From a small room off a Virginia parking garage to gigawatt AI campuses, data centers have become one of the most contested land uses in America. Here is why the new rule is "bring your own power," and why sovereign, behind-the-meter energy matters for defense.
By Ken Tapp, a director of Complete Defense Solutions
On October 21, 2026, U.S. President Trump posted a message on Truth Social that summed up where the data center debate has landed. New large data centers, he wrote, are "mandated by me to make their own electricity, and give or sell any excess back to the local community, or grid."
Whether that statement becomes a formal federal rule or not, it captures a shift that is already underway across the country. For most of their history, data centers simply plugged into the local utility like any other customer. Increasingly, the expectation is that the biggest of them will generate their own electricity on site, and that the communities hosting them should come out ahead rather than behind.
To see why, it helps to understand how a once-invisible industry became one of the most contested land uses in America.
From a Quiet Utility to a Public Fight
The modern data center industry has humble roots. In 1992, a handful of early commercial internet providers needed a way to pass traffic between their networks, because the government-funded backbone of the day was off limits for commercial use. Their answer was a shared interconnection point in Tysons Corner, Virginia, known as MAE-East. It began in an ordinary office suite and soon moved to a small room off a parking garage. For a time, a large share of the world's internet traffic passed through it.
That exchange helped turn Northern Virginia into the densest data center market on the planet. Companies clustered there because proximity meant speed, and speed meant money. When Amazon Web Services opened its first cloud region in 2006, it chose Northern Virginia, and that region, known to engineers as us-east-1, still anchors a large slice of the internet. Loudoun County's "Data Center Alley" grew from that early head start.
For decades, few people outside the industry paid attention. These buildings stored email, photos and streaming video, and they used a modest amount of power to do it. Artificial intelligence changed the math.
Why AI Changes the Power Equation
Traditional data centers mostly retrieve and deliver content that already exists. AI systems generate new content every time someone asks a question, writes a prompt or requests an image. That work runs on graphics processing units, or GPUs, which perform enormous numbers of calculations in parallel and draw far more electricity than conventional servers.
The difference shows up at the rack level. A single rack of today's leading AI hardware can draw on the order of 120 kilowatts. A typical American home averages roughly 1.2 kilowatts over the course of a year. One AI rack, in other words, can consume about as much electricity as a hundred homes, and the largest AI campuses hold thousands of them.
The national figures reflect the same trend. According to a December 2024 report from Lawrence Berkeley National Laboratory, data centers consumed about 4.4% of U.S. electricity in 2023. The same report projected that share could rise to between roughly 6.7% and 12% by 2028, driven largely by AI. Several projects announced in the past year are sized in gigawatts, a scale once reserved for entire cities.
The Grid Is Regional, and So Is the Shortfall
It is tempting to ask whether America has enough electricity for all of this. The more useful question is whether each region does, because the country does not operate a single unified grid.
Much of the East and Midwest is served by regional markets, such as PJM, where power plants compete to sell electricity and capacity costs are shared across ratepayers. Large parts of the Southeast and West are served by vertically integrated utilities whose rates are set by state commissions. Texas operates its own grid through ERCOT, kept largely within state lines and outside most federal oversight.
Each region faces a different supply picture. Several, particularly those with heavy data center growth, are projected to see their reserve margins tighten sharply later this decade. Those are also the areas where residents have begun to notice rising electricity bills, and where the political pressure has been most intense.
What Host Communities Are Worried About
Residents near proposed data centers tend to raise two concerns.
The first is water. Many facilities cool their equipment through evaporation, which can draw heavily on local supplies during hot weather. The Lawrence Berkeley report estimated that U.S. data centers directly used roughly 17 billion gallons of water in 2023. That is small next to agriculture, but it can be significant for a small utility in a dry county. Much of the public frustration has centered on transparency, with residents saying they were not told how much water a facility would use. In response, many newer designs rely on closed-loop or air-based cooling that sharply reduces water consumption.
Water is now following the same path as power. In 2025 and 2026 alone, state lawmakers introduced more than 60 bills addressing data center water use, and at least 12 states have considered requiring new facilities to use closed-loop cooling. In a closed-loop system, the coolant circulates through sealed pipes and is reused again and again, rather than being evaporated into the air, so a facility fills its system once and draws little new water after that. Some proposals go further still, calling for zero net water withdrawal and zero wastewater discharge, while others, such as one in Illinois, would set closed-loop cooling as the efficiency baseline and require operators to report their water use publicly every quarter. Developers are moving ahead of the mandates, because a million-gallon headline in a dry county can cost a project far more than the cooling savings are worth. Just as "bring your own power" answers the question of who pays for electricity, closed-loop cooling and public reporting are becoming the answer to the question every host community asks about water. Yet much of the messaging on social media still treats water as an unanswered question, portraying it as the single biggest resource, after power, that AI data centers take from the communities around them. For a growing share of new facilities built on closed-loop designs, that picture is simply out of date.
The second, and larger, concern is cost. When a single customer requests as much power as a mid-sized city, the utility may need new transmission lines, substations and generation. The central question for every community is who pays for that buildout: the company that requested it, or every household on the system.
A Policy Patchwork Takes Shape
State regulators and lawmakers have begun answering that question, and their answers have grown stricter over time.
The first wave focused on making data centers pay their own way. In Ohio, regulators approved a tariff requiring large new data centers served by AEP Ohio to pay for at least 85% of the capacity they reserve, whether or not they use it, for up to 12 years. Virginia's State Corporation Commission created a new rate class, known as GS-5, for customers with demand of 25 megawatts or more, effective January 1, 2027, making Virginia the first state regulator to set up a dedicated class for these large loads. Tennessee passed a law requiring data centers with peak demand of at least 50 megawatts to pay for their own electricity infrastructure. In Texas, Governor Greg Abbott paused new data center permits this fall while ERCOT reviews the long queue of large projects seeking to connect.
