By Laila Kearney

Feb 10 (Reuters) - A county commission in Pennsylvania on Tuesday denied a request by Talen Energy TLN.O to rezone hundreds of acres of land for the development of data centers, marking the latest example of local pushback hampering the U.S. expansion of server warehouses.

The rejection by Montour County commissioners follows months of opposition by residents in surrounding communities, who voiced concerns that the project would increase power bills and damage the environment.

Talen, in a statement, said it would continue to pursue the development.

"We appreciate the opportunity to continue conversations with Montour County leaders and residents about this proposed project," the company said. "This allows us to take the time to listen, incorporate feedback from the Commissioners, engage with the community, and refine our plans so they reflect local priorities."

Local fights like the one around Montour are increasingly problematic for plans by the country's power industry and Big Tech, which is pouring hundreds of billions of dollars into building and powering data centers that will be used to train and roll out artificial intelligence technologies.

Over the last year, companies including Microsoft and Meta have retreated from projects following community-level opposition.

The Pennsylvania rezoning was expected to serve Amazon AMZN.O data centers near Talen's natural gas-fired power plant through an arrangement known as co-location, where data centers are located close to the power source. Talen, which operates nuclear and gas-fired power, currently provides electricity to an Amazon data center co-located near Talen's Susquehanna nuclear power plant elsewhere in Pennsylvania.

"As is often the case after a rezoning request is rejected, we expect Talen and Amazon to either redouble their efforts in Montour County or pursue an alternative brownfield site elsewhere in Pennsylvania," analysts at consultancy Capstone said.

(Reporting by Laila Kearney in New York; Editing by Lincoln Feast.)

((laila.kearney@thomsonreuters.com))