Massachusetts has established new requirements for data center development that could affect project approvals, energy infrastructure planning and construction schedules. Gov. Maura Healey's Sept. 8 executive order requires proposed data centers to secure local approval before state permitting agencies can advance the projects.
The order also establishes requirements covering clean energy, energy infrastructure, water resources, environmental protections and community engagement. The measures are intended to address the infrastructure demands associated with large electricity-consuming facilities while limiting costs transferred to existing utility customers.
Under the executive order, state permitting agencies will not advance a data center project without approval from the host community. Proposed facilities also must have a community benefits agreement that meets state standards before proceeding through state permitting processes.
The order prohibits state agencies from entering into nondisclosure agreements with data center developers, adding transparency requirements to the approval process.
For projects with peak electricity demand exceeding 25 megawatts, state permitting agencies must determine whether the proposal complies with the administration's Data Center Framework before issuing permits.
The framework calls for developers to fund the full cost of energy infrastructure and clean energy supplies required for their projects, while also addressing impacts on water systems, environmental resources, public health and safety.
The executive order directs the establishment of a Ratepayer Protection Fund. Data centers are expected to meet their energy requirements with clean energy and pay for necessary energy infrastructure.
When project-related electricity costs are not fully covered by the developer, the order calls for the data center to pay a fee into the fund. Those funds would then be returned to electricity customers.
The requirements could make energy planning a more significant component of data center development in Massachusetts. Developers, contractors and infrastructure providers may need to account for power supply, grid connections, clean energy procurement and associated infrastructure earlier in project planning.
The new framework also addresses the local economic effects of data center construction and operations. The state expects projects to provide opportunities for local businesses and residents through employment and other community investments.
Labor organizations supporting the order highlighted the construction, manufacturing, supply chain and maintenance workforce associated with data center development. The requirements could increase attention on workforce availability and labor sourcing as Massachusetts evaluates future projects.
Massachusetts' requirements add local approval, energy infrastructure funding and community-benefit considerations to the development process for large data centers. For owners and developers, these requirements could influence site selection, project feasibility, permitting schedules and infrastructure budgets.
For contractors and specialty trades, the continued development of data centers could create construction opportunities while increasing demand for electrical, energy infrastructure and other specialized capabilities. Early coordination among developers, utilities, municipalities and construction teams will become increasingly important for projects subject to the new requirements.
Source: Mass. Gov.
