As rapid advances in technology accelerate demand for data processing capacity, leaders in Connecticut are weighing the stress that large data centers could place on the local power grid against the economic opportunities they present. It’s on.
A proposal to study how large data centers would affect the reliability of the state’s power grid has drawn opposition from those who say it would delay important development.
The General Assembly’s Energy and Technology Committee heard public testimony on the proposal Thursday. The bill would require utility regulators to work with the Department of Energy and Environmental Protection, the Consumer Affairs Bureau, and ISO-New England, the nonprofit corporation that manages the region’s power grid, to conduct the assessment. We are calling for this initiative to be completed by July 1 of this year.
Leaders from DEEP and the state Department of Economic and Community Development spoke out against the measure.
“The demand and need for data centers is growing significantly to keep pace with the needs of AI expansion, and could account for approximately 8% of U.S. energy consumption by 2030,” DEEP Secretary Katie said. – Mr. Dykes spoke to the committee and expressed the agency’s support for the bill. SB299.
“Having an appropriate framework to ensure the fair deployment of this type of demand, consistent with the need to maintain grid reliability, without passing costs on to other ratepayers or increasing costs. is very important,” Dykes said. He said.
In written testimony, DECD Commissioner Dan O’Keefe urged the commission to shift its research focus.
“Instead of studying the impact data centers have on the power grid, states [should] Instead, consider how to support data centers on our grid and take advantage of the greatest economic benefits they can offer,” he wrote.
Mr O’Keefe argued that it was important to further encourage data center development. “These new computing technologies are critical to the future of our economy, so we cannot afford to build them elsewhere first,” he wrote. “The biggest economic benefits will be in the states and communities where these data centers will ultimately be built. We need to make it happen here in Connecticut, but our opportunities to act are limited. .”
Three years ago, the state Legislature moved quickly to pass legislation that would create tax incentives to encourage data center development in the state. The program provides a 20-year sales and property tax exemption for data centers invested in the state that invest at least $200 million, or as little as $50 million if the facility is located within a state-designated business district. . For larger investments, the tax-free period can be extended for up to 30 years.
Since this incentive was signed, a handful of developers have taken the first steps to begin building data centers in several Connecticut towns. One of his major projects is the closest to breaking ground – a super-scale 300MW development on the site of Waterford’s Millstone nuclear power station. NE Edge, the development company behind the project, signed a so-called “host fee agreement” with the town last March, offering a 30-year payment in lieu of property taxes, as stipulated in the 2021 law. It promised to pay a fee of $231 million.
The project will consist of two two-story data center facilities capable of processing the large amounts of data needed for AI and other advanced technologies. NE Edge purchases power directly from Dominion Energy in a “behind-the-meter” agreement that significantly reduces data center energy costs.
Thomas Quinn, founder of NE Edge, said that if Congress were to consider it now, it would significantly delay the project and potentially cause Connecticut to lose out to other states competing to build hyperscale data centers. (Mr. Quinn said he was closely involved in proposing and advocating for the 2021 bill.)
“The market is ready for advances in AI, and we want to make this happen while we’re still in the game,” Quinn said.
Quinn testified on SB 299 before the Energy and Technology Committee late Thursday, explaining the broad economic benefits the Millstone project would generate and urging lawmakers not to approve the study. He said he has talked with DECD about the possibility of the data center providing services to the state at a discounted rate.
“This just slows us down for no reason at all,” Quinn told the committee.
According to written testimony, SB 299 also drew opposition from the Connecticut Building Trades Council, which entered into a project labor agreement with NE Edge to build the data center.
The Sierra Club, the Connecticut League of Conservation Voters, and Save the Sound advocates testified in support of the proposed study.
Lori Brown, executive director of the CT League of Conservation Voters, encouraged the committee to expand the scope of its study.
“Data centers are one of the most energy-intensive building types, consuming 10 to 50 times more energy per floor area than a typical commercial building,” Brown said. “We are asking that any studies conducted to assess the impact of data centers on the local power grid also include environmental and climate impacts.”
Sen. Norm Needleman (D-Essex), co-chair of the committee, said the bill was written specifically with the NE Edge project in mind. He said he was concerned about one of the technical aspects of the development. That is, data centers powered directly by Millstone may use the local power grid for backup power.
“My concern is not whether there are data centers or not,” Needleman said, reminding hearing participants that he guided the 2021 bill through Congress. “It’s about putting a very large data center behind the meter of a nuclear power plant, backed up by the power grid, and what the potential impacts are.”
“As chairman of the Energy Committee, I just want to make sure we don’t mess up the grid,” he later said.
