Massachusetts Requires Data Centers to Use Clean Energy

In a striking shift reflecting the changing public mood toward the data center industry, Massachusetts Governor Maura Healey issued an executive order requiring developers of these massive facilities to supply their own electrical power, provided it is clean and compliant with the state's adopted energy standards. This decision represents a new step in a growing wave of restrictions that U.S. states have begun imposing on a sector that, until recently, enjoyed incentives and facilitations.

Details of the New Decision

The executive order stipulates that any data center whose peak power demand exceeds the 25-megawatt threshold will be required to secure its own power source and ensure its compliance with the state's clean energy requirements. The governor prefers that these facilities generate clean energy directly on-site, but if that is not possible, they have two options:

• Financing the construction of new clean energy generation sources in nearby areas.
• Contributing to a fund dedicated to protecting electricity consumers from price increases.

According to a clarification issued by the governor's office, data centers will be required to meet 100% of their electricity needs through clean energy generation, a stricter condition than the general standard applied to other industries.

Stricter Standards Than Usual

The state's clean energy standard requires industrial sectors to generate only a specified percentage of their power from approved sources such as wind, solar, and hydropower. By 2030, for example, these sources must contribute no less than 40% of total consumption, with this percentage rising gradually year after year. However, data centers will be subject to a much higher ceiling of 100%.

The state has also directed local communities to "avoid signing non-disclosure agreements" with project developers, in pursuit of greater transparency. Until regulators are able to implement the new restrictions, the governor decided to suspend applications for the sales tax exemption on data centers, an exemption that had taken effect only a month earlier.

A Regulatory Wave Sweeping the States

With this decision, Massachusetts becomes the third U.S. state within three consecutive months to impose restrictions on the expansion of data centers, reflecting a clear shift in policies:

• In August, Texas Governor Greg Abbott announced that all new data centers would be subject to audits by the Public Utility Commission and the electricity grid operator ERCOT.
• In July, the Governor of New York halted the construction of new data centers with a capacity of 50 megawatts or more.

This trend reflects a radical shift; after tech companies were once showered with incentives to attract them to specific states, they now face rising public opposition, while politicians seek to demonstrate their responsiveness to voter concerns about rising electricity bills and pressure on resources.

The Tech Industry's Reaction

As the public mood toward data centers changes, the tech industry has begun to respond. The pro-artificial intelligence lobbying group "Leading the Future," funded by prominent figures such as Marc Andreessen, Ben Horowitz, and Greg Brockman, has launched advertising campaigns aimed at influencing voters in swing states ahead of the midterm elections.

Conclusion

Massachusetts' decision reflects a new equation taking shape between the accelerating growth of the artificial intelligence industry and its enormous energy requirements, and environmental pressures and consumer interests. As the scope of regulatory restrictions expands, it appears that data center developers must reconsider how to build sustainable infrastructure that takes into account both the environment and society.

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