in the middle of nowhere."
More data centers are being built to keep up with the demand for e-commerce, streaming, social media, gaming and other uses, Asare said. AI in particular has created more demand at a rapid pace, but more data center capacity is also needed to handle the increased volume of traffic websites like Amazon are getting, he said.
"Data centers are the underlying infrastructure of the digital age," Asare said. "The scale of computing power is increasing so rapidly."
Tech giants are building larger data centers not only because of the growing demand for data but also because it's more efficient and cost-effective to build one large data center rather than several small data centers, Asare said. Despite price tags that run into hundreds of millions or even billions of dollars to build them, massive data centers reduce the per-unit cost, he said.
The impact on local communities and the environment can vary widely, depending on the size and scope, as well as on how the data center is powered and cooled, Nikolopoulos said.
"When it comes to environmental impact, cooling, power, and siting are the big levers. Air-cooled sites in hot, dry places can gulp down a lot of energy — and often water — while modern liquid or immersion cooling can sharply cut both energy and noise. Companies like Microsoft and Nvidia are already pushing chip-level and liquid-cooling designs that reduce water use and cooling energy for AI data centers," Nikolopoulos said.
He added that data centers that combine efficient liquid-cooling systems with renewable energy and are located on already developed industrial land can significantly reduce environmental impacts. Locating near existing substations or industrial zones also means less strain on the grid and less need for new construction, he said.
"We’re also going to see them being more aggressive on-chip cooling, tiny fluid channels built into the silicon, 3D-stacked packages with integrated liquid loops, and phase-change materials near hot spots," said Nikolopoulos. "That helps pull heat directly from the source, so you can pack far more AI compute into each rack while shrinking everything else: size, noise and energy use included."
How much water and power will data centers use?
Residents have raised concerns that data centers can consume huge quantities of water. Asare said there's wide variation in how much water data centers use, depending largely on design. Data centers that use evaporative methods are a cause for concern, but in most cases the water is discharged after it's used for cooling, he said.
A closed-loop cooling system is ideal, as it ensures all the water is returned to the source, Asare said. Local governments need to look at putting in requirements about water usage during the permitting process, to ensure, for instance, that it's discharged back to the source and not allowed to evaporate, he said.
Data centers use so much water that they can put stress on aquifers, but likely would not do much to drain abundant sources of water like Lake Michigan, Asare said.
Hyperscale data centers can guzzle significant amounts of water, but can be designed to minimize water consumption, Nikolopoulos said.
"Big data centers can be very thirsty — especially those using evaporative cooling in hot climates — but actual water use depends heavily on design and location. A typical large hyperscale facility can consume on the order of a few hundred thousand gallons of water per day for cooling, and some proposed or extreme cases are in the millions of gallons per day, comparable to a town of tens of thousands of people," Nikolopoulos said. "By contrast, air-cooled or closed-loop liquid systems can drive direct cooling water use close to zero in many climates, and Microsoft’s latest designs aim for zero water cooling for AI-heavy sites. Personally, I think any new data center, especially in water-stressed regions, should stick to strict water budgets or go water-free entirely, and smaller, high-density systems make this much more practical."
A common concern among residents is that data centers will drain groundwater or harm Lake Michigan, the main source of drinking water for the Chicago metro area which is home to around 9.5 million people. Since data centers use water strictly to cool computer servers, the main source of pollution is heat, Asare said. Data centers discharge heated water back into the source, which can adversely affect aquatic life.
Steady discharges can raise temperatures, making it uncomfortable for fish and plant life.
"The biggest worries are about heat and treatment chemicals from cooling systems getting into local water, or pulling so much water that it disrupts local hydrology. Poorly managed facilities could warm rivers or lakes or leak biocides and anti-corrosion chemicals if discharge isn’t tightly controlled," Nikolopoulos said. "Around major freshwater bodies like the Great Lakes, some proposed data center projects have raised alarms for their planned withdrawals from sources like Lake Michigan and their potential impacts on already stressed watersheds. In those locations, I’d push for strict regulation, closed-loop or low-water cooling wherever possible, and clear, public monitoring of every withdrawal and discharge. Opting for smaller, modular centers that use little or no water is a much safer bet."
What do data centers mean for utilities and land use?
Residents who spoke at meetings earlier this year in Starke County said they worry about energy consumption and how data centers could drive up electric bills. Data centers consume vast quantities of power, Asare said. They currently use around 5% of the nation's electricity, a figure that's expected to skyrocket to 12% by 2028, according to the U.S. Department of Energy.
Data centers often will require new infrastructure, such as new electric power generation and new transmission lines, Asare said. Agreements are needed to ensure the data center operators foot those costs to spare ratepayers, he said. Renewable energy power purchase agreements can require that wind and solar be used to minimize the carbon footprint.
They tend to consume large amounts of energy, due in part to running around the clock 24/7, Asare said.
Large data centers typically require the addition of new electric capacity generation. NIPSCO, for instance, plans to build 3 GW of new capacity to accommodate Amazon Web Services' plans for a major data center campus in Hobart.
"Data centers pack a serious energy punch, and a big facility can quickly drive up local electricity demand if the grid isn’t ready for it. For example, a 100-MW hyperscale campus can use as much power as tens of thousands to around 100,000 households, putting real pressure on regional grids," Nikolopoulos said.
High energy usage and new infrastructure costs can be passed on to existing ratepayers, depending on how the data centers are handled.
"My preference? Spread things out with lots of smaller, efficient edge or enterprise centers that fit the local grid, team up with renewables or waste-heat users (for example, feeding heat into district networks), and actively work with utilities," Nikolopoulos said. "That way, they can be flexible, grid-friendly neighbors — not giant, inflexible energy hogs."
