New Jersey's 2nd-largest city bans standalone data centers over power bill fears

In a 9-0 vote, the Jersey City Council approved a ban on standalone data centers, signaling that concerns over electric bills, land use, and limited benefits are reshaping development policy across the state.

Jersey City joined a growing list of New Jersey municipalities seeking to curb the power and cost impacts associated with data centers.

Here's what to know

With the ordinance, Jersey City, the Garden State's second-largest city, became the 34th municipality in the state to adopt some version of a data center ban and the second in Hudson County after Bayonne, according to Hudson County View. The measure bars standalone data centers but allows certain co-location facilities, such as those meant for research or financial institutions that store their own data.

That carveout drew particular attention during public comment. "This ordinance still allows co-location data centers in the industrial area, in any area, in Jersey City," Stephanie Startz, who runs the Prevailing Sentiment Instagram page, told council members.

In her view, describing the measure as a data center ban overstated its reach and blurred what the ordinance covers.

Supporters cast the vote as a sensible response to the built-out city's land constraints and energy worries. "I think we can't be too careful even with recent moves at the state level, in addition to that land use," Ward D Councilman Jake Ephros said, per the View.

Ward E Councilwoman Eleana Little backed the ordinance as well, stressing that the exempted co-location facilities were "not the large AI data centers that people around the country are protesting right now."

More background

Data centers have become a flashpoint in New Jersey because of their enormous electricity demand.

The state is within the PJM Interconnection grid, where the cost of serving new large loads has become a major factor behind increases on PSE&G and JCP&L bills, making the issue especially concerning for households already dealing with high monthly expenses.

Officials are not only concerned about what gets built but also who pays for the infrastructure needed to support it and whether the trade-off in jobs and benefits is worth it.

Those backing the ban say keeping standalone, power-intensive facilities out of the city could shield ratepayers and reserve industrial land for uses that create more jobs.

Mayor James Solomon underscored that argument by saying the artificial intelligence sites "employ almost nobody," per the View, framing them as a poor match for a city trying to maximize community benefit.

Critics, though, argued the policy was too sweeping. Resident Brenden Clark said "a categorical prohibition is the wrong response to problems that can be regulated" and warned that Jersey City could lose a potential revenue stream at a time of fiscal pressure.

What's being done?

The goal of the ban is to restrict large-scale AI data centers. Little said the exemption is for small co-located data operations tied to financial institutions, research institutions, and campuses, not the larger standalone facilities more often associated with the AI boom.

Clark argued that the state has already begun addressing the cost issue. He pointed to the Data Center Fair Share Law signed by Gov. Mikie Sherrill on July 7, which, as described by the View, directs the Board of Public Utilities to set distinct rates for major data centers instead of having regular customers absorb those costs.

He said a conditional use ordinance would be more practical, reflecting his view that regulation, rather than prohibition, could better balance grid protection with economic development.

"Data centers eat up power, drive up utility bills for every ratepayer in this state, and employ almost nobody," Solomon stated. "Our industrial land should be put to work for the people who live here by creating real jobs with real wages."

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