New York proposes regulatory framework requiring large data centers to source 33% renewable electricity by 2030; pending legislation may impact existing facility operations.
Legislation that has been put on the back burner during the moratorium would require large data centers to increasingly procure electricity from renewable sources, analyses show.
New York's Independent System Operator reported that its large-load interconnection queue grew from six projects totaling roughly 1,045 MW in 2022 to 48 proposals totaling approximately 12 GW as of December 31, according to Harris Beach Murtha analysis.
Although the executive order targets future data centers, it may affect projects already in the permitting pipeline. According to Davis Wright Tremaine, projects awaiting Department of Environmental Conservation approval as of July 14 could be impacted, while those proceeding through local permitting alone would not be.
"For companies developing, financing, or operating data centers, the Executive Order serves as a reminder that successful projects increasingly require coordination across land use, environmental permitting, energy, technology transactions, commercial contracting, financing, and regulatory compliance," Davis Wright Tremaine states.
According to DLA Piper, the key difference between the bill and the executive order is scope. The executive order uses a 50-MW threshold, while the bill employs lower, variable thresholds of 1, 5, and 20 MW, with different approaches to timing and application to existing facilities.
"Under A11560, the key carve-outs are modifications, renewals, reissuances, and recertifications of existing approvals and projects that commenced construction on or before the effective date," DLA Piper explains. "Under the executive order, there is no such grandfathering mechanism. Instead, the applicability of the executive order depends on Department of Environmental Conservation permitting status."
The executive order pause remains in effect until the New York Department of Public Service completes a Generic Environmental Impact Statement assessing the environmental impacts of data center construction and operation, including effects on energy demand, water use and quality, air quality, and noise levels.
As part of the pending legislation, the Empire State Development Fund—a state agency providing grants and loans—would have 60 days to publish a framework giving localities more say in data center projects. The framework would address creation of a community investment fund financed by data center companies, with direction on local infrastructure investments, prevailing wage and project labor agreements, and reporting on economic metrics, according to Davis Polk.
The legislation would require data centers with a peak load of at least 5 MW to procure at least one-third of their electricity from renewable sources by 2030, with higher percentages in subsequent years, and to meet energy-efficiency goals to be developed by the New York State Energy Research and Development Authority, according to Harris Beach Murtha.
The legislation could also affect facilities with water-intensive cooling designs. The New York Department of Environmental Conservation would need to assess whether new or amended regulations are required for water withdrawal programs applied to data centers, with a report due within 12 months, according to Davis Polk.
Under A11560, large new data centers and any existing facility adding 20 MW or more of load must also fund a host-community benefits program covering residential energy upgrades, community infrastructure, and measures to mitigate water and wastewater impacts, according to Harris Beach Murtha.