Massachusetts is putting the brakes on fast-growing data centers as concerns mount over electricity demand, water use, and neighborhood impacts.
On Thursday, June 25, Gov. Maura Healey said data centers can still come to the state, but not with taxpayer-backed incentives unless they first meet tougher standards.
What happened?
Healey said Massachusetts will stop offering tax breaks to data centers for the time being and introduced a policy framework aimed at addressing worries about higher utility costs and other community impacts, according to CBS News Boston.
The state had initially approved the Data Center Sales and Use Tax Exemption two years ago that would last for two decades if the facilities met certain conditions, including creating or maintaining at least 100 jobs in Massachusetts within five years.
According to Healey, now, these incentives will stay on hold until the state puts more robust protections in place.
The governor wrote in a press release that "I am halting any tax incentives for data centers until we have strong protections in place for our residents and communities against higher gas and electric bills," she said in a statement.
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Healey added that these facilities "can support innovation and economic growth, but if developers want to build in Massachusetts, they need to first demonstrate that they can do so without driving up costs or harming our communities."
One central requirement is that companies supply enough clean energy to cover all of a facility's power needs. The guidance also tells developers to limit or offset air and noise pollution and says communities shouldn't bear the brunt of data centers' impacts.
Why does it matter?
The debate is largely about affordability and quality of life. Data centers can help support digital services and economic development, but they also consume enormous amounts of electricity and water, fueling higher energy bills and straining local infrastructure.
That issue carries extra weight at a time when many households are already strained by utility bills. By making new projects cover their own clean-energy demand instead of leaning further on the grid, the state is trying to stop ratepayers from absorbing additional costs.
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There are also public health and neighborhood concerns. Massachusetts currently has 42 data centers, according to datacentermap.com.
For now, the incentives are on hold, and the state wants developers to prove their projects can move forward without increasing customer bills, intensifying noise problems, or stressing local water supplies.
The industry, however, is pushing back. CBS News Boston reported that the Data Center Coalition claims the facilities do not increase electricity rates and said they have added more than $20 million to Massachusetts' economy.
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