New York has become the first US state to impose a moratorium on new hyperscale data centres after Governor Kathy Hochul signed an executive order temporarily pausing State environmental permits for up to one year while regulators develop a new framework for the sector. The order aims to assess the impact of large data centres on electricity demand, water resources and local communities before additional projects move ahead.
Announcing the decision, Hochul said: “New York has always been at the forefront of innovation and change but we’ve also always guaranteed that New Yorkers benefit. As data center development threatens to hike up utility bills, deplete our natural resources, and create uncertainty for New Yorkers, it’s my responsibility to take action and lead.”
Provisions of the executive order:
- The Department of Public Service (DPS) must prepare a Generic Environmental Impact Statement (GEIS) examining the environmental impacts of hyperscale data centres, including electricity demand, water use and quality, air quality, noise, and effects on disadvantaged communities. Until the review is complete, the Department of Environmental Conservation (DEC) must hold in abeyance discretionary permits for new or expanded data centres unless applications had already been deemed complete before the order.
- Empire State Development must publish a Community Investment Framework within 60 days. The framework will guide local authorities on negotiating community investment funds, infrastructure upgrades, childcare, public services, prevailing wage standards, local hiring, apprenticeships, workforce development, and reporting requirements for developers.
- DPS must review transmission planning, grid impacts and network upgrade practices for large data centre loads, and report to the Public Service Commission within 90 days.
- DEC must review whether New York’s water withdrawal regulations adequately address data centre water demand and submit recommendations within 12 months.
- The order applies to facilities that consume, or can consume, 50 MW or more of electricity, while exempting facilities primarily used for manufacturing, research, education, and medical care.
Additionally, DPS must consider establishing a New York Grid Acceleration Fund, which would require data centres to make upfront capital contributions towards financing grid improvements, supporting demand response programmes, procuring new clean energy supplies, and establishing an insurance pool. Crucially, the fund is designed to protect ratepayers from stranded-asset risk arising from project delays, changes in scope, or cancellations.
Furthermore, within 60 days, DPS must form a Data Center Interconnection Working Group to identify and resolve issues relating to the interconnection of data centres and other large loads. In doing so, the working group will apply “beneficiary pays” principles to network upgrade and resource adequacy costs.
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