An update on data center projects in El Paso | RSS.com
Diego Mendoza-Moyers: Today: A roundup on data center projects in El Paso.
Construction is proceeding steadily at the two major data centers in El Paso: Meta’s facility in Northeast El Paso and Project Jupiter in Doña Ana County just across the state line. But new policies adopted by the city of El Paso this week could make it much harder – if not impossible – for another tech company to build a data center within city limits.
And for Project Jupiter, the developers including Oracle promised to give $50 million to Doña Ana County to make badly-needed improvements to the water infrastructure in Sunland Park and Santa Teresa. And we got some clarity this week on when those dollars will be available for officials in southern Doña Ana County to start water-related projects.
El Paso Matters Assistant Editor Pablo Villa will join me shortly to do a roundup on the data center projects in our region and what to know as we enter late July.
First: this El Paso Matters Podcast episode is brought to you by our podcast title sponsor Tawney, Acosta and Chaparro, truck crash and injury attorneys. Their team of local, seasoned trial attorneys are ready to help if you’ve been injured in a crash.
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Now, onto our conversation.
Pablo, appreciate you joining me.
Pablo Villa: Diego, very nice to be here. It only took a couple months, but I’m finally here at the big kids’ table with you in your new studio here. So, very, very happy to be here. Thank you for having me on. And we’re actually here to talk to you, right?
So, artificial intelligence, AI, it’s become one of the biggest forces shaping economic development here in the Borderland, West Texas, southern New Mexico. And you’ve been seeing that play out in real time, right? You’ve been keeping the community informed about that subject for the past six months, maybe even longer than that.
Diego: Almost a year now.
Pablo: Yeah. And, of course, you’ve done a great job, and you had a story that published this week at elpasomatters.org that I encourage everyone to check out. You talked about one of the two massive data center projects that are in development here in El Paso or in the region. And this is Project Jupiter, right? The one that’s out in Sunland Park. It’s one that has sparked a lot of questions throughout the last half a year or so.
But your story this week focused on sort of an aspect that’s often talked about, and that’s water, right? Your story asked questions about infrastructure, public policy and what this new industry, data centers, can mean for the region. And you focus specifically on southern New Mexico. So, with that, I want to talk to you about that story, what you found out, and where we stand currently on that. Anything you want to say before we kick it off?
Diego: Well, I’ll just say this, Pablo. If we were talking last summer, I don’t think that I would have predicted that the coming year would be filled up with data center coverage. I didn’t have enough foresight to realize this was going to be maybe the number one story in our region. So, kind of interesting to reflect back on a year (ago), because I think it was last August that, sort of out of the blue, we heard about this $165 billion data center in Santa Teresa, Sunland Park area. So, anyways, man, it’s gone pretty quick. Had a son born and still covering data centers. So, here we are.
Pablo: I was just going to say it really has been fascinating – maybe that’s the wrong word. It’s just been intriguing to see how much has come to the fore since you started coverage on this. I think there’s been a lot of negative and positive feelings that have come about.
And I just think that El Paso Matters and you, to a large extent, have done just such a phenomenal job of keeping us informed on what’s real and what’s not, right? And we’re gonna continue to do that, you’re gonna continue to do that, and so we’re grateful to you for that, for sure.
Diego: Appreciate it, Pablo. But to get to your initial question about the Project Jupiter update we did, so, one of the key elements of the Project Jupiter deal, which was highly controversial, they got a large tax break that Doña Ana County commissioners approved last September, like three or four weeks after the project was unveiled, basically, publicly for the first time. So, it happened very rapidly.
But one of the key aspects of the deal that was supposed to be, like, the trade-off for the community and why to accept the project was that the developers were going to give $50 million to improve water and wastewater infrastructure, particularly in southern Doña Ana County, which really refers to Sunland Park and Santa Teresa areas that have kind of struggled with poor water infrastructure.
The utility out there, the Camino Real Regional Utility Authority, is a very small utility, serves about 22,000 people, had lots of problems over the last several years. I mean, it goes back 15, 20 years. But, more recently, in the last three, four years, they’ve had issues with high arsenic levels in the water, poor water treatment plants, poorly managed, poorly maintained and so forth. And just kind of a bad situation with the water out there.
