Data centers are reshaping Pennsylvania’s energy landscape—and not for the better

On February 3rd, during his annual address to the Pennsylvania general assembly, Governor Josh Shapiro expressed his concerns about how the rapid buildout of data centers in the state could contribute to rising electricity costs. His calls for guardrails on data center development may fall flat considering his previously unbridled support. Shapiro is currently backing a bill laying out a model ordinance that advocates claim is heavily favorable to data centers.

Pennsylvania is already a hotbed of data center development. Data centers use a lot of land and energy, so they tend to be built in areas that have these resources in abundance. As a net energy exporter and with ample undeveloped land, Pennsylvania is currently home to at least 40 active data centers and over 50 data center proposals. These data centers are reshaping Pennsylvania’s energy landscape, driving up fossil fuel use and burdening residents with the costs.

Pennsylvania has long been a leader of energy production in the United States, second only to Texas as a net energy supplier to other states. This legacy has come at a steep environmental cost, first through the mining, export, and combustion of coal, and then the subsequent boom in fracked natural gas. Now, with the state’s only major climate policy ending following Governor Shapiro’s exit from the Regional Greenhouse Gas Initiative (RGGI), Pennsylvania’s already limited climate progress is being further jeopardized.

Pennsylvania’s abundant fossil fuel energy resources are also powering the data center boom in other states in the PJM interconnection region, including Virginia, home to “Data Center Alley” and over 150 energy-hungry hyperscale data centers.

Much of the increase in energy demand being driven by power-hungry data centers could be met by clean energy. Solar energy and battery storage currently make up 82.3 percent of the new generation resources waiting to be approved for development in the PJM region, and renewable energy is cheaper and more efficient to develop than fossil fuel generation. Unfortunately, these projects are being sidelined by a renewed focus on building expensive fossil fuel generation, like the redevelopment of the former Homer City coal plant in western Pennsylvania into a massive 4.4 gigawatt natural gas plant. The plant is expected to be one of the most expensive power plants in the country. These types of projects, along with expensive transmission upgrades to connect them to data center customers, are contributing to a 10 percent increase in energy bills for Pennsylvanians, while also increasing air pollution and greenhouse gas emissions.

Pennsylvania’s role as an energy exporter shouldn’t come at the cost of its citizens’ health, wallets, or environment, particularly when data centers do not even provide a significant economic benefit to the communities in which they’re located.

Some measures are currently being considered which could help limit the harm from irresponsible data center proposals. At the state level, the General Assembly is considering legislation directing the Public Utilities Commission to draft regulations for data centers, including requiring the centers to contribute to the state energy assistance program and requiring public utilities entering contracts with data center customers to ensure that at least 25 percent of electricity supplied is from renewable energy sources.

At a regulatory level, the Pennsylvania PUC has proposed a model tariff that hopes to, among other things, protect ratepayers from footing the bill for the new energy infrastructure built to meet data center demand. The model tariff, however, will also expedite data center interconnections and doesn’t go as far as to impose early exit fees or require demand flexibility, two measures that could further protect Pennsylvania residents from exceedingly high energy bills.

Locally, municipalities have begun enacting ordinances to limit the environmental impact of data centers and contain their development to industrialized zones.

These measures are a step in the right direction, but more will need to be done to ensure that Pennsylvania protects its residents from the increased local air pollution, greenhouse gas emissions, and rising electricity bills that will come from meeting this energy demand with fossil fuels.