Massachusetts orders data centers to bring their own clean power, joining wave of state restrictions

Under Healey's order, developers of data centers exceeding 25 megawatts of peak demand must guarantee their electricity meets Massachusetts clean energy standards, with a preference for onsite generation. If they cannot, they must fund construction of new nearby clean generation or contribute to a fund protecting ratepayers. The state’s standard ordinarily requires industry to source a portion of power from approved sources like wind, solar, and hydro — rising to at least 40% by 2030 — but the governor’s office clarified data centers will be required to meet 100% of their demand with clean energy.

The order also pauses applications for a data center sales tax exemption that took effect last month, giving regulators time to implement the new restrictions. Communities are directed to “avoid signing non-disclosure agreements,” according to the executive order.

Massachusetts follows Texas, where Governor Greg Abbott announced in August that all new data centers must submit to audits by the public utility commission and grid operator ERCOT, and New York, whose governor halted construction in July on facilities 50 megawatts or larger.

The tech industry is beginning to push back. Pro-AI super PAC Leading the Future — funded by Marc Andreessen, Ben Horowitz, and Greg Brockman — is buying ads in battleground states to sway voters ahead of midterm elections.

Why This Matters

Massachusetts’ move tightens conditions for data center development in a state with already high electricity costs, potentially affecting AI and cloud computing expansion.
The trend of state-level restrictions could slow or redirect the $1 trillion-plus planned data center buildout, with implications for energy grids and local economies.
The tension between AI industry growth and clean energy mandates may become a key issue in the upcoming U.S. midterm elections.

Background

Data centers have surged in size and number over the past few years, driven by cloud computing and the explosion of AI workloads. Their massive electricity consumption — a single large facility can draw power equivalent to a small city — has sparked backlash from local communities concerned about grid reliability, emissions, and rising rates. After a period of generous incentives, states are now imposing tougher conditions, with Massachusetts, Texas, and New York leading this shift.

Key Perspectives

Data center developers and tech companies: They argue curbs on construction could hamper AI innovation and job creation, and prefer flexible siting options. Some are turning to expensive clean energy purchases or onsite generation, raising costs. State regulators and utilities: They seek to protect ratepayers from cost shifts and ensure grid stability, while meeting ambitious climate goals. Mandating self-supplied clean power reduces the burden on the public grid. Environmental and local groups: They welcome restrictions as overdue, warning that unconstrained data center growth could overwhelm renewable energy supplies and worsen climate emissions. Skeptics question whether 100% clean energy mandates can be enforced without loopholes or delays.

What to Watch

Whether other states — particularly those with heavy data center clusters like Virginia and Oregon — adopt similar rules in the coming months.
The impact of the pro-AI super PAC’s advertising campaign on midterm election outcomes, especially in swing states where data center siting is contested.
Implementation details of Massachusetts’ ratepayer protection fund and how quickly developers can comply with the 100% clean energy requirement.

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