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Washington Wants Data Centers to Bring Their Own Clean Energy

The state is poised to join a chorus of states with BYO energy policies.

Washington State and a data center.
Heatmap Illustration/Getty Images

With the backlash to data center development growing around the country, some states are launching a preemptive strike to shield residents from higher energy costs and environmental impacts.

A bill wending through the Washington State legislature would require data centers to pick up the tab for all of the costs associated with connecting them to the grid. It echoes laws passed in Oregon and Minnesota last year, and others currently under consideration in Florida, Georgia, Illinois, and Delaware.

Several of these bills, including Washington’s, also seek to protect state climate goals by ensuring that new or expanded data centers are powered by newly built, zero-emissions power plants. It’s a strategy that energy wonks have started referring to as BYONCE — bring your own new clean energy. Almost all of the bills also demand more transparency from data center companies about their energy and water use.

This list of state bills is by no means exhaustive. Governors in New York and Pennsylvania have declared their intent to enact similar policies this year. At least six states, including New York and Georgia, are also considering total moratoria on new data centers while regulators study the potential impacts of a computing boom.

“Potential” is a key word here. One of the main risks lawmakers are trying to circumvent is that utilities might pour money into new infrastructure to power data centers that are never built, built somewhere else, or don’t need as much energy as they initially thought.

“There’s a risk that there’s a lot of speculation driving the AI data center boom,” Emily Moore, the senior director of the climate and energy program at the nonprofit Sightline Institute, told me. “If the load growth projections — which really are projections at this point — don’t materialize, ratepayers could be stuck holding the bag for grid investments that utilities have made to serve data centers.”

Washington State, despite being in the top 10 states for data center concentration, has not exactly been a hotbed of opposition to the industry. According to Heatmap Pro data, there are no moratoria or restrictive ordinances on data centers in the state. Rural communities in Eastern Washington have also benefited enormously from hosting data centers from the earlier tech boom, using the tax revenue to fund schools, hospitals, municipal buildings, and recreation centers.

Still, concern has started to bubble up. A ProPublica report in 2024 suggested that data centers were slowing the state’s clean energy progress. It also described a contentious 2023 utility commission meeting in Grant County, which has the highest concentration of data centers in the state, where farmers and tech workers fought over rising energy costs.

But as with elsewhere in the country, it’s the eye-popping growth forecasts that are scaring people the most. Last year, the Northwest Power and Conservation Council, a group that oversees electricity planning in the region, estimated that data centers and chip fabricators could add somewhere between 1,400 megawatts and 4,500 megawatts of demand by 2030. That’s similar to saying that between one and four cities the size of Seattle will hook up to the region’s grid in the next four years.

In the face of such intimidating demand growth, Washington Governor Bob Ferguson convened a Data Center Working Group last year — made up of state officials as well as advisors from electric utilities, environmental groups, labor, and industry — to help the state formulate a game plan. After meeting for six months, the group published a report in December finding that among other things, the data center boom will challenge the state’s efforts to decarbonize its energy systems.

A supplemental opinion provided by the Washington Department of Ecology also noted that multiple data center developers had submitted proposals to use fossil fuels as their main source of power. While the state’s clean energy law requires all electricity to be carbon neutral by 2030, “very few data center developers are proposing to use clean energy to meet their energy needs over the next five years,” the department said.

The report’s top three recommendations — to maintain the integrity of Washington’s climate laws, strengthen ratepayer protections, and incentivize load flexibility and best practices for energy efficiency — are all incorporated into the bill now under discussion in the legislature. The full list was not approved by unanimous vote, however, and many of the dissenting voices are now opposing the data center bill in the legislature or asking for significant revisions.

Dan Diorio, the vice president of state policy for the Data Center Coalition, an industry trade group, warned lawmakers during a hearing on the bill that it would “significantly impact the competitiveness and viability of the Washington market,” putting jobs and tax revenue at risk. He argued that the bill inappropriately singles out data centers, when arguably any new facility with significant energy demand poses the same risks and infrastructure challenges. The onshoring of manufacturing facilities, hydrogen production, and the electrification of vehicles, buildings, and industry will have similar impacts. “It does not create a long-term durable policy to protect ratepayers from current and future sources of load growth,” he said.

Another point of contention is whether a top-down mandate from the state is necessary when utility regulators already have the authority to address the risks of growing energy demand through the ratemaking process.

