Key Takeaways
Maine could become the first state to ban new data centers.
Maine’s temporary ban has passed the State House, and other states are considering ways to slow or stop the deployment of data centers, with concerns ranging from electricity pricing to environmental issues.
Most of the stated concerns link higher-cost electricity to the new demands of the centers, but a recent IER study shows no correlation, and other studies show that a state’s approach to climate and “green energy” is more important.
Senator Bernie Sanders and Congresswoman Alexandria Ocasio-Cortez have proposed a similar ban on the federal level, but represent states with high electricity prices, higher than those in states with more data centers, due to climate/green-energy policies.
Maine may become the first state to ban new data centers, with its House passing legislation that would pause large data center construction until November 2027, applying to projects of at least 20 megawatts. The state wants the time to assess the impact of data center development on the environment and the electricity grid. Maine’s Governor, Janet Mills, supports a freeze. Other blue states, such as California and New York, are looking to block data center construction.
The hysteria over rising electricity prices and data center electricity demand has moved across the nation. According to the Wall Street Journal, at least 10 states other than Maine are advancing policies attempting to mitigate the cost and increase in generating capacity needed to accommodate new data centers. Legislators have introduced measures to temporarily ban or restrict data centers in New York, South Carolina, Oklahoma, and other states. In Ohio, some activists are collecting signatures to put a statewide ban on large data centers on the November ballot. Other municipalities and counties, especially small ones in Michigan and Indiana, imposed temporary pauses on data center development, and Denver and Detroit are among the major cities considering bans.
While Virginia is the current leader in data center activity, Texas is expected to surpass it as the top U.S. data center hub, with a projected total of 962 sites across operational, under-construction, and announced projects.
As the Journal reports, in Maine, some data center developments have targeted defunct industrial sites, such as closed mills. One company recently proposed building a $415 million underwater data center off Maine’s coast, powered by tidal energy. According to Data Center Dynamics, DeepGreen Western Passage SPV LLC wants to build a 51-megawatt power project offshore near the town of Eastport, which borders the Atlantic Ocean. The company submitted an application to the Federal Energy Regulatory Commission, requesting a 48-month permit to conduct environmental studies and engineering work in the area. The company would build “universal docking cradles” on the ocean floor, into which it would plug energy-generating turbines and pods containing artificial-intelligence computer infrastructure. The initial deployment would house 170 turbines and 34 data center pods, providing power for the data servers and Maine residents. The project is estimated to cost $415 million, funded by DeepGreen and other backers.
Via the Journal, the Maine House is considering adding exemptions to the bill that would allow two planned data center projects to move forward in Jay and Sanford, in southern Maine. Governor Mills supports an exception for the project planned in Jay, as it is “expected to bring much-needed jobs, economic activity and tax revenue to the region.”
Senator Bernie Sanders and Representative Alexandria Ocasio-Cortez recently proposed legislation to temporarily pause data-center construction in the United States. Both Congress members support climate policies that are the real cause of the high electricity prices troubling blue states. Sanders and Ocasio-Cortez are from states, Vermont and New York, respectively, whose residential electricity prices are among the top 10 highest nationally — higher than those in states with more data centers. Both states are heavily into climate policies that have retired nuclear and coal plants, limited natural gas use, and created superfunds to punish oil and gas producers, while being members of the Regional Greenhouse Gas Initiative and having renewable portfolio standards or clean energy standards. IER’s Blue States, High Rates shows the linkage between a state’s approach to climate and “green energy” and high electricity prices.
Analysis
In blue states, it is easier to blame data centers than to admit that instituting policies that promote intermittent renewable energy, which requires expensive backup power and additional transmission to reach demand centers, raises rates. Data centers are an easy target for blame as prices continue to rise largely due to the addition of transmission projects implemented to bring renewable generation to demand centers. Because natural gas generation is easier to site, it doesn’t need the high level of transmission infrastructure that renewables do. If proponents of slowing or stopping new electrical demand in the United States succeed in linking increased demand to higher prices, it could have severe implications for all kinds of economic expansion in the United States.
However, as we highlight in Have Data Centers Driven Up Electricity Prices?, data centers and increased demand are not causing the high electricity prices in these states. In fact, history shows just the opposite; more electricity sales actually correlate with lower prices, as the grid’s fixed costs are spread over more consumers.
For inquiries, please contact [email protected].