And, so, this idea that, really, Oracle and its partner companies, this sort of web of companies involved with Project Jupiter, (are) going to give $50 million, that’s a pretty impactful amount of money.
So, we heard that last fall, and I’ve been wondering, like, what’s up with that, right? What’s up with this $50 million? When’s it going to be available? The city of Sunland Park could use it as soon as possible. They have very – aging pipes. It was a big deal for the city of Sunland Park recently, they got $1 million, I think, in a federal or state grant to build a new water tank. Just, like, very basic water infrastructure that they’re lacking.
So, I reached out to Doña Ana County and I said, “Hey, what’s going on with this $50 million fund?” And I got a response that was somewhat alarming. And, over time, I understood where they were at. But their initial answer was, like, “We don’t really know where these funds are. We don’t know how to account for them or track them. And we’re working with the state of New Mexico to figure this out.”
And I’m like, man, this is, like, 10 months since this deal was approved. You would hope, in an ideal world, that a local government offering some sort of tax break and incentive would have an idea of how the benefits they’re receiving would be accounted for and tracked and so forth, right? Like, how this would play out and how they would collect that $50 million. You’d hope that would be figured out, like, before the deal was approved, but didn’t really seem to be the case.
And I’ll just take a moment. This gets kind of boring and complex. But the $50 million is not Oracle placing $50 million cash on the table. It has to do with Oracle is receiving a certain tax break on a monthly basis. And, so, as that tax break accrues, the first $50 million they’re going to set aside for this water (fund). And then after they accrue $50 million, they’ll get this tax break back in their hands every month. So, it’s sort of a fund that will accrue over time and during the construction phase, especially. So, it’s a little bit complicated.
And the state of New Mexico told me, when I contacted them, like, “Hey, Doña Ana County doesn’t have, apparently, the knowledge of how to account for these funds and put this $50 million fund together.” So, I talked to the New Mexico Economic Development Department and they said, “Look, this is a special tax break tool. We’ve only used it one other time. We’re kind of figuring it out,” right?
And, so, they said that already $25 million had accrued of the $50 million, which was surprising to me. That’s a pretty good amount of money. Of course, I would ask, well, why isn’t it already in Doña Ana County’s hands? But the state said, “Look, half of it’s accrued.”
The state and a Doña Ana County commissioner, they seem to think by early 2027, the $50 million will be sort of put together and allocated to Doña Ana County. And at that point, maybe we could see water projects proceed. And, so, that was really the finding that, OK, it seemed at first like Doña Ana County was sort of clueless about this $50 million. I think that wasn’t totally true. And they’re sort of working through a complex process of accounting and so forth to put this money into Doña Ana County’s hands and then, from there, into the city of Sunland Park’s hands.
Pablo: That’s a real good encapsulation of everything you’ve uncovered in your reporting. There’s so many aspects to this project that just just demand a lot of attention, right?
But to get back to what you’ve talked about this week in your story, I think water has sort of become a real central issue in nearly every conversation about Project Jupiter. As you dug into your reporting, where did you find the debate becoming more nuanced than simply how much water is this data center going to use?
Diego: So, of course, the water usage of Project Jupiter as well as Meta and any other data center in our region is, like, the number one concern people have. I think the developers of these data centers are aware of that and are doing things to address the water usage for the most part. Not that there aren’t other concerns. But Project Jupiter has said, I think, that it’s going to use 20,000 gallons of water a day or I think a maximum allowable like 40,000 gallons.
And there’s some complexity of, like, they’re going to also buy some groundwater from a nearby sod farm that, if the data center wasn’t purchasing it, they would just be using the water to water grass, basically. And, so, it’s not a net increase in groundwater withdrawals is what Oracle would say.
Anyways, there’s some complexities here, right? But Oracle says, “Look, our water use will be sustainable” and so forth. But so, obviously, a compounding or complicating issue here is the legacy of bad water right in that area. So, if you’re a resident and you go, “Man, we already have bare minimum water infrastructure. We’ve had a lot of issues with water quality.” It’s not a great look to allocate water to Project Jupiter. And, so, that’s where this $50 million fund comes in, which Doña Ana County has said they will give $10 million of it to Sunland Park. We can talk more about the relationship between the county and Sunland Park in a bit.
