Massachusetts became the latest state to require data centers to bring their own electricity, but with an unusual twist: facilities must supply clean energy or pay into a fund protecting ratepayers. Gov. Maura Healey's executive order marks a dramatic shift from just a few years ago, when states competed to lure tech companies and data center builders with generous incentives. Now politicians are responding to growing public opposition by imposing new restrictions on the industry.
Under Healey's order, any data center with peak demand exceeding 25 megawatts must supply its own electricity and ensure it complies with the state's clean energy requirements. The governor prefers facilities generate clean power on-site, though they can alternatively fund construction of new generation nearby or contribute to a ratepayer protection fund. The order also directs local communities to avoid signing non-disclosure agreements, according to the executive order. To allow regulators time to put the new restrictions in place, the governor is halting applications for a data center sales tax exemption that became effective last month. While Massachusetts law normally requires industries to generate only a portion of their power from approved sources like wind, solar, and hydro—40% by 2030, for example, with the share increasing over time—the governor's office clarified that data centers must meet 100% of their electricity demand with clean energy generation.
The Massachusetts action reflects a broader pattern of states cracking down on data center development. Texas Gov. Greg Abbott announced in August that all new data centers in the state would need to submit to audits by the public utility commission and the grid operator, ERCOT. In July, New York's governor halted construction of new data centers 50 megawatts or larger. Healey said facilities must comply with the Massachusetts clean energy standard written into state law, though it comes with added strength compared to requirements for other industries.
This wave of restrictions stems from politicians seeking to demonstrate to voters they're addressing concerns about data centers, as public sentiment has shifted against the facilities. Just a few years ago, tech companies and data center developers received incentives to build in particular states, but they're now confronting widespread public opposition. The tech industry has started pushing back as sentiment turns: Pro-AI super PAC Leading the Future—funded by Marc Andreessen, Ben Horowitz, and Greg Brockman—is purchasing ads aimed at swaying voters in battleground states ahead of midterm elections. The tension reflects competing priorities as states balance economic development goals against voter concerns about energy consumption and grid strain. Companies that built business models around traditional incentive packages now face a regulatory environment that demands they shoulder infrastructure costs themselves, fundamentally altering the economics of data center expansion.