Project Blue Data Center in Tucson Advances Despite Local Opposition December 5, 2025 A major data center development in Arizona has secured a critical utility agreement, moving forward despite significant local opposition and the recent withdrawal of its anchor tenant. The approval highlights the complex balancing act between expanding digital infrastructure to meet surging demand and addressing community concerns over resource use and transparency. The Arizona Corporation Commission has approved an energy supply agreement between Tucson Electric Power (TEP) and Beale Infrastructure, the developer behind the controversial "Project Blue" campus in Tucson. According to the agreement, TEP will supply power to the project under terms designed to protect existing ratepayers from subsidizing the new, massive load. TEP spokesperson Joe Barrios stated, "Basically, the agreement outlines a number of protections that ensure other customers won’t be subsidizing or paying for service to this project." The development, owned by investment firm Blue Owl, is planned as a campus of up to ten buildings spanning 2 million square feet. At full build-out, it is projected to demand 600 megawatts of power, which would make it TEP's single largest customer. The first phase of the project was initially slated to go live in 2027. The utility deal represents a significant step for Project Blue, which has faced intense scrutiny. The Tucson City Council voted unanimously to reject the project in August, with Mayor Regina Romero citing a need to "protect Tucson from this industry." Local residents have criticized the project's secrecy and its planned use of drinking water for cooling during its initial years of operation. Furthermore, earlier this month, Amazon—previously identified as the primary end customer—reportedly backed out of the development. Despite the city's rejection and tenant loss, the project is proceeding via county-level approvals and the newly secured utility pact. The next steps involve obtaining final regulatory approval for the physical grid connection and conducting a public review of the development's impacts. City lawyers have requested a formal hearing, citing ongoing concerns about potential effects on utility rates for residents. Source: datacenterdynamics
Arizona's Controversial Project Blue Data Center Clears Key Hurdle with Power Deal
