22-05-2025
Senate panel backs bills targeting New Jersey data centers
A data center underconstruction in Utah. Utility and interconnection officials have cited power-hungry data centers as a major cause of growing demand for electricity. (Photo by)
A Senate panel approved another series of bills meant to reduce the impact of electricity prices that are set to soar on June 1.
The bills, which cleared the Senate Environment and Energy Committee in divided votes Thursday, would raise data centers' share of electricity costs, boost construction of energy storage, and create an automatic approval process for residential solar projects, among other things.
Environmental groups hailed the data center legislation, which would create a separate rate-setting process within the Board of Public Utilities for data centers with maximum monthly demands of at least 100 megawatts, forcing them to pay for increases in energy costs as a result of data center load.
'This bill would not only provide an incentive for data centers to drive consumption down, but it would also protect ratepayers from shouldering the unfair burden of the cost,' said Jay Weisbond, a policy assistant for the New Jersey League of Conservation Voters.
It would also require rates for data centers to include cost recoveries for transmission or distribution infrastructure needed for their operation. The separate rate-setting process contemplated in the bill would take effect one year after its passage.
Utility and interconnection officials have cited power-hungry data centers as a major cause of the growing demand for electricity.
Electricity prices are spiking as demand that had been largely level for decades surges, and New Jersey's in-state generation has faced stumbles as offshore wind projects set to deliver thousands of megawatts fail or are blocked by federal regulatory authorities.
Republicans have blamed Gov. Phil Murphy's wind-heavy renewable energy agenda and the shuttering of existing fossil plants for auction-driven price spikes set to arrive June 1, while Democrats have sought to lay the increases at the feat of PJM Interconnection, the grid operator for New Jersey and 12 other states. Assembly Democrats are particularly anxious about rising utility bills, as all 80 Assembly seats are on the ballot this year (Democrats hold a majority in the chamber).
Separate legislation would require quarterly reporting on data centers' energy and water usage.
Business groups opposed both bills, warning they would push data centers into other states, including those on the same grid as New Jersey,
'We can't entice data centers to locate in New Jersey if we're going to continually be putting roadblocks in the way or making it more expensive or problematic to develop here in New Jersey,' said Ray Cantor, deputy chief government affairs officer for the New Jersey Business and Industry Association.
Murphy and legislators have sought to encourage AI development in New Jersey, including through tax credits, hailing it in July 2024 as a 'transformative industry that will change lives and grow our economy.'
The state would be better served by boosting electricity supply than by targeting large energy users, Cantor said, adding that manufacturing plants and even hospitals could run similar loads.
Though some suggested expansions, witnesses were broadly supportive of a bill requiring the Board of Public Utilities to procure and incent large-scale energy storage projects, which store energy produced at times of low demand to ease strains on production when demand is high.
Storage projects could start operating in the short term and would more quickly affect prices than other types of generation, they said.
'It doesn't have to wait in line for PJM Interconnection, which we know takes years. It can be interconnected locally. It can be permitted locally, so it's the fastest way to build,' said Lyle Rawlings, CEO of Advanced Solar Projects Inc. 'These projects, we're not talking about 2029 or 2030, we're talking about 2026 that these can be brought online.'
Separate legislation would require the Department of Community Affairs to create an online permitting platform to algorithmically approve residential solar projects. Municipalities could use the platform or set up their own automated solar approval system.
Supporters saw it as another method of quickly standing up new energy supply.
'Local solar can be a critical tool in meeting our energy needs, but only if we need it. While large-scale solar projects are important, they are often facing multi-year delays in the PJM interconnection queue. Local solar, on the other hand, can be rapidly deployed,' said Elowyn Corby, mid-Atlantic regional director of the Vote Solar Action Fund.
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