Some data centers now consume more electricity than a mid-size city. Feeding them has set off the biggest construction boom of natural gas power plants in American history and is keeping aging coal plants running past their scheduled retirement dates. Now a coalition of state lawmakers, environmental groups and the tech industry’s own energy buyers is pushing back, trying to make sure the AI buildout runs on something cleaner.
The core problem, as the Associated Press reported this week, is speed. Tech companies want power at a pace and scale that wind and solar construction simply cannot match, so utilities reach for gas. Clean energy advocates are not trying to slow the data centers down. They are trying to change what gets built to feed them.
Statehouses draw their lines
New York may act next. On Governor Kathy Hochul’s desk sits a bill that would require data centers above a certain size to meet renewable energy benchmarks starting in 2030 and to source at least 90 percent of their power from renewables by 2040. Its author, state Senator Kristen Gonzalez, argues the targets are realistic: companies with billions of dollars to spend on data center construction, she told the AP, can afford to build the renewable generation to power them.
Michigan, Oregon and Minnesota moved first, passing laws over the last 18 months to shield their existing requirements that utilities go emissions-free by 2040. Minnesota and Oregon ordered regulators to keep data center power supplies in line with state emissions goals. Michigan took a different route, tying money to behavior: hyperscale data centers there must hit 90 percent clean energy within six years to qualify for the state’s generous sales tax exemption. Similar bills have surfaced in more than half a dozen states, including California, Illinois, New Jersey, Pennsylvania and Virginia.
Working the regulators instead
Where legislatures will not act, the fight has moved to utility commissions. Google’s arrangement with NV Energy in Nevada, approved by regulators last year, is widely viewed as the first of its kind: a large customer builds clean generation and connects it to the grid through its utility. Google says similar structures are now approved or under consideration in eight other states, including Indiana, Kansas, Missouri and South Carolina.
Colorado followed a different path to the same place. Regulators there ordered Xcel Energy, the state’s largest utility, to create a program letting big power users build clean energy projects that plug into the grid. In an April filing, Xcel pointed to two Google projects approved through comparable programs elsewhere: 115 megawatts of geothermal in Nevada and 1,900 megawatts of wind, solar and battery storage in Minnesota.
Corporate buyers are organizing too. The Corporate Energy Buyers Association, whose members include the biggest tech companies, negotiated an agreement with Georgia Power, approved by state regulators earlier this year, that lets members build clean energy sources and connect them to the grid. The group is now pursuing the same arrangement in North Carolina.
Why utilities are listening
The pitch to utilities is pragmatic rather than moral. They gain a large, long-term customer that pays to expand the grid, attached to a power source they do not have to bill ordinary households for. That matters at a moment when electricity bills are rising quickly in many parts of the country and utilities are absorbing the political blame. The alternative is worse for them: watching hyperscalers build standalone power plants and bypass the grid entirely.
Greg Robinson, whose North Carolina firm Aston Power procures energy for data centers, compared the moment to the rise of FedEx, a new service born because the existing one could not keep up with what business needed. Not everyone is convinced the math works. Bob Jenks, who leads the Oregon Citizens’ Utility Board, noted that the state’s emissions-free targets were already difficult before data centers arrived.
Google, for its part, is hedging every bet at once, putting billions into solar, wind, geothermal, nuclear and battery storage projects even as gas plants multiply around its data centers.
The Corporate Energy Buyers Association’s senior vice president of policy, Nidhi Thaker, told the AP she believes the procurement structures being negotiated right now will set energy policy for the next two to three decades. The nearest test is in Albany, where Hochul’s signature, or her veto, will signal how far states are willing to push. For more coverage of AI and climate, visit Mylistingo.