But just a sense of what where those $50 million in funds could go to, Manny Sanchez, the Doña Ana County commissioner, the first thing he brought up was drilling exploratory wells to explore desalination.
There’s a certain segment of the groundwater that’s a little bit salty. And, so, I think they’re thinking, “Hey, can we build a desal plant similar to the Kay Bailey Hutchison desalination plant that El Paso Water relies on and that El Paso ones get water from every day?” El Paso Water’s figured out desalination. It’s a little bit expensive and dealing with the salty waste is a challenge. But Doña Ana County is trying to undertake that so that they can access maybe 6 million to 8 million gallons of water per day, which is a huge amount. CRRUA at the moment supplies, like, 2.8 million gallons a day, roughly, maybe 3 million gallons a day. So this potential desalination plant could double the water capacity in that area, which would also go to industrial operators as well as homes and businesses.
But the point is this $50 million wouldn’t fund the whole thing. Obviously, it probably would cost hundreds of millions of dollars to build a desal plant, but it’s kind of the initial step to explore the wells, see the composition of the water, what it would take to treat it and things like that.
In addition to desalination and exploring that, they talked about using the funds to – they would give $10 million to Sunland Park, which I think would do things like, just replace piping and do very basic infrastructure things that need to be done for aging infrastructure.
And then one of the other things that was interesting that Sanchez talked about as it relates to this water fund was like, say the county keeps $40 million and gives $10 million to Sunland Park. What if the county set aside that $40 million and did things like maybe use it as collateral to borrow so you could sort of get more money and then use that $40 million potentially as collateral. Or you could invest that $40 million and get a few percentage points of yield every year or something like that, right? Get some investment earnings.
The point being explore ideas – not that any of this is set in stone – but explore ideas to sort of make this water fund stretch further and accomplish more with it.
And, so, that’s really the tie-in. Project Jupiter’s developers say, “Look, our water use will be sustainable, 20,000 gallons a day for our office.” And also the water that they get from the sod farm, they say they, basically, will have a one-time fill of several million gallons and then kind of recirculate it.
So, Project Jupiter says, “Hey, our water use will be sustainable, and we’re also going to get $50 million for a variety of water projects.” And, again, hopefully the funding will become available next year, and the county and Sunland Park can get going on some projects.
Pablo: It’s interesting because as a journalist, as a reporter, I mean, all you can do is take these companies at their word, right? That we’re not going to be able to see any of these processes in action until they’re actually being played out in real time, right? So, I know there’s a lot of questions that are raised by the community.
And, with that in mind, El Paso City Council recently approved some new policies related to data centers. And, largely, those are probably more related to the city’s dealings with Meta. We have the big project going on in Northeast El Paso. But can you tell us at all how much of that action was influenced by Project Jupiter, and what do those policies tell us about how local leaders are thinking about future AI development in our region?
Diego: Yeah. So, the city, like you said, they adopted this data center policy framework that we’ve known about for a few months. I think an interesting part of it, as it relates to Project Jupiter, is that a big part of the data center policies the city adopted – which I’ll enumerate further – but a big part of it is basically seeking from data center developers who potentially want to build in the city limits: “Hey, we need a community benefits agreement,” right?
So, it’s almost the reverse – rather than a tax break, like what Meta got where the city’s giving Meta money and a break on taxes and so forth, it’s kind of like, “Well, what can you, the data center company, give us,” right? Whether it’s cash or whatever. And that’s really what that $50 million fund, the water infrastructure fund that Project Jupiter’s developers, really Oracle, are giving to Doña Ana County. That’s, I think, instructive for the type of thing that the city of El Paso would like to see if any other data centers come to the town. And again, it would be only within the city limits.
I have big doubts about whether there will ever be another data center constructed within city limits for various reasons. Number one, just the public pushback would be incredible. Number two, I don’t know that there’s a massive 1,000-plus-acre plot of land where you could do it. Is there a place that could accommodate a power plant, right? El Paso Electric’s building a power plant for Meta right next door.
