Some states are working out their data center playbook. More should use it.

As the energy and climate world gathers for Climate Week NYC, many of the conversations will come back to AI data centers. Policymakers and businesses are navigating an unprecedented new era of rising energy demand – driven by data centers, electrification, and manufacturing – as well as affordability challenges and growing community backlash. 

The vast majority of Americans are concerned about how data centers could impact electricity prices, water supply, and grid reliability, according to recent polling. These concerns are why local communities blocked or delayed 45 data center projects across the U.S. between just April and June this year.  

Demand for solutions to address the challenges of the AI data center buildout is hitting a critical point. States that set strong, consistent rules now will shape this build-out for the benefit of communities and give businesses the certainty they need to invest.  

This moment is also an opportunity to address existing weaknesses in the energy system. Most of America’s grid is decades old and could need $1.4 trillion in upgrades over the next few years, with the costs passed on to consumers. Policymakers must shape a cleaner, more efficient system that keeps bills affordable, keeps us economically competitive, strengthens national security, and protects communities from pollution.    

The encouraging news is that we’re starting to see governors and state legislators meeting the moment with commonsense policies to ensure data centers are powered by affordable clean energy and limit impacts on water supplies and communities. 

I want to celebrate four examples of state policymakers acting, with support from Ceres and businesses across the economy, on sustainable data centers. They reflect many of the principles laid out in Ceres’ reports and policy work on data centers this year, and they should be models for policymakers around the country. More must be done by states to provide consistent and enforceable standards that guide the industry towards a sustainable future. 

California 

Gov. Gavin Newsom this week signed a suite of data center bills from the state legislature into law, including an important measure supported by Ceres to guide data center permitting. 

SB 887 will create a faster review pathway for projects that meet high standards on grid costs, clean energy, water efficiency, demand response, and community benefits. That includes an enforceable community benefits agreement. The overall package also includes many of the principles for sustainable data centers that Ceres laid out in a letter to Newsom earlier this month. 

California now has a clear path to powering data centers with clean energy and ensuring that they do not threaten the state’s water supply. 

Pennsylvania 

Pennsylvania Gov. Josh Shapiro signed an executive order last month spelling out requirements in the state permitting process for data center developers to be transparent about their impacts, include communities in the development process, pay costs for the electric infrastructure they will need, and meet water conservation requirements. 

The governor's order will empower communities to share the benefits of nearby projects if they choose to host them and ensure that new electricity demand is met with affordable, clean energy.  

Virginia 

The data center capital of the world is now a national leader in data center sustainability, thanks to an executive order this month from Gov. Abigail Spanberger. The order lays out a framework to incentivize clean energy, limit polluting backup generation on-site at data centers, improve energy efficiency, and limit water use. 

It will bring benefits to the entire energy system and, as demand grows, maximize use of the cheapest sources of energy: Solar, wind, and storage. That will also help all businesses – outside of hyperscalers and data center developers – reap the benefits of cheaper energy and a more efficient power grid.  

Ceres will be advocating in Virginia in the coming months, as legislators in the General Assembly look to write many aspects of the governor’s order into state law. 

Massachusetts  

In Massachusetts, Gov. Maura Healey signed an executive order this month requiring local approval of data centers and moving the state towards a “bring your own clean energy” model for development. 

Healey has long acknowledged AI’s potential economic benefits, and her order shows that smart policy can make this buildout a win for the power grid, the environment, and the communities that want to host data centers.  

Looking ahead 

Policymakers increasingly recognize that when built and operated sustainably, and powered by clean energy, data centers can contribute to local economies and put downward pressure on electricity prices by helping pay for grid upgrades. They are also reckoning with water impacts, which can come both from the data centers themselves and from the generation that powers them. 

But there is still much more to come when state legislatures meet again next year. Ceres will continue to focus on commonsense sustainability guardrails for data centers to protect communities, as well as broader solutions to modernize the power grid, limit costs, and deploy clean energy more widely.  

There is a window now for policymakers to get this right. Without state leadership, communities will be left to navigate data center development on their own with few guardrails and limited transparency.