Meta scales Louisiana AI hub to $50bn amid tax and power disputes
Meta has quintupled the cost of its Louisiana AI data center to over $50 billion, highlighting the immense capital demands of the artificial intelligence race and the strained public-private negotiations over power and tax incentives.
Meta will expand its Hyperion supercluster in Richland Parish to 5 gigawatts, pushing the total cost past $50 billion. The figure marks a fivefold increase from the $10 billion estimate when construction began in 2024. The facility is now Meta’s largest data center and ranks among the biggest AI infrastructure projects globally.
The cost surge is underpinned by private capital and aggressive state tax concessions. A 2024 Louisiana law exempts data centers built before 2029 from state and local sales taxes for two decades. Louisiana Economic Development Secretary Susan Bourgeois noted Meta’s firm stance during negotiations: “If you don’t have this, we will not consider your state.”
The construction phase is generating localized economic windfalls. Meta has contracted over $1.6 billion with local businesses, and a 1% local sales tax on equipment is funding temporary school bonuses that reached $50,000 for some teachers. However, local officials like Scott Franklin of the Richland Parish chamber of commerce expect this revenue to shrink once construction ends.
Beyond tax breaks, the project's financing structure is drawing scrutiny from consumer groups. Meta sold roughly 80% of the data center to Blue Owl Capital, a venture debt firm. Environmental advocates argued this maneuver could leave utility ratepayers exposed, though the Louisiana Public Service Commission declined to investigate the arrangement in February.
To supply Hyperion’s 5-gigawatt demand, utility Entergy is building 10 new power plants and 240 miles of transmission lines, funded directly by Meta. While Meta signed a "Ratepayer Protection Pledge" and agreed to fund 2.5 gigawatts of renewable energy, advocates worry the sheer scale of the electrical load could eventually elevate grid costs for other users.
The Louisiana project exemplifies a broader national tension as Big Tech scrambles for compute capacity. Microsoft, Alphabet, and Amazon are securing similar state subsidies, with Amazon alone committing $12 billion to northwest Louisiana. However, public resistance is mounting; a March Gallup poll found seven in ten Americans oppose local AI data centers, outpacing opposition to nuclear plants.
States are already reacting to the pushback. Maine passed a bill barring large-scale data centers in April, and Wisconsin approved a referendum giving voters more power over tax-funded data center projects. Governor Jeff Landry has also directed his economic development agency to draft rules shielding consumers from absorbing the costs of new power plants.
