Pennsylvania Dangles Permitting Carrot For Data Centers That Bring Their Own Power

Submitted by Ethan Howland of UtilityDive

Pennsylvania will give data center projects preferential permitting treatment if they commit to a set of power supply, environmental and cost-responsibility requirements under an executive order issued Tuesday by Gov. Josh Shapiro, D.

The state Department of Environmental Protection will develop the new review process. To receive a faster state permitting review, data center projects in Pennsylvania must source their electricity from new power supplies, including from growing amounts of firm clean power, according to the order, which affects proposals for projects with a peak demand of more than 25 MW.

The order “should further close the door” to the idea that independent power producers like Talen Energy, Vistra and PSEG Power will be able to sell power from their existing generating assets under long-term contracts to data centers in Pennsylvania, Jefferies equity analysts said in a note on Wednesday. However, Talen’s legacy deal to sell power from its majority-owned Susquehanna nuclear power plant to an Amazon data center appears safe, according to the note.

Shapiro’s executive order comes amid a wave of action by state and local governments aimed at setting limits on data center development. At least 81 cities and counties have moratoria on data center development, according to a National League of Cities database unveiled Wednesday.

Under the permitting framework set by the executive order, data center developers that sign a consent order and agreement requiring them to abide by the state’s infrastructure development standards unveiled in February will receive preferential treatment compared to those that don’t.

For example, applicants that execute a consent order and agreement will have their projects reviewed by DEP on a rolling basis, whereas for developers that don’t sign, the state won’t consider their applications until they have all local permits in hand as well as any needed water withdrawal or wastewater discharge authorizations.

“We have so much speculation in Pennsylvania — like, gold rush speculation on these data centers,” Katie Blume, political and legislative director for Conservation Voters of Pennsylvania, told Utility Dive in an interview. “A lot of this [order] is going to be weeding out those bad actors because they’re not going to want to spend five years in the permitting process.”

But Dan Diorio, executive vice president for state policy and government affairs for the Data Center Coalition, sounded a note of caution in an emailed statement.

“It’s important that rules are not changed midstream impacting ongoing investment in verified and responsible data center projects,” Diorio said. “Data centers take compliance and accountability seriously, building only where they are authorized to do so under local, state, and federal rules and regulations.”

The infrastructure development standards include requiring data centers to pay for “all costs caused in whole or in part by the interconnection, service, or load of a [data center] project, including any costs associated with energy and ancillary services, transmission, distribution, network upgrades.”

Besides requiring data centers to be supplied by new generating resources from the same local PJM Interconnection zone where the facilities are built, they must be supplied from growing amounts of firm clean energy such as solar, advanced nuclear and battery storage, Shapiro said when he signed the executive order.

The firm clean energy requirements ramp up from 10% on Jan. 1 to 14.5% three years later and 32% by Jan. 1, 2035.

The executive order directs the Pennsylvania DEP to expedite permitting for clean energy and storage facilities on brownfield sites. The DEP must also facilitate the use of advanced reconductoring and other advanced transmission technologies on existing transmission rights-of-way.

In prepared remarks, Shapiro pointed to the speed of data center development in the state, which he said has “seen an unacceptable number of speculative proposals ... many of them led by developers who have no regard for local communities.”

PPL Electric has about 20.7 GW of potential data center load with electric service agreements in Pennsylvania, according to an Aug. 7 investor presentation. FirstEnergy utilities in Pennsylvania have data center contracts totaling nearly 1 GW, the company said in a July 28 presentation.

It is unclear how those data center projects will be affected by the executive order, but slowing data center development could affect utility transmission spending in the state, the Jefferies analysts noted.

Exelon, FirstEnergy and PPL are “materially increasing their transmission investment with data center demand a key driver,” the analysts said. “If the pace of data center growth slows, we see downside pressure to the pace of transmission investments.”

Currently, data center-driven transmission costs are being shared with residential and other utility customers, they noted.

Shapiro’s executive order directed the state Office of Transformation and Opportunity to remove any existing data center project from the PA Permit Fast Track Program, established in 2024, and rescinded their eligibility for the program. It also barred state agencies from entering into confidential agreements with data center developers.