Indeed, regulators all over the country are already working on it. The Smart Electric Power Alliance, a clean energy research and education nonprofit, has been tracking the special rate structures and rules that U.S. utilities have established for data centers, cryptocurrency mining facilities, and other customers with high-density energy needs, many of which are designed to protect other ratepayers from cost shifts. Its database, which was last updated in November, says that 36 such agreements have been approved by state utility regulators, mostly in the past three years, and that another 29 are proposed or pending.

Diario of the Data Center Coalition cited this trend as evidence that the Washington bill was unnecessary. “The data center industry has been an active party in many of those proceedings,” he told me in an email, and “remains committed to paying its full cost of service for the energy it uses.” (The Data Center Coalition opposed a recent utility decision in Ohio that will require data centers to pay for a minimum of 85% of their monthly energy forecast, even if they end up using less.)

One of the data center industry’s favorite counterarguments against the fear of rising electricity is that new large loads actually exert downward pressure on rates by spreading out fixed costs. Jeff Dennis, who is the executive director of the Electricity Customer Alliance and has worked for both the Department of Energy and the Federal Energy Regulatory Commission, told me this is something he worries about — that these potential benefits could be forfeited if data centers are isolated into their own ratemaking class. But, he said, we’re only in “version 1.5 or 2.0” when it comes to special rate structures for big energy users, known as large load tariffs.

“I think they’re going to continue to evolve as everybody learns more about how to integrate large loads, and as the large load customers themselves evolve in their operations,” he said.

The Washington bill passed the Appropriations Committee on Monday and now heads to the Rules Committee for review. A companion bill is moving through the state senate.

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Hotspots

Michigan’s Data Center Bans Are Getting Longer

Plus more of the week’s top fights in renewable energy.

The United States.
Heatmap Illustration/Getty Images

1. Kent County, Michigan — Yet another Michigan municipality has banned data centers — for the second time in just a few months.

  • Solon Township, a rural community north of Grand Rapids, passed a six-month moratorium on Monday after residents learned that a consulting agency that works with data center developers was scouting sites in the area. The decision extended a previous 90-day ban.
  • Solon is at least the tenth township in Michigan to enact a moratorium on data center development in the past three months. The state has seen a surge in development since Governor Gretchen Whitmer signed a law exempting data centers from sales and use taxes last April, and a number of projects — such as the 1,400-megawatt, $7 billion behemoth planned by Oracle and OpenAI in Washtenaw County — have become local political flashpoints.
  • Some communities have passed moratoria on data center development even without receiving any interest from developers. In Romeo, for instance, residents urged the village’s board of trustees to pass a moratorium after a project was proposed for neighboring Washington Township. The board assented and passed a one-year moratorium in late January.

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Q&A

Could Blocking Data Centers Raise Electricity Prices?

A conversation with Advanced Energy United’s Trish Demeter about a new report with Synapse Energy Economics.

Trish Demeter.
Heatmap Illustration

This week’s conversation is with Trish Demeter, a senior managing director at Advanced Energy United, a national trade group representing energy and transportation businesses. I spoke with Demeter about the group’s new report, produced by Synapse Energy Economics, which found that failing to address local moratoria and restrictive siting ordinances in Indiana could hinder efforts to reduce electricity prices in the state. Given Indiana is one of the fastest growing hubs for data center development, I wanted to talk about what policymakers could do to address this problem — and what it could mean for the rest of the country. Our conversation was edited for length and clarity.

Can you walk readers through what you found in your report on energy development in Indiana?

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Hotspots

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map of renewable energy and data center conflicts
Heatmap Illustration

1. Marion County, Indiana — State legislators made a U-turn this week in Indiana.

  • The Indiana House passed a bill on Tuesday that would have allowed solar projects, data centers, and oil refineries on “poor soil.” Critics lambasted the bill for language they said was too vague and would wrest control from local governments, and on Thursday, local media reported that the legislation as written had effectively died.
  • Had it passed, the new rules would have brought Indiana’s solar permitting process closer to that of neighboring Illinois and Michigan, both of which limit the ability of counties and townships to restrict renewable energy projects. According to Heatmap Pro data, local governments in Indiana currently have more than 60 ordinances and moratoriums restricting renewable development on the books, making it one of the most difficult places to build renewable energy in the country.

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