Illinois at a Crossroads: AI Infrastructure, Policy, and Competitiveness

Members Content: Articles

6 hours ago (0 Comments)
Posted by: Bill Winsininski, President, AFCOM Chicago

Share |

Illinois is at a crossroads as artificial intelligence and cloud computing reshape the global economy and drive unprecedented demand for digital infrastructure. States across the country are competing aggressively to attract the data centers that power this transformation, and Illinois has many natural advantages: strong utilities, a skilled workforce, a robust fiber backbone, and a central geographic location that has long made Chicagoland one of the most important interconnection hubs in North America.

Yet the hyperscale data center legislation currently under consideration risks undermining those strengths.

The bill is well-intentioned and grounded in goals many of us in the industry share, including protecting communities, safeguarding water resources, and advancing environmental equity. However, good intentions alone do not make good policy, especially when regulation does not reflect how modern digital infrastructure is actually designed, financed, and operated.

The Call Is Coming From Inside the House

AI infrastructure is not theoretical. According to the 2026 AFCOM State of the Data Center report, 74% of operators plan to deploy AI-capable infrastructure, and 72% expect AI workloads to significantly increase facility capacity requirements. Average facility sizes are now approaching 38 megawatts, up from 32 megawatts just a year ago, and average rack density has jumped to 27 kW per rack, a 69% year-over-year increase. These are not incremental changes. They represent structural shifts in how facilities are built and powered.

Illinois is well-positioned to participate in this growth. ComEd territory alone has seen an accelerating number of large load interconnection requests tied to data center expansion. At the same time, regional grid operators PJM and MISO have both highlighted interconnection backlogs and long transmission upgrade timelines as emerging constraints.

A recent Cleanview Power Strategies report notes that power availability and transmission constraints have become the primary gating factors for nationwide hyperscale data center deployment. In other words, the competition among states is increasingly about speed to power and regulatory clarity. Capital flows toward jurisdictions that can provide both.

Large AI and hyperscale data center projects are planned on 18 to 36-month deployment timelines, and capital depends on predictable permitting and regulatory certainty. The proposed legislation introduces cumulative impact assessments, multi-agency approvals, expanded public hearings, quarterly reporting, and recurring permit renewals. Each requirement adds time and uncertainty, and taken together, they create open-ended timelines that are incompatible with how these projects are financed and built.

Following the Investments

When uncertainty increases, capital does not wait for clarity. It moves to states that offer it.

Illinois is competing whether we acknowledge it or not. Texas, Ohio, Indiana, and Virginia are actively courting the same investments Illinois hopes to attract, offering clearer permitting frameworks, faster approvals, and fewer structural costs.

Hyperscale data center campuses can represent one to five billion dollars in private investment per site. They also drive secondary economic effects, including construction jobs, electrical contracting, fiber deployment, property tax base expansion, and long-term operations roles. According to AFCOM’s findings, energy costs are already cited by 72% of operators as their fastest-growing operational expense. Adding recurring demand-based fees and newly created public benefit funds effectively functions as new structural costs that reduce return on investment and push projects toward states with more predictable economics.

AI infrastructure is mobile. If it becomes harder to build in Illinois, investment will flow elsewhere.

One of the most concerning aspects of the bill is that it treats data centers as if they were emissions-heavy or extractive industries. Modern data centers typically have low on-site emissions, are increasingly air-cooled or use closed-loop liquid cooling, and continue to reduce water intensity year over year. In fact, 49% of operators now prioritize cooling solutions that reduce or eliminate water usage. Applying cumulative environmental justice frameworks designed for refineries or landfills misrepresents the industry and risks weakening serious environmental policymaking.

Water policy in particular needs greater technical precision. The legislation mandates water scarcity plans and quarterly reporting without adequately distinguishing between evaporative cooling, closed-loop liquid systems, and air-cooled or hybrid designs.

The bill also expands public notice requirements, mandatory hearings, and intervenor compensation funds in ways that invite litigation rather than collaboration. Even technically compliant projects could face multi-year delays. That uncertainty affects not only operators, but utilities, construction workers, municipalities, and local tax bases that depend on projects moving forward.

Restrictions on nondisclosure agreements and expanded public reporting further raise concerns about exposing sensitive infrastructure layouts, power and redundancy strategies, and customer-related operational details. Data centers support healthcare systems, financial markets, government services, and national security. Transparency must be balanced with protection.

A way forward

Illinois does not need to choose between environmental responsibility and economic leadership. A better path forward would focus on performance-based standards instead of prescriptive mandates, clear differentiation by cooling technology and water intensity, defined permitting timelines with agency accountability, grid investment credits tied directly to infrastructure upgrades, and community engagement frameworks that encourage partnership rather than litigation.

AI infrastructure decisions are being made now. Policies enacted today will shape Illinois' competitiveness for decades. The Cleanview analysis makes clear that power-constrained states that streamline processes will capture the next wave of AI investment, while those that introduce uncertainty risk will be bypassed.

We share the goal of protecting communities and natural resources. Illinois can do that without regulating itself out of the AI economy. This legislation needs refinement, not rejection of the very industry it seeks to regulate.