Massachusetts is imposing new requirements on large data centers, including a mandate that qualifying facilities cover their electricity demand with clean power and demonstrate that their projects will not leave residents paying higher utility bills.

Gov. Maura Healey issued an Executive Order establishing a statewide framework that applies to new data centers with peak electricity demand above 25 megawatts, with limited exemptions. The policy addresses a growing issue: AI computing requires vast amounts of electricity, raising concerns that new data centers could lead to higher utility bills for residents and businesses.

Under the order, developers seeking certain state permits and approvals must secure community support, including community benefits agreements with affected municipalities. Projects will also face reviews covering electricity demand, grid effects, emissions, water consumption and land use. Developers must address labor and workforce issues and show economic benefits such as job creation.

Additionally, data centers covered by the policy will be required to match 100% of their electricity demand with clean energy generation. Developers can supply clean power directly, support development of new generation or contribute to a ratepayer protection fund. The goal is to prevent the cost of serving power-intensive computing facilities from flowing through to household and business utility customers.

The 100% requirement goes beyond the minimum percentage of approved clean energy that Massachusetts law requires for general electricity consumption. The state’s clean energy standard is scheduled to reach at least 40% in 2030, with the requirement rising over time.

The order also calls for greater transparency in negotiations between developers, communities and government. State agencies will not use non-disclosure agreements with developers, while communities are being directed to avoid them.

Pausing Earlier Effort to Attract Data Centers

Massachusetts is currently reconsidering an earlier effort to attract data centers. State lawmakers approved a tax incentive for the industry in 2024. Healey paused the program in June, and applications for a data center sales tax exemption are now on hold while the state implements the new rules.

Massachusetts already has roughly 50 data centers, concentrated largely in Greater Boston. Existing facilities are not the target of the new requirements, leaving ongoing disputes involving established projects unaffected.

One closely watched development is in Lowell, where Markley Group has invested more than $600 million to convert the former Prince Spaghetti factory into a 14-acre data center campus. The company still has about half of the site’s available space to build out. Lowell has approved a moratorium on additional data center development, as has Mansfield, while Holyoke has enacted a citywide ban.

Those local actions are part of a larger public resistance. A national NBC News Decision Desk Poll, conducted from Aug. 20 through Sept. 1, found 69% of respondents opposed construction of AI data centers in their communities, including 45% that strongly opposed them.

Massachusetts’s new Executive Order makes it a leader in the move toward tighter state oversight. Texas recently established additional auditing requirements for new data centers, while New York halted construction of new facilities of 50 megawatts or more in July.