Residents express fears that data centers will drive up electric bills, which have been soaring in Northwest Indiana and around the nation. The U.S. Energy Information Administration reports electricity costs have jumped by 7.4% over the past year.
"Data centers are driving increased investment by utilities in generation, transmission and energy storage," University of Chicago Professor of Computer Science Andrew A. Chien said. "These investments must be covered by the ratepayers, and there is also increased competition for power. There are several examples of areas where auctions for future power supplies have already jumped dramatically — showing increases to come. So power prices are going to go up, with data center power growth as a major cause."
Studies that have not found a correlation between data centers and increased energy bills are flawed, Chien said.
"While done by good researchers, these studies are backward looking and don't accurately capture the macro effects that data center power growth is driving increased power prices," he said.
Can communities limit noise and light impacts?
Noise pollution has also been brought before city councils and other local officials. Data centers do generate an audible hum that varies depending on the size, Asare said. Fan, cooling equipment and backup generators all can create noise. Experts say it can be mitigated with shrubbery, building setbacks and other techniques to minimize the effect on neighbors.
Many municipalities have noise regulations that require 45 decibels or fewer at night and could seek to further regulate data centers to ensure they don't disrupt nearby homes or neighborhoods, Asare said.
The volume of noise can vary depending on the size of the data center and it can be mitigated, Nikolopoulos said.
"Traditional air-cooled data centers can be pretty noisy, especially when they’re big and running at full tilt — you’ll often hear a steady low hum from fans and chillers," he said. "This is typically in the 60 to 75 decibel range at the fence line, comparable to loud conversation or busy street noise. But this isn’t inevitable. With smart building design, acoustic barriers and newer cooling methods like direct liquid cooling (which reduces reliance on huge air handlers), noise can be dialed way down. Small, outdoor, or modular centers are even easier to make quiet, as long as noise is treated as a top-tier design constraint from the start."
Light
Residents, especially those who live in rural areas, have said they worry about light emanating from data centers, including at public hearings in Starke and Porter counties. Security or perimeter lights are not unique to data centers and could be found on any comparable commercial or industrial building, Asare said. Barriers of shrubs and other techniques can be required to shield neighbors. Communities could require warmer colors, mandate motion control or ban stadium-style lighting during the review process, he said.
The lighting is akin to what one might find on a large building like a supermarket, home improvement or big box store, Nikolopoulos said.
"Most of the visible light impact comes from security lighting, not from the servers themselves," he said. "Poorly designed sites can create light pollution that annoys neighbors and confuses wildlife, but this is a very solvable problem. With shielded fixtures, downward-facing LEDs, and smart lighting controls, a data center can be almost invisible after dark — something already implemented at many Nordic and campus-style sites. Smaller, spread-out centers are easier to blend into their surroundings with thoughtful lighting than massive, highly visible campuses."
What is the impact on property values?
Hammond residents earlier this year expressed worry about data centers sinking property values. Asare said data centers could affect the resaleability of a home if it was close enough, but would not necessarily affect the value, merely the perception among some buyers. Having one in the community could end up being a boon for property values if it resulted in more tech companies and jobs, increasing the economic opportunity in town, he said.
Nikolopoulos said it comes down to location, location, location.
"Property values depend a lot on context. A huge, noisy, visually intrusive data center right next to homes can depress nearby residential values; we’ve seen that concern in fast-growing data center hubs in Virginia and Texas," he said. "Put the same facility in an industrial or commercial zone with good buffers and design, and it can have neutral or even positive effects through job creation and a stronger tax base. Personally, I think the smart move is to keep the very large sites away from neighborhoods and focus on smaller, human-scale edge or enterprise centers that fit naturally into mixed-use or commercial areas."
How will data centers affect nearby neighborhoods?
Residents also fear new development will disrupt wildlife habitats, driving out deer, turtles, birds and other fauna. The four homeowners who sued to block data centers in Hobart specifically raised concerns about migrating birds and families of deer that frequent their properties. Data centers could fragment habitats, but no more than any other massive development would, Asare said. The night lighting could affect nocturnal species like owls, birds could vary their migration patterns and discharges could affect heat levels, affecting aquatic life.
Locating data centers in already developed areas instead of greenfield sites can help preserve habitats for flora and fauna, Nikolopoulos said. Data centers in Scandinavia minimize impact on the natural environment with careful siting, low-noise cooling and dark-sky lighting.
"Wildlife feels the effects of data centers mostly through land conversion, noise, heat, light, and water use," he said. "Building a large campus on undeveloped land can fragment habitats and disrupt migration routes. By contrast, compact, modular centers sited on already-developed sites — parking lots, brownfields, rooftops, or former industrial properties — cause very little additional habitat loss."
Public health
Another common issue that frequently comes up at city council and planning commission meetings is that the long-term impact on public health is not known. The hum could get on people's nerves, which would adversely affect quality of life by creating a chronic nuisance, Asare said. Backup generators could cause air pollution that could exacerbate conditions like asthma, he said. But otherwise there's thin evidence of a major impact on public health in surrounding neighborhoods, Asare said.
Data centers typically do not impact public health as much as steel mills or oil refineries but can still have some effect, Nikolopoulos said. Data centers should strive to have a positive quality-of-life footprint or at least a neutral one, he said.
"Data centers don’t emit smokestack pollutants like factories do, but their choices about energy, water, diesel backup, traffic, and land use still matter for public health. If a center relies heavily on fossil fuels, uses a lot of diesel for backup testing, or generates constant truck traffic and construction, nearby communities may feel the impacts," he said. "On the other hand, designs that use clean power, minimize noise and traffic, and integrate with district heating or other community services can be net positives."