The Upstate will soon see 2 data centers invest billions. Their impacts could differ wildly.

An artificial intelligence boom has driven a surge in data centers, with new sites rapidly dotting the country — including in the Upstate, where two recently announced facilities are expected to bring a combined $5 billion in investment.

Those data centers offer a sharp contrast in how these sites impact the surrounding communities, with one expected to follow the traditional narrative that these facilities use tremendous amounts of water and electricity, and another that aims for energy self-sufficiency.

NorthMark Strategies — the one planning a smaller footprint — announced in April a $2.76 billion investment in Spartanburg County to transform a former manufacturing facility into a high-performance computing center. Two months later, Cielo Digital Infrastructure announced a $2.1 billion investment to build a high-performance computing data center in Cherokee County.

Data centers are computer farms that support technologies many use every day, including artificial intelligence and cloud computing. They operate around the clock, consuming large amounts of energy and water, housing servers and the equipment needed to cool them.

The enormous investments brought excitement for local governments as the projects are set to contribute substantial tax revenue, despite receiving large tax breaks. Still, the energy and water consumption questions linger, as do environmental concerns around NorthMark's plan to generate its own power.

A tale of two data centers

NorthMark plans for its Spartanburg County center to generate its own power on-site using natural gas. The site already offers a direct natural gas connection and is working with Transco and the city of Union to source it. The project also does not plan to use more water than the site used previously as a manufacturing facility.

Meanwhile, Cielo's data center in Cherokee County is expected to draw hundreds of megawatts per day when its data center is complete. This kind of strain on the grid could hit ratepayers in their wallets due to increased energy costs.

Eddy Moore, decarbonization director at the Southern Alliance for Clean Energy, said that data centers are largely to blame for the state's increased energy needs, which have led to rate hikes, a trend seen across the nation. When utilities build new power plants, electric rates typically rise to cover the cost, plus a profit.

While South Carolina has seen dramatic population increases, Moore said the energy demand from the flood of new residents has largely been mitigated by increased energy efficiency. Data centers threw a wrench into that process.

"The gradual increases in efficiency for air conditioning and the significant increase in efficiency for lighting and then a bunch of other little efficiency gains, (have) basically totally offset the effect of all the people coming into South Carolina," Moore said. "That trend was largely expected to continue before the data center growth showed up."

Duke Energy did not respond to requests for comment from The Post and Courier about the impact of data centers on energy bills.

NorthMark's data center coming to Spartanburg County is repurposing a former Kohler manufacturing facility at 4000 S. Pine St. It is planned to support applications in artificial intelligence, scientific research, advanced simulations and data analysis. The full site will be around 900,000 square feet.

A data center under construction at 4000 S. Pine St. on Aug. 20. A letter from the Southern Environmental Law Center and Sierra Club Upstate warned that the data center could emit harmful air pollution.

Valara Holdings LLC, a subsidiary of NorthMark, bought the site for $20.5 million in March, according to public property records. The site's first "data hall" is set to come online in spring 2026.

NorthMark did not provide The Post and Courier with details about the project's expected energy or water usage, saying the figures would be available closer to its launch. The company said that high-performance computing is "significantly less water-intensive than traditional manufacturing or cloud-based data centers." Spartanburg Water will provide the water.

However, the Southern Environmental Law Center, a nonprofit, on behalf of the environmental organization Sierra Club Upstate, sent a letter to the S.C. Department of Environmental Services in August that raised environmental concerns about the data center.

The letter from SELC says that the company's plan to "produce its own power under a permit with no truly enforceable limits on certain air pollutants substantially increases the risk of dangerous air pollution in the area and thus threatens significant adverse impacts on the community."

NorthMark Strategies told The Post and Courier in a written statement that its Spartanburg County facility is designed to "meet or exceed all regulatory standards and to minimize strain on local resources."

The data center in Cherokee County, the county's first, will be built on vacant land near the Broad River on Ford Road in Gaffney. It is planned to comprise four buildings, with at least one expected to come online by the end of 2028. Each nearly 400,000-square-foot building is expected to consume about 72 megawatts daily, with all four drawing 288 MW.

That's a lot of energy used every day; 100 MW is roughly the amount of energy used by 350,000-400,000 electric cars in one year. Moore said the combined demand of data centers coming to the state is likely to require new power plants, which will increase energy prices for ratepayers.

"Electric costs go up when there's significant growth in the system," Moore said. "288 (MW) is a big addition."

The center's daily water usage is undetermined. However, Christopher Maier, the senior vice president of implementation at Cielo Digital Infrastructure, told The Post and Courier that it will use closed-loop technology that uses "exponentially less water" than earlier data centers. He added that the data center plans to procure its water from the Gaffney Board of Public Works.

Cielo identifies and develops sites suitable for data centers. It can then either continue to operate the data center, sell it, or lease it to another company. As the final operator of the data center is undetermined, so is the final use. However, Maier said it would most likely not be used for cryptocurrency mining.

How could these data centers impact the Upstate?

Local governments and business leaders have celebrated the announcements of these two data centers coming to the Upstate, pointing to the tax revenue they'll generate.

Former Spartanburg County Councilman David Britt celebrated the NorthMark Strategies project as a "game changer" for the whole state and called it a great project.

Still, some state lawmakers want more clarity on how data centers will impact South Carolina's infrastructure. During a legislative hearing in September, Republican S.C. Sen. Chip Campsen from Charleston emphasized the energy demands of data centers and their lack of wide-scale job creation.

"Current residential ratepayers are going to pay a lot, lot more because of data centers that bring almost no employees," Campsen said.

NorthMark's Spartanburg County data center is expected to create 27 jobs and Cielo's data center in Cherokee County would create 30.

Megan Chase, state policy director for conservation-based nonprofit Upstate Forever, echoed the desire for more transparency about data centers' use of resources and said state lawmakers must pay close attention to South Carolina's evolving resource needs.

Data centers are a new and emerging industry, and until there's more information, she said, there's no way to know if they're worsening the state.

"I'm not quick to condemn anyone unless proven otherwise," Chase said. "I just want to make sure that residents are not footing the bill for new energy generation or water withdrawals, and under our current regulatory landscape, it's looking like that's going to be the case."