Illinois freezes data center tax incentives amid energy concerns

The latest: In his annual budget speech on Wednesday, Pritzker called for a two-year suspension of tax incentives to build data centers in Illinois.

State of play: Illinois has at least 222 data centers — the fifth highest in the country.

What they're saying: "We need to think critically about our future energy usage with the needs of Illinois households at the forefront," Pritzker said.

• "With the shifting energy landscape, it is imperative that our growth does not undermine affordability and stability for our families."

The intrigue: The move comes as data centers expand rapidly across the country and in Illinois, sparking community concerns about the size, scope and drain on natural resources.

• Pritzker's move is at odds with the Trump administration, which has been pushing for more AI data centers. President Trump signed an executive order prohibiting states from regulating the burgeoning industry.

Yes, but: Trump has signaled a shift recently, wanting big tech companies to "internalize" data center costs to ensure Americans don't get stuck with higher utility bills.

Between the lines: Pritzker's move is a win for Illinois climate groups that have pushed for a halt on new data centers, citing environmental concerns.

• A recent state report warns that the centers could outstrip our energy supply.

The other side: The data center industry generated $3.51 billion in direct and indirect tax revenue in Illinois in 2022-2023, according to a PricewaterhouseCoopers report.

• A report from the Illinois Department of Commerce and Economic Opportunity says each data center project generates 150 to 300 jobs during construction, accounting for 4,000 to 8,000 positions statewide.
• "Suspending this critical economic development tool would put the state at a strategic disadvantage in attracting data center projects," the Data Center Coalition said in a statement, adding the centers are "bringing significant benefits to neighboring states and helping make life more affordable for their residents."

Zoom out: Pritzker also signed a new executive order to develop more nuclear power plants in Illinois.

• "Illinois is already number one in clean nuclear energy production," Pritzker said. "Producing even more energy is vital to keep up with increasing demand and bring down prices."

The big picture: The governor is ordering the Illinois Power Agency and the Illinois Commerce Commission to begin evaluating potential nuclear sites.

• The order includes developing a modern regulatory framework and updating safety standards to ensure "future developments are responsible, transparent, and in the best interest of Illinois families."
• The goal is to deliver at least 2 gigawatts of nuclear capacity, enough to power up to 2 million Illinois homes.
• The order calls for construction to begin in 2033.

The bottom line: The governor's moves are designed to wrangle skyrocketing energy costs, which are showing no signs of leveling off.