Batavia data center gets nod as residents worry about it ‘gobbling up’ energy reserves

The Batavia City Council has approved a service agreement to provide energy for a proposed 50-megawatt data center on the city’s northeast side, despite concerns raised by residents during extensive discussion at recent meetings.

Miami-based energy and digital infrastructure company Hut 8 Corp. plans to build a $500 million, 120,000-square-feet data center on the vacant industrial park lot at 1780 Hubbard Ave.

The agreement was introduced at a July 15 Committee of the Whole meeting and approved at a July 21 City Council meeting, despite concerns from residents over the data center’s water and energy usage, environmental pollution and a perceived lack of transparency by the city.

Though the agreement was approved quickly, City Council members, city staff, Hut 8 representatives and residents discussed the topic for nearly four hours between the two meetings.

City Council members approved a master service agreement with Batavia DC Corp., representing Hut 8 Corp., in a 12-1 vote at the July 21 meeting. Council member Leah Lehman cast the sole no vote and Council member Kevin Malone was absent.

The master service agreement grants the developer access to electricity, contingent on council approval of a separate agreement for water services.

Because the data center’s water usage will vary greatly depending on the type of cooling systems employed, the water utility access was removed from the agreement, to be negotiated further and approved in a separate master service agreement.

Once a service agreement for water is approved, the development will go on to the design review phase for permitting of construction plans for the facility.

Developers expect the data center to be operational by Winter 2026, at a load of about 20 megawatts. The development will require about $18 million in off-site electrical infrastructure improvements to the city’s utilities.

Per the agreement, the developers will pay for all offsite electrical improvements upfront, to be reimbursed by the city over a seven-year period. The data center will be responsible for all on-site improvements.

Once those funds are reimbursed, the city is expecting to receive about $2.3 million in new annual electric utility revenue, $375,000 in annual franchise fees and $800,000 in new property tax income, in addition to the new property taxes to the school and park districts.

Once the data center reaches its full 50-megawatt capacity, the city expects it to generate about $5.5 million in annual utility revenue and $800,000 in franchise fees.

Under the agreement, the city will establish a sub-account for the data center with regional grid operator, PJM, and will not affect residential customers’ rates.

While the current infrastructure can handle the anticipated load increase, the total load could reach 125 MW during peak usage, nearing the 150 MW capacity.

Five Batavia residents spoke during the public comment portion of the meeting. Some asked that the agreement be tabled for more discussion and that the city seeks more assurances from developers relating to water usage and natural resource protection.

Batavia resident Susan Russo took issue with the speed at which the agreement was being considered, calling it a “not-so-stellar example of government transparency.”

Russo also asked why the city is reimbursing the data center for the $18 million in infrastructure costs, why the developer is not paying for the new transformer and why there are no penalties in the agreement should the data canter terminate operations.

“This data center is gobbling up the Batavia’s substation reserve margin,” Russo said. “It isn’t a question of whether the substation will need to be upgraded. … The question is when will we need it. This data center will need to pay its share of that cost.”

City Administrator Laura Newman said the city has incorporated penalties in past agreements when making an upfront investment, but considering developers will be funding the improvements and $500 million in the building, they are not likely to terminate operations.

Other residents raised concerns over the anticipated new revenue stream and urged Council members to resist letting profits from outside companies influence city operations.