Data Centers Face New Costs, Curtailment and Local Control
Across the United States and Europe, data-center expansion is shifting from a fast-growth story to a test of who pays for power, water and local infrastructure. PJM’s proposed capacity rules, Texas’s queue audit, Pennsylvania’s tighter permitting and Cary’s moratorium all increase scrutiny, while Spain’s proposed renewable requirements and Microsoft-Qcells’ capacity model point toward stricter or more self-sufficient power arrangements.
Friday, Aug 28, 2026
Tracking: Data Center · Data Centre
PJM proposes making new data centers pay for grid capacity
PJM, the regional grid operator serving 13 states, has asked the Federal Energy Regulatory Commission to approve a framework requiring new large-load customers—primarily data centers—to help secure the power capacity they need.
Customers that do not pay directly for new capacity or arrange backstop purchases could be moved to backup generators or required to reduce consumption during extreme hot or cold weather.
The proposal would leave states to set cost-allocation and load-reduction rules, meaning utilities would likely seek approval for new policies.
It arrives as PJM works through its power-project queue and utilities expand generation and transmission for rising data-center demand.
Dominion Energy has already created a large-load rate class with minimum charges, while environmental groups warn that greater reliance on diesel generators could increase local emissions. PJM has not yet used emergency authority to move data centers off the grid.
Key facts:
- PJM filed the proposal with the Federal Energy Regulatory Commission on August 27, 2026.
- PJM serves 13 states, including Virginia.
- Noncompliant large loads could face backup-generation orders or reductions during grid stress.
- Dominion created a large-load rate class covering transmission, distribution, and generation costs.
- Virginia lawmakers recently required Tier 4 generators for new data centers.
Why it matters: The proposal would shift more of the cost of data-center-driven power expansion toward the facilities creating the demand, potentially limiting costs passed to other ratepayers.
It also gives states a larger role in deciding who pays for generation and transmission, so approval by FERC would be only the first step; state regulators would still need to design and adopt the operating rules described in the PJM framework.
The tradeoff is operational and environmental. Requiring load reductions or backup operation could help PJM manage reliability during peak conditions, but more diesel-generator use could increase emissions.
Regulators and communities will therefore be watching FERC's decision, state implementation plans, generator use, and whether data centers fund new capacity rather than relying on emergency measures.
Pennsylvania tightened data-center permitting as Texas audited grid connection projects
Pennsylvania Governor Josh Shapiro has removed data-center projects from the state’s fast-track permitting program and barred future projects from entering it.
His executive order also imposes what he called the nation’s strictest standards for AI data centers, reversing course after his administration helped secure Amazon’s planned initial \$20 billion investment.
Texas is taking a different route rather than imposing a construction moratorium.
Governor Greg Abbott ordered a comprehensive verification and audit of projects in ERCOT’s “Batch Zero” interconnection queue; the review covers roughly 250–300 proposals and requires information on electricity and water use, on-site generation, cooling, incentives, and local-impact mitigation.
PUCT and ERCOT are examining whether developers will provide power themselves or depend on the grid, amid more than 474 gigawatts of large-user connection requests, nearly all from proposed data centers.
Key facts:
- Shapiro’s order removes data centers from Pennsylvania’s fast-track permitting program.
- Abbott’s audit covers roughly 250–300 projects in ERCOT’s Batch Zero process.
- ERCOT is considering more than 474 gigawatts of large-user connection requests.
- Developers must disclose expected electricity and water use, cooling systems, and on-site generation plans.
Why it matters: The two orders show a broader political shift: leaders who previously promoted data-center investment are now responding to concerns about electricity prices, water use, infrastructure demands, and local impacts. But the policies are not equivalent.
Texas is tightening information and verification requirements inside an existing growth process, while Pennsylvania is removing data centers from an expedited permitting route and giving the state more discretionary control.
For developers, Pennsylvania offers less access to fast-track approvals, while Texas projects face an earlier scrutiny gate before advancing through interconnection.
The next consequential signal will be whether the audits and new standards delay, reshape, or exclude projects as regulators assess their power, water, cooling, and community-impact plans.
Pennsylvania Tightens Data Center Permits Around Local Approval and Environmental Standards
Pennsylvania Gov. Josh Shapiro has imposed new requirements on most large data center projects, requiring local approvals before state permits and tying tax relief to compliance with the administration’s GRID standards.
