Thai authorities are revising artificial intelligence data center incentive programs due to mounting concerns over localized power grid strain and freshwater consumption limits.
Thailand is preparing to overhaul the rules and investment incentives governing data centres, with the government seeking to ensure that future projects deliver measurable benefits to the Thai economy while managing their heavy demands on electricity and water. Deputy Prime Minister and Finance Minister Ekniti Nitithanprapas stated that the policy review aims to keep pace with rapidly evolving technology and guarantee that sector investment generates genuine economic value for the country.
The government and the Board of Investment (BOI) have already begun reassessing how data centre projects are screened, placing greater emphasis on domestic benefits, energy and water efficiency, and environmental impacts. Historically, policy has prioritized attracting capital through BOI incentives. However, rapid industry growth has triggered a broader recalibration, with investment volume alone no longer serving as the sole criterion for government support.
Under the revised framework, authorities will evaluate what Thailand receives in return for granting incentives. Assessments will extend beyond capital inflows to determine whether projects strengthen national digital infrastructure, stimulate broader economic activity, and create tangible domestic advantages. “This review is a complete overhaul, with the value to the country’s economic system as the starting point. We must consider comprehensively how the benefits will accrue to Thai people, while also taking environmental issues involving water and electricity, as well as the various incentives, into account,” Ekniti said.
Resource consumption remains a central concern, as large-scale data centres require substantial electricity and significant volumes of water for cooling, while also generating electronic waste that requires proper management. The updated framework will impose clearer accountability requirements on operators regarding power and water usage, aiming to prevent the digital industry’s expansion from imposing unsustainable long-term strain on Thailand’s energy and natural resources. As artificial intelligence and data centre activity scale up, the government faces the dual challenge of accommodating rising infrastructure demand without compromising energy and resource security. The overarching objective is to strike a careful balance between attracting foreign direct investment and ensuring that national electricity and water systems can support growth sustainably.
Ekniti acknowledged that Thailand currently lacks a fully unified oversight system for the entire data centre sector. Certain operators can establish businesses without applying for BOI promotion, which limits the government’s capacity to manage the industry holistically—particularly regarding resource consumption and grid impact. To address this, officials are pursuing a comprehensive regulatory mechanism covering both BOI-backed projects and those established through alternative investment channels. On August 5, the Cabinet approved a draft Prime Minister’s Office regulation establishing a national policy mechanism for the sector. Designed to coordinate standards, guidelines, and approvals across government agencies, the framework will oversee licensing, promotion, and operational services for data centre developers. Implementation will involve multiple ministries, including the BOI, the Ministry of Energy, and the Ministry of Natural Resources and Environment. This marks a fundamental shift from treating data centres solely as investment vehicles to recognizing them as strategic infrastructure intersecting with economic development, technology, energy security, and environmental management.
Thailand’s policy recalibration aligns with a broader international trend. Governments, regulators, and municipalities worldwide are introducing or proposing restrictions as the AI-driven expansion of data centres raises concerns over electricity costs, water consumption, land availability, and pressure on local infrastructure and communities. In Australia, the government plans to establish an Office of AI to coordinate policy and standards. The forthcoming framework will dictate where large data centres may be built and regulate their electricity and water usage. Legislation is expected early next year, though Australia currently relies on privacy and consumer protection laws alongside a voluntary AI ethics framework rather than dedicated AI legislation.
European jurisdictions have similarly tightened controls. Amsterdam imposed a one-year moratorium on new data centre developments in 2019. In April 2025, the Dutch capital expanded its restrictions, barring new facilities or expansions within municipal boundaries until at least 2030. At the national level, the Netherlands restricted hyperscale data centres to two designated zones in 2022. Microsoft still secured approval in January 2026 for an Amsterdam project structured into three separate towers, each designed to fall below the applicable size threshold. Near Dublin, Ireland’s grid operator effectively halted new data centre connections from 2021 due to grid strain concerns. That restriction was lifted in December 2025, but new interconnections now require on-site power generation. Meanwhile, Denmark has proposed legislation that would deprioritize new data centres for grid connections as capacity tightens, reserving priority for households, healthcare, industry, transport, and renewable energy projects. The proposal holds backing from parties representing approximately 80 percent of the Danish parliament.
Across the United States, multiple states and local authorities have implemented stricter measures. In Pennsylvania, Governor Josh Shapiro signed an executive order mandating that AI data centre developers meet environmental and transparency safeguards and secure local community approval. The order removed data centres from the state’s Fast Track permitting programme and prohibited executive agencies from signing non-disclosure agreements with developers. Texas Governor Greg Abbott paused approvals for new data centre projects through the state’s grid interconnection process, citing reliability risks from surging electricity demand. Developers must now disclose detailed projections for power and water usage, tax incentives, ownership structures, and community mitigation strategies. New York Governor Kathy Hochul enacted a one-year construction moratorium on data centres consuming 50 megawatts or more, making New York the first U.S. state to implement a full moratorium of its kind. During the suspension, the Department of Environmental Conservation will withhold discretionary permits while developing environmental assessment standards. In Maine, Governor Janet Mills vetoed bipartisan legislation that would have imposed an 18-month moratorium on data centres exceeding 20 megawatts. While supporting the principle of a temporary pause, Mills objected to the bill for lacking an exception for a specific project in Jay. Meanwhile, residents of Monterey Park, California, took a definitive stance in June 2026, voting to permanently ban data centres following sustained community opposition to a planned development.
The global trajectory underscores how the AI boom is increasingly functioning as an infrastructure and resource-management challenge rather than purely a technological one. For Thailand, the policy imperative has similarly evolved: accommodating digital investment while safeguarding electricity and water security, mitigating environmental impacts, and ensuring that economic returns remain firmly within the domestic economy.