The second wave goes further, requiring data centers to bring their own supply. Maryland now bars large-load customers from connecting unless 25% of their capacity is covered by backup storage or a demand-response program. Connecticut requires new customers of 50 megawatts and above to receive all of their electricity from a co-located source or an off-grid supplier. And PJM, the grid operator for much of the East Coast, has asked the Federal Energy Regulatory Commission to approve a rule requiring new large loads to bring their own power supply. That proposal was still pending at the time of writing.
The President's October announcement adds federal weight to the same idea. The trend line is clear: from "pay your own way" to "bring your own power."
What Behind-the-Meter Power Looks Like
"Behind the meter" refers to generation located at or next to the facility it serves, rather than power drawn from the shared grid. For data centers, the leading options today include natural gas turbines, which can be deployed relatively quickly; nuclear power, both from existing plants and from a coming generation of small modular reactors and microreactors; and renewable generation paired with storage.
The most striking example is in Pennsylvania. Three Mile Island Unit 1, which sits beside the reactor that suffered the 1979 accident that chilled American nuclear development for decades, is being restarted as the Crane Clean Energy Center. Microsoft has agreed to buy its output under a 20-year power purchase agreement, and the plant is expected to return to service as soon as 2027. A facility once synonymous with public fear is coming back online with a private customer underwriting the cost.
Why the Stakes Are National
The scale of investment explains why policymakers are treating this as more than a local zoning issue. The largest technology companies are expected to spend well over $700 billion on AI infrastructure in 2026 alone. By comparison, the Interstate Highway System cost roughly $500 billion in today's dollars, spread across about four decades.
Many in the industry believe AI computing capacity will become a strategic resource in the global economy, comparable in some ways to oil in the twentieth century. If so, the countries that host the most capable, reliably powered computing infrastructure will hold a meaningful economic and security advantage. Northern Virginia showed how an early lead attracts talent, suppliers and capital, and keeps attracting them. The same dynamic may now play out between nations.
The Defense Case for Sovereign Power
For the defense sector, the question of how data centers are powered is not only about cost. It is about resilience.
The military and the companies that support it rely more each year on AI for logistics, engineering, manufacturing and decision support. If that computing depends on a strained public grid, a single outage, whether caused by extreme weather, equipment failure or deliberate attack, could take critical capabilities offline at the worst possible moment.
That is why our team recommended, in a white paper submitted in August 2025 to the Defense Innovation Unit within the U.S. Department of War, that AI compute serving the Department of War and defense companies be secured in a SCIF environment and powered by sovereign, behind-the-meter energy. The principle is simple: if the grid goes down, the data center does not. That recommendation came roughly a year before local opposition and grid constraints began slowing projects across the industry, and before "bring your own power" entered the national policy conversation.
Complete Defense Solutions is pursuing that vision through its partnership with AI Arsenals, which is exploring secured AI compute and sovereign power solutions for the defense community.
Looking Ahead
The data center debate is ultimately about who builds the infrastructure of the AI era, where it goes, and who bears its costs. The answer taking shape is that the largest facilities will increasingly supply their own power, share benefits with the communities around them, and in the case of national security, operate independently of a grid they cannot fully control.
The buildings may still look like unremarkable warehouses from the highway. What happens inside them, and how they are powered, will help determine America's economic and security position for decades to come.
Ken Tapp is a director of Complete Defense Solutions, Inc., a subsidiary of Complete Financial Solutions, Inc. (OTC: CFSU).
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Sources
- Trump wants to force data centers to 'make their own electricity' — Reason, October 23, 2026
- Governor Abbott Directs TCEQ To Halt Data Center Permits — Office of the Texas Governor, September 21, 2026
- Quick Facts: Data Centers in Ohio — Office of the Ohio Consumers' Counsel
- SCC Issues Order on DEV Biennial Review 2025 — Virginia State Corporation Commission
- New Tennessee law requires data centers to pay for their own electricity infrastructure — WKRN
- Behind-the-Meter Data Centers: State Power Legislation — MultiState, October 13, 2026
- New proposal from grid operator PJM would require data centers to bring their own power — Virginia Mercury, August 27, 2026
- Constellation to Launch Crane Clean Energy Center — Constellation Energy, September 20, 2024
- Big Tech Will Spend Over $700 Billion On AI This Year — Forbes, October 7, 2026
- State Data Center Water Usage Legislation Gains Momentum — MultiState, March 3, 2026
- Closed-loop cooling strategies for the new wave of U.S. state water rules — Schneider Electric, August 11, 2026
- Zero-water cooling mandates could leave America thirstier — SLR Consulting
- Lawmakers eye water use transparency requirements for data centers — Capitol News Illinois
- 2024 United States Data Center Energy Usage Report — Lawrence Berkeley National Laboratory, December 2024
Forward-looking statements: This article contains forward-looking statements regarding projected data center electricity demand, pending and proposed energy and water policies, the timing of third-party power projects, and the efforts of Complete Defense Solutions and AI Arsenals to pursue secured AI compute and sovereign power solutions for the defense community. These statements involve risks and uncertainties, and actual results may differ materially. No project, investment, or financing is assured.
Important Information:
This article is published for general informational purposes only. It is not an offer to sell or a solicitation of an offer to buy any securities of CFSU, Complete Defense Solutions, Inc. ("CDS"), Ai Arsenals, Inc. ("Ai Arsenals") or any other company, and nothing in it is investment, legal, accounting or tax advice.