The order also removes data centers from the state’s Fast Track permitting program and bars executive-branch agencies from signing project-related nondisclosure agreements.
For facilities above 25 MW, developers can use an easier track by signing a consent agreement incorporating GRID and documenting local approvals; state permits can then be issued on a rolling basis.
Projects that do not take that route face a much more difficult track, while the policy stops short of a moratorium and keeps siting and zoning primarily local. It also conditions tax-exemption access on following the standards.
Key facts:
- Shapiro’s executive order creates two permitting tracks for data centers exceeding 25 MW.
- Developers must document local approvals before receiving Pennsylvania state permits or authorizations.
- GRID standards include clean-energy and job-creation requirements.
- Noncompliance can block applications for Pennsylvania’s data center sales-tax exemption.
- Governor-controlled agencies may no longer sign data center nondisclosure agreements.
Why it matters: The order shifts leverage toward municipalities by preventing developers from obtaining state permits before securing local approvals—the practice that could pressure local officials once construction had begun.
It also gives developers a defined, faster route if they accept the state’s environmental and employment conditions, while making noncompliance costly through permitting and tax consequences.
The policy increases transparency at the state level, but local governments can still sign nondisclosure agreements.
Developers and communities will now watch how local approvals affect project timelines, and whether the state’s two-track system redirects proposals rather than stopping them outright.
Spain Proposes Hourly Renewable Power Rules for New Data Centers
Spain is considering a draft decree that would require new data centers above 1 MW to obtain 80% of their electricity from newly commissioned renewable capacity on an hourly basis.
The rule would apply until Spain’s power mix reaches 90% renewables, and would exclude facilities already operating.
Renewable capacity would need to have been commissioned within the previous 18 months, supplied through self-consumption or long-term contracts.
The proposal links energy sourcing to grid access: noncompliant projects could face higher grid and network charges, followed by possible loss of access.
Projects already under development would have six months to comply, or three months if awaiting a grid-access tender.
The package also proposes top-tier energy and water efficiency, EU-based operators, and European storage of data and metadata, as Spain has already awarded more than 12 GW of connection rights to data centers.
Key facts:
- The draft targets new data centers above 1 MW.
- The proposed renewable requirement is 80% hourly until Spain’s energy mix reaches 90% renewables.
- Qualifying renewable capacity must have been commissioned within the previous 18 months.
- Spain has awarded over 12 GW of grid access and connection rights to data centers since 2021.
- Noncompliance could trigger higher charges and ultimately loss of grid access.
Why it matters: If adopted, Spain would make renewable supply a condition of grid access for new large data centers, rather than allowing developers to balance consumption only over a full year.
That would increase pressure on operators to secure closely matched renewable generation and could favor projects with strong procurement arrangements or on-site supply.
The proposal also broadens the approval test beyond electricity, adding water and energy efficiency, European data-location, and third-country access controls.
The next decisive step is public consultation, followed by whether the government enforces the proposed penalties and applies the rules to a pipeline seeking more than 10 GW of additional grid connections.
Cary imposes 18-month moratorium on data center development
Cary, North Carolina’s Town Council unanimously approved an 18-month moratorium on data center development on August 28, immediately suspending approvals, rezoning applications, development plans and building permits for facilities seeking to locate in the town.
The pause is scheduled to continue through February 2028. Town officials said Cary’s development code does not specifically regulate data centers.
They will use the moratorium for research, public engagement and regional coordination, focusing on where facilities should be permitted, how large they should be, and whether local water and electric infrastructure can support them.
The council also narrowed an exemption during deliberations: facilities initially proposed below 25 megawatts must now remain below one megawatt, roughly the electricity demand of up to 1,000 homes.
The decision reflects wider Triangle concerns about data centers’ water and power use as artificial-intelligence demand grows.
Key facts:
- Cary’s Town Council approved the moratorium unanimously on August 28, 2026.
- The moratorium immediately suspends data center approvals, rezonings, plans and building permits.
- The pause runs through February 2028.
- The council reduced the exemption threshold from 25 megawatts to one megawatt.
Why it matters: The decision gives Cary officials time to create rules before approving projects that could place new demands on municipal water and electricity systems.
