Economic promise meets community pushback in Delaware’s data center debate

Delaware stands at a crossroads between digital age demands and its local realities. 

The state’s advantages, including proximity to major metros and a favorable tax climate, have made it a small but credible player for industrial, logistics and tech-adjacent projects. With the rise of massive data centers to fuel AI demands, both scale and the stakes are raised.

“Data centers are an important part of the broader technology ecosystem. When developed thoughtfully, they can create high-quality jobs, spur infrastructure investment and help diversify Delaware’s economy,” said Zakiyyah Ali, executive director of the Tech Council of Delaware. “At the same time, we recognize that these projects can raise important questions about environmental impact, energy use and community priorities.”

While data centers do exist in Delaware already, the mega data centers that are being built in places like Memphis would be a huge jump in size and resource usage from what currently exists in the state. 

In early August, a Miami-based venture capital firm called Starwood Digital Holdings officially submitted a proposal for Project Washington, a data center campus near Delaware City that is unprecedented in size for the state. 

If built, it would encompass some 6 million square feet spread across 11 data center structures. The plan, an apparent partnership with PBF Energy, would draw on the Delmarva power grid and demand as much as 1.2 gigawatts of electricity — more than many in the state believe the current system is prepared to deliver without consequences.

In response, Delaware legislators have taken steps to prepare for this and other potential data center projects.

By September, New Castle County Councilman Dave Carter introduced an ordinance regulating how data centers could be built. Under the ordinance, data centers of over 20,000 square feet could not be built less than 1,000 feet from any residential area and would be required to have a battery energy storage system and comply with standards for noise, traffic and water use.

Related, though not directly in response to Project Washington, is a resolution that passed with bipartisan support in March through the State Senate exploring the feasibility of nuclear energy in Delaware. Sponsored by Senator Bryant Richardson, the resolution created the Delaware Nuclear Energy Feasibility Task Force, which is currently being appointed. 

With the environmental impact of fossil fuel-run data centers becoming a major concern for both residents and civil servants, small modular nuclear reactors, which have been suggested as a way to keep residential energy costs stable, may also be a sustainable option for powering data centers.  

We asked members of Delaware’s tech ecosystem for their thoughts on Project Washington, the data center boom and potential local impact. While most agree that there are economic benefits, the kind of pushback New Castle County has seen from residents can also be found among some members of the tech ecosystem. 

100 jobs

In a letter to New Castle County requesting approval for Project Washington under the county’s “Jobs Now” accelerated development program, Michael Perlman, senior vice president of Starwood Capital Group, projected 95 to 125 permanent jobs at the data centers, in addition to hundreds of trade workers that would be needed to build the centers.

The number of projected permanent jobs is higher than that of other companies that relocated to Delaware in 2024, according to the Delaware Prosperity Partnership’s (DPP) most recent annual report. For the size of the project, data centers create fewer permanent jobs than projects like manufacturing fabs, which can create thousands of jobs at a single site.

DPP, which has a mission to support job growth in the state, generally supports building more data centers. 

“Data centers are one of the hottest project trends across the U.S. right now,” DPP said in a statement to Technical.ly. “Given Delaware’s tax structure and its other favorable features, our state would be a highly competitive location for almost any company looking to establish a data center.”

Other ecosystem players are more hesitant.

“Data centers are critical to ensuring the United States remains a global leader in technological development, artificial intelligence and other advanced industries,” wrote the Tech Council of Delaware in its statement. “They have the potential to drive significant investment, expand Delaware’s tax base and create high-quality jobs that keep our tech economy competitive.” They added that they also believe these projects “work best when industry, lawmakers and community leaders collaborate early to address environmental and quality-of-life concerns.”

Similarly, Stephen Sye, cofounder of Futures First Gaming, forefronted concerns about environmental impact on communities.

“Tech jobs and innovation are a big win for Delaware, but the proposed data center’s massive energy and water demands raise real concerns,” Sye said. “We need clear commitments to renewable energy, efficiency and environmental protections so growth doesn’t come at the community’s expense.”

Benefit vs. risk

The Delaware Black Chamber of Commerce (DEBCC) outright opposes Project Washington.

“While we recognize the potential economic benefits such as job creation and increased investment, we also have serious concerns that need to be carefully considered,” DEBCC President Ayanna Khan told Technical.ly. “Our opposition to the project stems from several key issues: energy consumption, environmental impact and community benefit vs. risk.” 

The proposed data center, Khan said, is expected to consume a substantial amount of energy, raising questions about long-term sustainability and strain on the local grid. 

“As a resident just over the bridge in Middletown, I’ve already observed strain on the power grid as a result of rapid overdevelopment,” she said.

The environmental consequences, Khan said, particularly related to emissions, water usage and noise pollution, could be significant and potentially harmful to surrounding communities.

“It remains unclear whether the economic benefits will truly outweigh the social and environmental costs, especially for residents in the immediate area,” she said.

Delaware may not meet the needs of massive data centers

Environmentalist and founder of the greentech startup Omnipotential Energy Partners, Cora Castle, also notes that any negative impact will likely hit those who are struggling.

“Once completed, the facility would consume more energy than all Delaware residences combined, with a net effect of dramatically increasing the cost of living in the First State,” Castle told Technical.ly. “Of course, that impact would fall disproportionately on those in Delaware least able to afford last year’s energy rate, to say nothing of the current energy rate [power grid operator] PJM charges.”

The project, Castle said, could also adversely impact wetlands, hydrology, stormwater runoff and tidal marsh health. “And that’s without all the natural disruption from the deployment of the pumping stations.”

Whether or not Project Washington, in one form or another, becomes a reality in Delaware, the state isn’t likely to become a massive data center hub like northern Virginia, said Rob Nicholson, affiliated scientist with the University of Delaware’s College of Earth, Ocean and Environment in Lewes and a Navy Oceanography Officer.

“That’s a tough sell,” Nicholson said, “because you need a lot of land, you need a lot of power, you need a lot of data and fiber-optic infrastructure, and I don’t know if we have all of those.”