Contact Us

Infrastructure Bill Poised To Push 'Significant' Dollars Into U.S. Data Centers

There may only be a single direct reference to data centers in the $1.2 trillion infrastructure bill passed by Congress Friday, but industry insiders tell Bisnow the legislation will have wide-ranging impacts on data center development for years to come. 


The Bipartisan Infrastructure Investment and Jobs Act, currently awaiting President Joe Biden’s signature, will direct more than $130B in federal spending toward improving digital and energy infrastructure — programs that industry leaders say may change the landscape of where and how data centers are built. 

“I don’t think there’s any doubt that the impacts on the industry are potentially significant,” said Greg Riegle, managing partner at McGuireWoods Northern Virginia practice, speaking with Bisnow after the bill’s passage by the Senate.

“The industry as a whole has always pushed resiliency, stability and, increasingly, sustainability in the industry and the networks that support it, whether power or fiber, so I think the objectives of the legislation are well-aligned.”

The legislation steers $65B toward improving the country’s broadband internet capabilities, primarily by expanding optical fiber and 5G networks — an unprecedented investment in digital infrastructure that experts say could be a boon for data centers on multiple fronts. 

Much of the funding to build out optical fiber and 5G networks focuses on last-mile connections and requires that broadband services be extended to new areas. Language in the bill frames this as an effort to close the digital divide — the reality that 10% of the U.S. population doesn't have access to high-speed broadband. The bill also creates a direct-to-consumer subsidy to help low-income individuals pay for high-speed internet service.

If successful, these measures would create tens of millions of new internet users with access to social media, gaming and streaming services, experts say. And that subsequent surge in data needs to be processed and stored in data centers.

Beyond driving demand, the massive rollout of optical fiber and other broadband infrastructure would open up new regions for data center development. The bill designates $1B for so-called middle-mile connectivity — broadband infrastructure that does not connect directly to an end user, such as fiber connections to data centers, cable landing stations and other digital equipment.

Insiders tell Bisnow that these subsidies, combined with the resulting denser network of optical fiber across the U.S. could help boost submarkets and speed up the decentralization of the country’s digital infrastructure — a network that is already trending toward the edge

“It opens up the ability to put some size of data center anywhere,” said Mike Rechtin, head of Seyfarth’s data center services group. “Right now putting in fiber is super-expensive, and to do that with a bunch of different providers is prohibitive, and this is going to take the element of cost out of it.”

Just as important as fiber to many in the data center world is the $65B to improve the nation’s power grid and expand renewable energy. In a year in which data center operators have contended with grid failures in large markets like Texas and California, leaders across the industry say they are acutely aware of the reduced costs and lower risk that would come with a more resilient grid. 

Others point to the infrastructure bill’s ample funding for green energy infrastructure and innovation. Access to renewable power has become a primary consideration in siting data centers as hyperscalers, cloud users and colocation tenants aim to reduce the carbon footprint of their data.

The infrastructure bill presents a rare opportunity for utilities to upgrade infrastructure and build out new sustainable power sources without passing costs onto users. And for data centers, the cost of power is everything. 

“The perspective I’m hearing from my clients is that it’s not just the direct investment in broadband, it’s the larger investment in the power grid,” McGuireWoods’ Riegle said. “From an industry perspective, a strong, resilient grid is foundational, so this part of the bill is enormously important to the industry.”