May 6, 2024 With data centres consuming a growing share of the nation’s electricity, some states are reconsidering the incentives they offer to these “electricity hogs.” Concerns over the impact of data centres on energy supplies, clean energy goals, and electricity costs have led lawmakers in several states to re-evaluate their policies toward this industry.
In Connecticut, State Senator Norm Needleman is rethinking the tax breaks offered to data centres, especially those that could disrupt the state’s clean energy supply. He’s particularly concerned about a proposed mega data centre that would have priority access to electricity from the state’s only nuclear power plant, potentially reducing carbon-free power available for other users. Needleman, co-chair of the Senate Energy and Technology Committee, is working on legislation to study the impact of data centres on the state’s electric grid, noting that mistakes now could lead to “a real crisis.”
While some states, like Maryland and Mississippi, continue to pursue incentives for new data centres, others are taking a more cautious approach. In South Carolina, lawmakers are questioning whether data centres should receive tax breaks and preferential electric rates, while Georgia has passed legislation halting tax incentives for new data centres for two years.
Virginia, home to the world’s largest concentration of data centres, is also scrutinizing the industry’s impact on electric reliability and affordability. State Delegate Ian Lovejoy noted that data centres moving into traditionally residential areas are straining the state’s power infrastructure, with potential “rippling effects” on the grid.
Data centres require massive amounts of energy to keep data moving and prevent servers from overheating. The global consultancy McKinsey & Company predicts that U.S. data centres will double their electric demands to 35 gigawatts by 2030. As states weigh the impact of this growth, concerns are mounting over the reliability and affordability of local electric grids and the potential reliance on fossil fuels.
As lawmakers and advocates debate the pros and cons of data centres, some are calling for greater oversight and environmental standards for the industry. In Virginia, Clean Virginia, an advocacy group pushing for renewable energy, has highlighted the scale of data centre power consumption and its potential impact on clean energy goals and household utility bills. As states like Virginia await the results of legislative studies on data centres, the debate over their role in the energy landscape is far from over.