It also creates an immediate delay for prospective developers and signals that local approval—not only regional demand—may constrain data center expansion in the Triangle.
The next consequential step is whether Cary converts the study period into clear siting, size and infrastructure standards.
The one-megawatt threshold will also determine which smaller facilities can continue through the town’s development process while larger projects remain paused.
Microsoft and Qcells Test a New Power Model for AI Data Centers
U.S. AI data-center developers are increasingly trying to secure electricity outside the ordinary grid queue, but they are choosing sharply different paths.
Global Energy Monitor data cited by ForkLog and Gadget Review puts gas-fired capacity tied directly to U.S. data centers above 189 gigawatts by mid-2026, up from 97 GW at the end of 2025 and just over 4 GW in early 2024.
The total includes announced and pre-construction projects, not guaranteed plants.
A separate August 27 announcement shows Microsoft and Qcells testing a cleaner “bring-your-own-capacity” model: build generation and flexible resources alongside data centers, serve Microsoft directly or the utility, and explore virtual power plants using distributed batteries.
No capacity commitment has been announced. Bloom Energy’s Oracle agreement, meanwhile, illustrates the on-site fuel-cell alternative, with 1.2 GW intended to shorten the wait for power.
Together, the developments show electricity procurement becoming part of data-center construction strategy.
Key facts:
- Microsoft and Qcells expanded their partnership on August 27 to explore energy capacity alongside AI data centers.
- U.S. data-center-linked gas projects rose from 97 GW at end-2025 to over 189 GW mid-2026.
- Seven major technology companies signed a March pledge to build, attract, or buy power for data centers.
- Oracle signed a 1.2 GW agreement with Bloom Energy for on-site solid-oxide fuel-cell power.
- Qcells and Microsoft are exploring virtual power plants using distributed residential and commercial batteries.
Why it matters: The immediate beneficiaries are data-center developers that cannot afford to leave expensive AI hardware idle while grid connections wait years.
Behind-the-meter generation can compress timelines, but the current U.S. pipeline is heavily gas-based, bringing fuel dependence, additional emissions, and the risk of decades-long assets if AI demand or project financing falls short.
Gas-turbine supply constraints and permitting could also limit how much of the 189 GW pipeline is built.
Microsoft and Qcells offer a competing model in which new generation and flexible demand are planned with the data center rather than added to an already stressed grid.
Its potential benefits are still unproven: the partnership has no announced capacity target, while Qcells’ proposed battery program could provide payments or lower bills to participating, income-qualified households.
The next indicators are firm construction commitments, permits, financing, equipment orders, and evidence that utilities accept these hybrid connection models.
U.S. Data Center Policy Shifts Toward Moratoriums and Power Curtailment
Data center expansion is facing a broader policy backlash across the United States.
New York Governor Kathy Hochul has signed what the source calls the country’s first statewide moratorium on new data centers, while PJM received federal approval to reduce power to new data centers before ordinary households during shortages.
More than 300 state bills targeting data center transparency and regulation were introduced during the first half of 2026. The debate is increasingly focused on disclosure before construction, especially for water and electricity use.
In Texas, Agriculture Commissioner Sid Miller has requested a one-year moratorium while lawmakers establish stronger guardrails and oversight.
The Texas commentary portrays that proposal as a response to public anger over rapid development, permitting, infrastructure demands, and community impacts, while questioning why restrictions were not imposed earlier.
Key facts:
- New York signed the country’s first statewide moratorium on new data centers.
- PJM won federal approval to curtail new data centers before households during shortages.
- More than 300 state data center bills were introduced in the first half of 2026.
- Texas Agriculture Commissioner Sid Miller requested a one-year data center moratorium.
- The policy debate centers on disclosing water and electricity use before construction.
Why it matters: These developments shift data center approval from a largely local land-use question toward a national debate over grid reliability, resource disclosure, and fairness during shortages.
A rule allowing PJM to curtail newer facilities first could protect household service, but it also introduces operational uncertainty for cloud and AI operators that depend on continuous power.
Moratoriums and disclosure mandates may give communities leverage before projects are approved, while increasing permitting risk for developers and customers seeking new capacity.
The next key question is whether states adopt temporary freezes, mandatory resource reporting, or permanent limits—and how Texas lawmakers respond to Miller’s request.