There’s many reasons why I don’t even know if these policies will ever go into effect or take action because I don’t know that we’ll see another data center built within the city limits. Maybe I’m wrong, we’ll see.
But just an example of some of the other things city council adopted with these new data center policies was like, number one, no incentives, no tax breaks for data centers. Which I think fits with the nationwide and state shift where, a few years ago, local officials in most places in America were like, “Yeah, multi-billion-dollar development? Sure, we want that. We want you to pay taxes and whatever. We’ll give you incentives.” And I think there’s been a real philosophical shift there.
So, the city says no incentives, no tax breaks. And then some of the other policies are like, if a data center wants to come here, they would have to get this new special permit. Whereas before, if a data center – it was kind of like, “Hey, you get this permit as long as you’re trying to build in an area zoned as industrial, manufacturing.” Certain areas, you’re more or less automatically granted a permit. Whereas now, if a data center wanted to go, basically that permit would require city council vote to approve. So, it would be very public and it would require elected officials to buy into it. I think another reason why I don’t think a data center would be built here is for that reason.
So, I think this set of policies was kind of about not enacting a moratorium, like you’ve seen some other communities try to do – some places have had success, others have rolled them back after legal threats from data center developers. So, I think this is sort of stopping short of a moratorium, but I think it, in practice, could have a similar effect of basically preventing the development of another data center here.
Of course, the public isn’t really satisfied. A lot of the opponents of data centers say, “Hey, we don’t care about future data centers. We want to prevent Meta from building a data center here.” Meta’s almost – they’re well in the construction process. So, I think Meta will continue as they have been. But I think a lot of people wanted to see the city somehow cancel the tax break for Meta and kind of prevent Meta from continuing. I don’t know how possible that was.
So, anyways, yeah, there’s a suite of policies I think that really could effectively prevent the construction of another data center within El Paso city limits.
Pablo: I’m glad you answered a question that I personally had, which is, is there a sentiment of “too little, too late” here? Because, to your point, there isn’t that much space left for a hyperscale data center to come take root here. So, do these policies even matter? Maybe they do, maybe they don’t. I mean, that’s not that’s not for us to decide, really, but it is just interesting how this could just be a move that placates people who have opposed these projects. But they are in place now, so we’ll see how that plays out.
Diego: You know where I think it could have an effect, Pablo, more so than determining the future of data centers? There’s elections coming up in November, right? And, so, I think there’s a real political imperative to come out against data centers and be anti-data center.
We’ve seen even Governor Abbott, like, a year ago or a few months ago even was trying to make Texas the AI hub of America and totally being friendly to AI developments. And then he comes out, a month or two ago with this ratepayer protection stuff and trying to posture himself as being skeptical of data centers and ensuring that they’re not having negative effects on Texans, whether it’s through utility bills or noise or whatever.
And I think we saw a similar shift with Mayor Renard Johnson, right? Who, I mean, I’ve quoted him in stories where last fall he was cheering Meta’s investment. Like, “This is the future of economic development in the Borderland.” Stuff like that, right? That (were) very much positive about Meta’s investment and very much in favor of it.
And then I think he saw – Mayor Renard Johnson did – whether it was at the data center meetings the city held and just all these different venues where people have shown up with the proverbial pitchforks out, like, “We don’t like this. We think that this is going to threaten our water supply or foul the air in El Paso.” Claims that I don’t always know are totally accurate. But there obviously is a lot of anger. And to be fair, Meta hasn’t engendered a lot of goodwill in El Paso, and we can talk a little bit more about that.
But, yeah, I think Mayor Renard Johnson a year ago, nine months ago, was very much in favor of data centers. His perspective has been like, “We want to bring commercial entities in to pay taxes,” right? So that property taxpayers or homeowners are paying less in taxes and the businesses are paying more and so forth. And then it shifted really quickly, I think, like I said, after the anger at the meetings. And it became very evident that there’s a lot of people in El Paso very upset about data centers. And Renard Johnson switched pretty quickly to appearing as a skeptic, supporting this data center policy framework and so forth. So, anyways, I don’t know that there’s going to be another data center come here where these policies will take effect, but I think at the ballot box there will be an impact from council adopting these policies.
