Negotiating Data Center Proposals

Opinion By Drew Williamson

© 2026 Williamson News Service LLC

One of the reasons that public officials end up in so much hot water over proposed data centers is the starting point for these negotiations.

One of the principles in negotiations is known as “anchoring”. Typically, this involves one of the parties making an offer. Then negotiations anchor around the numbers in the offer. https://www.pon.harvard.edu/daily/negotiation-skills-daily/what-is-anchoring-in-negotiation/

However, existing public processes put officials in the position of allowing developers to submit whatever proposals they want. Then everybody debates around the numbers submitted by the developer.

An example of how this might work:

Developer submits a data center proposal expecting a negotiated settlement. The initial proposal could “low ball” the public officials by proposing connecting with the local power grid. Cooling for the data center computer chips would be provided by connecting to the local water system.

During negotiations, public officials become concerned that the 100 megawatts of continuous 24/7 electricity demanded by the data center will increase the cost of electricity. The data center developer offers to provide its own electricity by burning natural gas to drive generating turbines.

In this instance, negotiations anchor around local electrical grid or natural gas turbines. Neither solution is necessarily optimal.

Similar negotiations lead to the debate about water supply. The data center offers to pump 30 million gallons annually from an onsite well, using the water rights for the agricultural land that has been chosen for the project. City water or groundwater? Again, neither solution is necessarily optimal.

The way out of this conundrum is simple but will require upfront work. Public officials in Arizona should develop an optimal design for a data center. By doing that, we would avoid falling into the negotiation trap of anchoring on unacceptable outcomes.

The template for Arizona might require that the primary source for electrical power would be from solar energy. The template also could require air conditioning for cooling to save water. Here’s what Google’s Gemini suggested:

https://by-drew-williamson.ghost.io/lets-ask-google-about-new-data-center-design-for-arizona/

By specifying minimum required features for a proposed data center in advance, public officials will save time, avoid much of the ill will of the public and will experience better outcomes for the public when negotiating data center proposals because they will receive better initial proposals.

Drew Williamson is a freelance writer in Arizona. His professional expertise includes newspaper reporting and editing, advertising sales and management, and investment advising and retirement planning. He has a BA in Journalism/Political Science from the UA in Tucson and a MBA in Strategic Management from ASU in Tempe. He is a proud member of the Valley of the Sun Chapter of the Society of Professional Journalists (SPJ).