North Carolina weighs new limits on data center construction
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Legislation that would rein in how data centers are built and operated in North Carolina is scheduled for an N.C. House vote Wednesday.
Why it matters: Data center construction has become a political lightning rod in recent months, with municipalities across the state passing construction moratoriums over residents' concerns about rising electricity cost and environmental impacts.
- At the same time, many local leaders see data centers as a potential way to increase their tax bases at a time when budgets are tight.
Driving the news: The bill moved rapidly through House committees Tuesday and is calendared for a vote in the full House on Wednesday.
Zoom in: The bill addresses several aspects of data center construction, including:
- 💰 Banning local incentives for data centers. Richmond County, notably, gave incentives to Amazon last year to land a $10 billion data center project.
- ⚡️ Mandating data centers enter into contracts with utilities and pay the incremental costs of providing new power and upgrading transmission lines and the power grid. The goal is to protect other electricity customers from "subsidizing the cost of the data center's electric service."
- 🎧 Requiring developers to do site assessments to determine the noise impacts of the project on residents and schools within 500 feet of the data center.
- 💧 Mandating closed-loop water systems at future data centers. Data centers often use large amounts of water to keep their computer infrastructure cool. Closed-loop systems minimize the amount of water used.
- ❌ Prohibiting foreign ownership of data centers and surrounding land. This applies to nationals of China, North Korea, Russia and Iran.
What they're saying: "We're not saying don't come. We're putting guardrails on the development of these in response to the consumer outrage about this," state Rep. Dean Arp (R-Union) said when presenting the bill in committee.
Between the lines: While not addressed in the bill, Gov. Josh Stein has called for the state to stop giving tax breaks to data center projects.
- Senate leader Phil Berger says he, too, wants to end those tax breaks.
State of play: The legislation would also bar the state's Utility Commission from authorizing the retirement of facilities that create more than 100 megawatts of energy — most likely a coal or natural gas plant — until a certificate of public convenience and necessity (CPCN) has been issued for the construction of a new nuclear facility.
- A CPCN is required before construction can start. However, the construction of a new nuclear facility could take many years. Duke has previously said it wants to bring a new nuclear reactor on by 2037.
- Duke Energy, which is the only utility in the state considering new nuclear, did not directly comment on the provision.
- But Craig Wilson, a spokesperson for the utility, said in a statement that it "will continue working with policymakers and regulators to deliver reliable and increasingly clean energy while keeping rates as low as possible."
What they're saying: "I think why we are seeing something like this [bill] .. is that there have been a lot of concerns around rising electricity costs in the state," Matt Abele, executive director of the N.C. Sustainable Energy Association, told Axios.
- "On average, North Carolina electricity users have seen a 23% increase in rates over the past five years, and a lot of folks are drawing connections to data centers, whether that is factually accurate or not," he said. "There is some political imperative to address rising utility costs and the rise of data centers across the state."
What's next: If the bill passes the House, it would head back to the Senate.