Pablo: Well, optics matter, Diego. They matter a lot, right? And they certainly shift, too.
And so, I mean, and again – just to go back to something I said at the top, is just the public really does benefit from your presence at all these meetings. And all our reporters at El Paso Matters, right? We always got our pulse on things, and that’s really to the benefit of the public.
So, with that in mind, I know recently you had to take off your reporter hat because you moderated a public roundtable that focused on Project Jupiter.
Diego: It focused on Meta, actually.
Pablo: On Meta, you’re right. And you joked afterward that you had some choice words after that experience. Can you tell us a little bit about it? What happened? What was your takeaway?
Diego: Yeah, well, just to start, I mean, I think the choice words were that it was a waste of time. But I wanted to get into this because I think it was a little bit illuminating about the discussion and the debate here in El Paso about data centers.
Cynthia Boyar-Trejo, the city council representative in District 4 in Northeast, that’s where Meta’s building, I think she’s really gotten the brunt of the complaints and the concerns and so forth from the public about this project. And, so, she has also – I don’t know that she was ever a big proponent of the data center – but she’s really postured herself to be a big skeptic of Meta and trying to get out in front of this and advocate for the public and address their concerns and things like that.
So, she organized this roundtable along with the mayor. And the idea was – I think it was 14 people total involved in involving me. And it was 60 minutes. Off the bat, way too many people to try to involve in an hour-long conversation.
But it was supposed to bring together the different parties here to have just, “Hey, let’s sit down, let’s hash this out, let’s talk about our concerns, let’s have a good conversation, see where we can go.”
So, Meta had some representatives there. El Paso Electric’s CEO was there, El Paso Water’s CEO was there. There was a union representative. Of course, the unions like these projects. They create a lot of union jobs. There was the head of the El Paso Chamber, the head of the realtors association. Many, many people at this meeting, as well as the mayor and Representative Trejo. And then also some community members. There was Veronica Carbajal, a community organizer, as well as some residents in Northeast opposing this.
So, the idea was cool, I thought. And I was actually asked the night before – I wasn’t planning on participating and I got a call the night before to moderate this. So, I said sure.
And, so, I got there and I wanted to get into it. “Hey, let’s not waste any time. Let’s get into this. Let’s immediately ask – we’ll start off with the water, right? So, what’s up with the water use? Meta, how can you assure us that your water use won’t be unsustainable or affect water supply for El Pasoans?”
And, so, I asked John Balliew, the CEO of El Paso Water. He had a whole series of poster boards and data points and all that kind of stuff, basically saying, “Hey, look, Meta is going to be less than one percent of our daily water usage or annual water usage. We can accommodate it, and here’s why,” and blah, blah, blah.
And then it went to Meta and I said, “Hey, Meta, can you just talk about your water usage and how it will be sustainable?” And Meta started off – these two representatives – by just reading this letter, it was a written statement. I’m thinking we’re going to have this open discussion, there’s sort of a sense of goodwill. Let’s have this communal effort to arrive at a greater shared truth here and just try to hash out the concerns. I don’t know how interested Meta was in that.
They had their prepared written statement, which I really saw as a filibuster – waste some time, spend five, 10 minutes reading this letter. Nobody gets anywhere. “We’re going to be a good corporate partner” and so forth. Like, just talking points that don’t mean that much, right, to people in the room.
And it also illuminated for me how – so, of course, some of the community organizers would cut Meta off and they were trying to ask Meta questions and Meta was very guarded and things like that. But it showed me how the people who are skeptical of data centers and opposing them and have very valid concerns and justified concerns, when they’re talking about it versus when Meta, El Paso Electric, which is essentially a partner in Meta’s data center, the El Paso Chamber, the business community, they’re very in favor of this development. They’re speaking completely different languages to each other, right?
