State legislators are currently locked in a heated discussion about how — or even if — they should encourage the growth of data centers in Colorado. The crux of the debate comes down to an economic impact versus an environmental impact. Here’s what you need to know ⬇️
First, What Are Data Centers?
Data centers are facilities that house centralized computing infrastructure that help store, process, and distribute… well, the internet. They’re “server farms” that power things like video streaming, cloud services, artificial intelligence, and everything that enables online activity. As you can imagine, that requires an immense amount of energy (and water!). Plus now, the current AI boom is creating an unprecedented demand for data centers.
Does Colorado already have data centers?
Yes, quite a lot, in fact — more than 50 across the state, with over 40 of those located in Denver alone — and more likely on the horizon.
The Debate
There are two major opposing data center proposals being considered by state lawmakers right now during the 2026 state legislative session. Here’s how they differ:
Incentivize data center construction
The sponsors of House Bill 26-1030 want to lure data centers to the state by offering tax breaks (something lawmakers have repeatedly shut down in recent years). Otherwise, supporters argue, data center companies will instead go to the many other states that do offer incentives, leaving Colorado to potentially miss out on massive opportunities for economic growth.
Opponents worry this bill doesn’t focus enough on curbing data centers’ environmental impact or how data centers could affect utility rates for residential consumers.
Listen to our conversation last fall with CPR climate reporter Sam Brasch about the data centers that already exist in Denver.
Regulate data center construction
While an opposing bill hasn’t been formally filed yet, several lawmakers are working on an alternative or companion proposal that would put more environmental guardrails in place, requiring data centers to offset their energy use by using renewable sources and covering their own costs for infrastructure. New data centers could strain the power grid (potentially leading to higher utility rates for residents), pull from Colorado’s dwindling water supply, and slow the state’s progress on its already ambitious climate goals.
Opponents worry such heavy-handed guardrails will deter data centers from coming to Colorado altogether.
What Happens Next
We will have to wait and see what lawmakers decide at the end of the session. If one or both proposals move forward, there will need to be committee hearings, amendments, votes, debates, and of course approval from the governor. (If you need a refresher, here’s how Colorado laws are made.)
The Colorado Public Utilities Commission is also working on creating guidelines for utility companies in talks with data centers. (Psst, here’s how the PUC works.)
