Massachusetts Sets Clean-Power Conditions for Large Data Centers
Massachusetts Governor Maura Healey has ordered new restrictions for data center development, requiring projects with more than 25 megawatts of peak demand to bring clean power, finance nearby new generation or pay into a ratepayer protection fund. The state is also pausing applications for a data center sales-tax exemption that took effect last month while regulators prepare to implement the policy.
Under the order, qualifying developments must guarantee that their power meets Massachusetts clean-energy requirements. Healey said the preferred approach is on-site clean-power generation. Where that is not feasible, developers would need to support construction of new generation nearby or make payments to the protection fund.
A new condition on data center growth
The mandate applies to projects above the 25 MW peak-demand threshold, placing energy arrangements alongside land, connectivity and tax treatment in the development process. It also directs communities to avoid signing non-disclosure agreements, a measure intended to shape how local discussions around proposed facilities are conducted.
The clean-power obligation does not require every unit of electricity used by a data center to come from approved clean sources immediately. It follows the clean-energy standard in Massachusetts law, under which wind, solar, hydro and other approved sources must provide a specified share of total electricity. In 2030, that share is at least 40%, and the requirement changes by year and increases over time.
State policy is moving toward grid accountability
Massachusetts is the third state in as many months to impose new limits or oversight on data center development. In July, New York’s governor halted construction of new data centers of 50 MW or larger. In August, Texas Governor Greg Abbott said new data centers would have to undergo audits by the Public Utility Commission and grid operator ERCOT.
The Massachusetts approach combines a capacity threshold with a choice of compliance routes: on-site generation, funding nearby generation or contributing to a ratepayer protection fund. The regional context includes Massachusetts AI, energy and startup ecosystem and its focus on how Massachusetts connects AI, energy and startup activity, while the new order makes power compliance a direct requirement for larger facilities.
Planning implications for operators
For companies evaluating a Massachusetts data center, energy procurement and the applicable clean-energy share now need to be assessed before a project advances. Teams should account for the 25 MW threshold, the potential need for generation commitments or fund payments, and the paused tax-exemption process when comparing locations and structuring development plans.