Like, the utility executives and some of the business people are talking about “We want to increase our commercial tax base and reduce the ratio of commercial versus residential property taxes, and then we’ll have a greater tax base and we’ll attract more businesses” and blah, blah, blah. Oh, and El Paso Electric: “Hey, we’re going to make our system more efficient and we’re going to increase our utilization rate because we’re going to be using our power plants more to sell (electricity) to Meta.” Like, who cares, right? These things that don’t mean anything to people.
And then the community members are saying, like, “Hey, what about all the noise and what about the air pollution that’s going to result? What about the water use?” And things like that. And then Meta will respond with this robotic answer that doesn’t really address the question.
So, without going on and on, it was just – it showed me the disconnect that exists between the business community and the people that aren’t in favor of these. And it’s not that both sides are inherently wrong. I think there’s just such an incredibly huge gap in their viewpoints and priorities and so forth that maybe it’s irreconcilable, right? And they just have such a different starting point of the perception of data centers.
Are they engines of tax revenue and some jobs and you bring in other tech companies and it’s all this ecosystem? Or, is it this extractive trillion dollar company, Meta, coming here and taking our resources, providing too-few jobs? How do you look at it?
So, it was a waste of time in that these very large philosophical gaps were never going to be bridged in 60 minutes. They might not be bridged in any amount of time. And I just think that the fact that Meta and the city haven’t held any more roundtables I think was indicative of the pointlessness of it all.
Pablo: Very telling, very telling. Yeah, feet are dug in and they’re not moving, right?
OK, so you’ve touched on Project Jupiter, you’ve touched on Meta, everyone’s been focused on those. But another story that has been developing at Fort Bliss, right, our military post here in town. What do we know about the military’s interest, the U.S. Army’s interest in AI data centers? And how could a project there at Fort Bliss ultimately become more consequential for our region?
Diego: Yeah, so we hear about this Fort Bliss project – we heard about it first, I think, in April. Kind of mysterious, right? To me, everything with Fort Bliss is a little bit mysterious. Like, the army, let’s be honest, isn’t too accountable to the public. They just kind of do their own thing out there. Not a lot of visibility for reporters, anyways.
And, so, I went down and I talked to some members of the “Department of War.” They’re talking about, “Hey, we want to rent out part of our land to this company, Carlyle Group,” that’s this really big private equity firm. And Carlyle Group is going to build a data center here. And, so, you go, OK, that’s weird and interesting, but let me learn more.
And, so, the army was very short on details. But a couple of the details I got out of that back in April were that, number one, the size of the facility would be three gigawatts. You throw a term out there like (that), who cares? But El Paso Electric, just to put it in perspective, the most power that everybody from Hatch down to Las Cruces, the entire El Paso metro area out to Van Horn, all those people are customers of El Paso Electric. The most electricity they’ve ever demanded at one time, the most electricity El Paso Electric’s ever supplied was 2.3 gigawatts, roughly, really hot summer a couple of years ago.
So, we’re talking 2.3 gigawatts, the entire – every home and business in the whole region was using. And Fort Bliss will use – this data center would use more than that all the time. So, 3 gigawatts is a big city’s worth of electricity just for this one data center. So, it’s kind of a gargantuan scale.
And they also told me – I kind of got the answer after a series of questions that they’re planning on powering them with natural gas turbines. And so, I mean, three gigawatts of natural gas generation capacity, if you ask anybody in the electric industry – who are even inclined to kind of downplay the negative effects of fossil fuel power plants – they’ll say “Absolutely 3 gigawatts of fossil fuel power plants will have a huge impact on air quality negatively. Really impact air quality.”
And, so, I’m thinking, “Man, this is more electricity than we all use in the whole region just here in Fort Bliss to be powered by natural gas turbines. We already have issues with particulate matter and other air quality issues here. It doesn’t seem great.”
And, so, months have passed now, that was three or four months ago, and no details have been released. I’ve reached out to the Army multiple times to get any sense of what’s going on here. Basically nothing. They just say, “Hey, we know everybody’s upset about data centers. This one’s going to be great.” That’s essentially their answer.
