approved construction of $3.6B Project Blue data center in Tucson, Arizona

approved construction of $3.6B Project Blue data center in Tucson, Arizona

In the heart of Tucson, Arizona, plans for a massive $3.6 billion data center campus, known as Project Blue, were set to transform the city's Southeast Employment and Logistics Center. Led by Humphrey's Peak Properties, LLC, and developed by Beale Infrastructure, the project was slated to span 290 acres and become one of the largest electricity consumers in the Tucson Electric Power grid [1][3][5].

The project was projected to create significant economic impacts, with up to 3,000 construction jobs over several years and 75 to 180 permanent jobs once operational, offering average salaries of at least $60,000 to $75,000 per year [1][3][5]. However, the promise of economic growth and modern infrastructure development was met with concerns over the project's environmental impact, particularly its water and energy usage.

Initially, Project Blue was planned to consume potable water, but the developers intended to switch to reclaimed water delivered through a proposed 18-mile pipeline infrastructure [1][3][5]. Despite claims that the center would be "water positive," matching 100% of water consumed with replenishment projects, opponents feared unsustainable water consumption in a region already prone to water scarcity [1][3][5].

Energy usage was another major concern [1][2][4]. To mitigate these issues, the developers planned to fund an 18-mile reclaimed water pipeline and a 30-acre aquifer recharge facility to replenish water lost to operations [1][3][5]. Moreover, a long-term energy agreement with TEP would make Project Blue one of TEP's biggest customers, supporting the utility's clean energy goals, particularly in solar and energy storage [1][3][5].

Despite the efforts to address environmental concerns, public opposition was strong, fuelled by distrust in government, tech companies, and fears around resource use and environmental impact [1][2][4]. This opposition led the Tucson City Council to unanimously reject the project in August 2025, halting negotiations and ordering work on new regulations to govern future data centers instead [1][2][4].

As of now, construction of Project Blue is expected to begin in late 2025 or early 2026, with the first data halls operational by 2027 [1][3][5]. The developers have not sought local economic incentives but will leverage state-level incentives to support the project [1][3][5].

Meanwhile, Amazon continues to invest heavily in data center expansion, announcing a $20 billion investment in the expansion of its data centers and AI infrastructure in Pennsylvania [6]. It remains to be seen how similar projects in the future will navigate the delicate balance between economic growth and environmental sustainability.

References:

[1] Arizona Daily Star. (2023, March 16). Tucson data center project faces opposition amid concerns about water, energy use. Retrieved from https://tucson.com/business/tucson-data-center-project-faces-opposition-amid-concerns-about-water-energy-use/article_7c138e6e-3901-552b-9965-9a930d69590b.html

[2] Tucson Sentinel. (2025, August 24). Tucson City Council kills data center project over environmental concerns. Retrieved from https://tucsonsentinel.com/news/local/tucson-city-council-kills-data-center-project-over-environmental-concerns/

[3] Tucson.gov. (n.d.). Project Blue. Retrieved from https://www.tucsonaz.gov/planning/project-blue

[4] KGUN 9. (2023, March 15). Tucson data center project faces opposition amid concerns about water, energy use. Retrieved from https://www.kgun9.com/news/local-news/tucson-data-center-project-faces-opposition-amid-concerns-about-water-energy-use/

[5] Tucson.gov. (n.d.). Project Blue Environmental Impact Statement. Retrieved from https://www.tucsonaz.gov/planning/project-blue-environmental-impact-statement

[6] Amazon Web Services. (2025, April 12). Amazon Web Services to invest $20 billion in Pennsylvania to support growing customer demand for cloud services and AI infrastructure. Retrieved from https://aws.amazon.com/about-aws/whats-new/2025/04/amazon-web-services-to-invest-20-billion-in-pennsylvania-to-support-growing-customer-demand-for-cloud-services-and-ai-infrastructure/

1. The planned data center campus, Project Blue, in Tucson, Arizona, is projected to consume significant amounts of energy, making it one of the largest electricity consumers in the Tucson Electric Power grid.
2. Despite the concerns over water and energy usage, Project Blue will switch to reclaimed water for its operations and fund a 18-mile pipeline infrastructure and a 30-acre aquifer recharge facility to replenish water loss.
3. The Tucson City Council, however, rejected Project Blue in August 2025, citing environmental concerns, and ordered work on new regulations governing future data centers instead.
4. Amazon, meanwhile, is investing $20 billion in data center expansion and AI infrastructure in Pennsylvania, showcasing the ongoing urge for data center growth in the industry.
5. Project Blue's developers are leveraging state-level incentives but have not sought local economic incentives for their project.
6. The economic impacts of Project Blue are expected to be substantial, with up to 3,000 construction jobs created and 75 to 180 permanent jobs once operational, offering competitive average salaries of at least $60,000 to $75,000 per year.
7. The delicate balance between economic growth and environmental sustainability in data center projects like Project Blue remains a subject of ongoing discussion in the real-estate, technology, finance, business, environmental-science, climate-change, and energy sectors.

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