Massachusetts has become the latest state to crack down on data center development. Gov. Maura Healey signed an executive order this week that changes how large facilities get their power.
The order applies to data centers with more than 25 megawatts of peak demand. These facilities will now have to bring their own clean power instead of drawing freely from the grid.
Healey's preference is for companies to generate that clean power on-site. This could mean solar panels, wind turbines, or other approved sources built right at the facility.
What Happens If Companies Can't Generate On-Site
Not every data center will be able to build its own power source. For those companies, the state has laid out two other paths.
Developers can fund the construction of new clean generation somewhere nearby. Or they can pay into a ratepayer protection fund instead.
That fund is meant to shield regular electricity customers from cost increases tied to data center growth. The idea is that data centers, not everyday ratepayers, should cover the cost of their own power needs.
Massachusetts also directed communities to avoid signing non-disclosure agreements with data center developers. These agreements have been common in other states and often keep project details hidden from the public.
The governor's office also paused new applications for a data center sales tax exemption. That exemption took effect just last month, but regulators need time to put the new rules in place first.
Clean Energy Standard Gets Stricter for Data Centers
Massachusetts already has a clean energy standard on the books. Under that law, industries must get a growing share of power from approved sources like wind, solar, and hydro.
By 2030, for example, the standard requires at least 40% of power to come from those sources. The percentage rises over time under the existing law.
But data centers won't get to use that lower bar. The governor's office clarified that these facilities must meet 100% of their electricity demand with clean energy.
This move places Massachusetts alongside a small group of states pushing back on data center growth. In August, Texas Gov. Greg Abbott called for audits of new data centers by the state's public utility commission and grid operator, ERCOT.
In July, New York's governor halted construction of new data centers rated 50 megawatts or larger. That pause is still in effect as regulators review the situation.
Massachusetts now marks the third state in as many months to add restrictions on data center development. A few years ago, states were offering incentives to attract these facilities. That trend appears to be reversing.
The tech industry is starting to respond to the shift in public opinion. Leading the Future, a pro-AI super PAC backed by Marc Andreessen, Ben Horowitz, and Greg Brockman, is buying ads in battleground states ahead of the midterm elections.
The ad campaign is aimed at swaying voters as more states consider similar restrictions. Massachusetts' order stands as the newest example of that ongoing policy fight.