And, so, I’ll just say this: Through conversations, through reporting, I’ve gathered that the Department of Defense, the Army, hasn’t had real concrete conversations with El Paso Electric to tell El Paso Electric, “Hey, we want you to build us so much generation capacity by X day.” Like, those conversations haven’t really happened. And, at the same time, the Army has said, “We want this Fort Bliss data center to be operational before the end of 2027.” So, less than a year and a half from now.
I mean, it takes multiple years at this point to build a power plant. So, I have big questions about, like, this timeline doesn’t make a lot of sense considering we don’t even know any details about the project, really, other than those kind of basic ones I shared, three gigawatts, natural gas turbines. It’ll be with this company Carlyle and the army wants to use the data center for whatever it may be, AI targeting systems or for bureaucratic stuff, whatever.
So, OK, not a lot of discussions with El Paso Electric. I think that could mean that by the end of ‘27, maybe they’ve just built a tiny portion of it. They kind of plug it in, put some solar panels or whatever, they just have a tiny part operational by the end of next year to say, “Hey, look, we brought this in our operation.” And then maybe we see construction follow in the years afterward.
One thought I had, this is pure speculation, but our president, President Trump, has at times, I think – I don’t think he’s had a lot of respect for typical institutional norms and processes when he has a big priority. So, I’ve thought maybe the president calls up the turbine manufacturers and say, “Hey, everyone who’s in line to buy a turbine, move them back and put the military first or bad things will happen to you.” I don’t know. That’s pure speculation. I just think the timeline communicated by the military was very confident, but it doesn’t really match the physical realities of building three gigawatts of generation capacity. I think it would take El Paso Electric until 2032 or 2033 or something like that to build that much.
So, in 18 months, I don’t know how it’ll happen, but I’ll just say, just to reiterate, I mean, I think that I had left open mentally the possibility that the Army would build a power plant for this facility somewhere out in the middle of nowhere West Texas to get around the pollution concerns. Like, “Hey, it’s in the middle of nowhere, nobody lives nearby there.” But I think the transmission planning and building would take many, many years to do that. And, so, I really think at this point the likely possibility is that we see a really, really massive amount of natural gas power plants, or one big mega power plant built on Fort Bliss to power this facility. Which certainly brings me some concern as far as the air quality impacts and pollution and so forth.
I think that the Army has been really adamant to say that the facility will be water neutral. I don’t really know what that means in practice. I think the desalination plant will play some role because the army kind of has a stake in that as well. The army gets some water from that. So, I don’t know. The water, I think the army’s kind of trying to get out ahead of any concerns about water usage. I don’t think that they’ve really addressed any concerns about the air pollution that would result. So, not a lot of details, but that’s kind of the rough outline of the project I’ve been able to gather. Seems like a lot of the details are to be worked out.
One more thing I’ll say on this. I think that we could get some details in October. The Army’s got a conference planned in Tampa, Florida, where the agenda material suggests they’re going to lay out their sort of AI strategy for AI data centers on bases around the country. So, maybe in the months ahead, we get some details.
But, at this point, I’m thinking about it as a massive source of new pollution in the heart of El Paso. A little bit concerning.
Pablo: Very, very concerning. And, if you want to be on the pro-army side of things, I mean, yes, you want the fighting force to be swift and agile and all those things that you want out of your army to be able to defend our rights and all that. You want them to be on the forefront of technology and all those things. And AI is certainly that, right? It’s certainly at the forefront of technology. And our military needs to jump on it. At the cost of the public that surrounds these military bases, I mean, I don’t know.
You mentioned the three (gigawatts) of power. I mean, that’s a lot of power. All localized in one place is certainly going to have ramifications for us. And definitely something that’s concerning for me, and certainly will be for a lot of other people. So, I mean, it’s – we play a role where we’re not partisan, right? And we’re not necessarily taking sides here, but raising these questions is absolutely vital just for our health and our future.
Diego: And you and I both have kids, Pablo. So, certainly I don’t want my kid growing up where he’s playing at the park and having asthma develop because it’s poor air quality or whatever.
And I’ll just say I think the military has been generally – like, the Army’s been a good partner with El Paso. We’ve kind of grown up together, right? Fort Bliss and the city. So, I assume that there will be some consideration of these concerns. Of course, the people (who) live at Fort Bliss cycle in and out. We all have to live with these concerns long-term. So, just something I’ll be keeping a close eye on in the months ahead.
