States Move to Restrict Data Center Growth as Grid and Utility Concerns Mount

A growing number of U.S. states are moving to slow or block new data center construction, as residents and lawmakers raise alarms over electricity demand, water consumption, and rising utility bills. The trend marks a turning point for an industry that has spent the last several years expanding largely unchecked across the country's power grids.

At a Glance

• AI data centers are driving up electricity and water demand, raising concerns about grid reliability and costs.
• New York may become the first state to enact a temporary ban on large data centers.
• Monterey Park, California, is the first U.S. city to permanently ban data centers by public vote.

Power Demand Is Outpacing Expectations

Global data center electricity and water consumption is projected to roughly double by 2030, according to a United Nations report released in June. Worldwide, data centers drew 448 terawatt-hours of electricity in 2025, with artificial intelligence workloads responsible for about one-fifth of that total. The same facilities consumed 4.5 trillion liters of water and produced 189 million tons of carbon dioxide emissions over the same period.

In the United States, large data center power demand climbed by roughly 11.3 GW in 2025 alone, reaching 61.8 GW. Forecasts from 451 Research put total demand for IT load, cooling, and lighting at 75.8 GW in 2025, rising to 108 GW by 2028 and 134.4 GW by 2030. Those figures exclude facilities developed by companies outside the technology sector, meaning actual grid impact could run higher still.

More than 4,300 data centers are already operating across the country, according to the Data Center Map database. For utilities and grid planners, that buildout has translated into accelerated load growth, pressure to upgrade transmission, and difficult interconnection queue decisions that were not part of long-range planning just a few years ago.

The strain described in New York and California echoes concerns already raised about U.S. data centers straining the grid in regions where transmission capacity has not kept pace with new load.

Public Opinion Has Turned Sharply

Consumer resistance to data center development is now widespread. A recent Gallup poll found that 70 percent of Americans oppose the construction of data centers in their own communities, with more than half saying they are strongly opposed. Commonly cited complaints include higher electricity rates, strain on local water supplies, noise, and emissions from backup generation.

At least 38 states still offer tax incentives to attract data center investment, reflecting the economic development case that drew many of these projects in the first place. But at the same time, at least 14 states are weighing legislation to pause new construction, according to the National Conference of State Legislatures. Those states include Georgia, Maine, Maryland, Michigan, Minnesota, New Hampshire, New York, Oklahoma, Pennsylvania, South Carolina, South Dakota, Vermont, Virginia, and Wisconsin.

Maine came close to enacting the nation's first statewide moratorium, but Governor Janet Mills vetoed the bill in April. Similar legislation remains under consideration in Georgia, Michigan, New York, Pennsylvania, South Carolina, and Vermont. North Carolina has introduced separate measures aimed at tightening rules around new facilities rather than halting them outright.

This rapid build-out follows a broader pattern of data center demand booming across the country, as hyperscale operators race to secure power capacity ahead of AI workload growth.

Local Votes Set Early Precedents

Some of the most consequential actions have come at the municipal level. Monterey Park, California, became the first U.S. city to permanently ban data center development through a public ballot measure. Preliminary results from the early June vote showed nearly 90 percent of residents in favor of the ban, following sustained complaints about rising utility costs, depleted water resources, and air quality concerns tied to nearby facilities.

City councilmember Jose Sanchez described the outcome as a clear signal that residents do not want data centers built in their community, and said he hopes other cities will follow Monterey Park's example.

In Wisconsin, voters in Port Washington approved a measure requiring local officials to obtain voter approval before offering tax incentives to data center developers. Residents of Janesville, Wisconsin, are scheduled to vote in November on a similar requirement for any new facility valued at more than $450 million.

The debate is not confined to the United States either, as similar tensions are emerging around the rise of data centers in Alberta, where utilities are weighing comparable interconnection and cost-allocation questions.

New York Could Set the Statewide Standard

New York is now closest to becoming the first state with an enforceable moratorium. In June, the state legislature passed a one-year ban targeting "hyperscale" data centers larger than 20 MW. The bill now awaits a decision from Governor Kathy Hochul on whether to sign it into law.

State senator Kristen Gonzalez, who co-authored the legislation, said large technology companies have grown accustomed to operating without rules and argued that the bill represents lawmakers taking responsibility for putting New Yorkers in control of decisions affecting their own grid and communities.

The moratorium is aimed squarely at the largest proposed projects. At least 28 large data centers, representing a combined 9.7 GW of demand, are currently under review in New York. Gonzalez has also pointed to the environmental tradeoffs involved, arguing that water, energy, and green space should not be sacrificed for generative AI workloads of limited public value.

What It Means for Utilities and Grid Planners

For electric utilities, transmission planners, and engineers managing interconnection queues, the moratorium trend introduces a new layer of regulatory uncertainty into an already-strained capacity-planning environment. Projects that utilities had assumed would proceed on schedule may now face delays, redesigns, or outright cancellation, depending on how individual state legislatures act in the coming months.

At the same time, the pushback reflects a legitimate set of grid reliability and cost-allocation questions that utilities have been raising for years: who pays for the new generation, transmission, and substation capacity that hyperscale facilities require, and how that cost gets distributed between large industrial customers and residential ratepayers.

With more state legislatures expected to take up similar bills before year's end, utilities and large load customers alike will need to watch this regulatory landscape closely. The outcome in New York, in particular, could shape how other states balance attracting data center investment with protecting grid reliability and affordability for existing customers.

Globally, the scale of the buildout is just as pronounced, with China's data center expansion underscoring how AI-driven power demand is reshaping grid planning well beyond North America.