Pablo: Yeah, And it’s another one of those things that could be impacted by elections two years from now, right? So, you never know. You never know.
But all right, Diego, thank you for all that. So, just taking a bit of a step back, do you think we’re witnessing the beginning of a fundamental shift in the way the Borderland takes the approach to its economic development? I mean, we’ve seen manufacturing booms here in the past, logistics expansion, massive distribution centers, the age of maquilas, all that kind of thing. But is AI infrastructure becoming the region’s next major growth factor?
Diego: I have thought that yes, the answer to that question is yes. I’m increasingly starting to think it’s a piece, it’s not the main driver of whatever our economic development looks like going forward.
Obviously, these data centers will be a big part of that because they’re already in the ground. But I think the public backlash is such that if there (were) plans to build more data centers in El Paso, I think that those plans could be done away with, right? And just, I think that the public is so against this that it’s going to be difficult to support our economy just based on data centers. But they will play a big role. And, right now, there’s thousands of people working at these sites at Meta and at Project Jupiter.
Anecdotally, I’ve had people say that local truck driving companies have had to pay drivers more because Project Jupiter and Meta are having hundreds of trucks in and out of their sites every day. And, so, they’re paying these people really well. So, I guess that’s the wage effect. Of course, on the flip side, if you live nearby, that probably isn’t cool to have massive trucks driving through your community, whether it’s in Santa Teresa or in Northeast El Paso or Chaparral, New Mexico, just across the state line from Meta.
So, it depends on your perspective. But, yeah, I think that obviously there’s a big impact now with all these thousands of construction jobs. And the big thing, too, is I’ve written a story about how Meta will be the biggest taxpayer in the city and pay, like, $15 million in taxes every year to the city of El Paso. Project Jupiter similarly will pay a flat $12 million to Doña Ana County every year in addition to this $50 million water fund.
From a local government perspective – I mean, these are revenue generation sources. Whether that’s worth the trade of the water and air pollution and so forth people can decide for themselves. But I think these will be a big part of our economy going forward. But I think that the opposition has become so intense that a future developer probably would just look elsewhere if we even needed another data center here.
So, it’s going to be a big part. And I’ll just mention too, there is the company Ferveret that’s a company from California that located here to do data center cooling solutions. The city gave them some incentives to come here and create some jobs and stuff.
So, I think that the city is kind of pivoting its strategy away from data centers a little bit. I will say this too, the economic development team for the city of El Paso, since the Meta deal became so controversial and there was, I think, a realization that probably the city was too generous to Meta in its incentives: an 80% tax break for 25 to 35 years and then $12.5 million to fix the roads. I think there was a realization that that was probably too generous. We probably didn’t need to give Meta incentives.
And, so, since the public has become increasingly skeptical of the deal with Meta, you have not seen the economic development team of El Paso who negotiated that deal go to the public and answer questions and things like that. The elected officials on city council repeatedly say, “Look, this Meta deal was approved before we were here. It wasn’t our decision. We’re just living with it.” But nobody ever mentions, like, who is still there (are) the people in the economic development department who negotiated the deal.
So, yeah, I just think it will be a part of our economy going forward. But I think everybody realizes data centers are unpopular. Let’s try to figure something else out.
Pablo: Optics matter, Diego.
Diego: Yes, they do.
Pablo: Thank you very much for taking the time to illuminate us on all things data centers. I know there’s much more coming up in the coming months. I know you have a significant project you’re working on that I encourage our listeners to keep an eye out for. But I also know that you’re going to keep your eye on this for the foreseeable future. So, definitely thank you for that. And thank you for letting me sit in the host chair in the new digs.
Diego: Sometimes it’s nice to be the one answering questions and getting to opine on things and not to ask questions. So, I appreciate you taking the host seat, Pablo.
Pablo: Absolutely, Diego, any time. So, thank you again, and we’ll do it again soon.
Diego: All right, we’ll leave it there. Thanks.
The post Podcast: Updates, news on data center projects in El Paso appeared first on El Paso Matters.
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