Pennsylvania Offers Preferential Permitting for Data Centers with Clean Power Commitments

Pennsylvania Governor Josh Shapiro has issued an executive order that aims to regulate the development of data centers in the state. The order, which was issued on Tuesday, offers data center projects preferential permitting treatment if they commit to sourcing their electricity from new power supplies, including firm clean power.

## Data Center Requirements

To receive a faster state permitting review, data center projects in Pennsylvania must meet certain requirements. These include sourcing their electricity from new power supplies, such as firm clean power, and paying for all costs associated with energy and ancillary services, transmission, distribution, and network upgrades.

The state Department of Environmental Protection will develop a new review process for data center projects that meet these requirements. Applicants who sign a consent order and agreement will have their projects reviewed by DEP on a rolling basis, whereas those that don't sign will have to wait until they have all local permits in hand as well as any needed water withdrawal or wastewater discharge authorizations.

| Requirement | Description | | --- | --- | | New Power Supplies | Sourcing electricity from new power supplies, including firm clean power | | Cost Responsibility | Paying for all costs associated with energy and ancillary services, transmission, distribution, and network upgrades | | Environmental Standards | Meeting environmental standards, including requirements for firm clean energy |

## Impact on Data Center Development

The executive order is part of 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.

The order is expected to have a significant impact on data center development in Pennsylvania. Data center developers that sign a consent order and agreement will receive preferential treatment compared to those that don't. This is expected to weed out "bad actors" who are not willing to spend five years in the permitting process.

However, the order has also raised concerns among data center developers. Dan Diorio, executive vice president for state policy and government affairs for the Data Center Coalition, has sounded a note of caution, stating that rules should not be changed midstream impacting ongoing investment in verified and responsible data center projects.

## Impact on Utilities

The executive order is also expected to have an impact on utilities in Pennsylvania. Exelon, FirstEnergy, and PPL are "materially increasing their transmission investment with data center demand a key driver," according to Jefferies analysts. If the pace of data center growth slows, it could affect utility transmission spending in the state.

Currently, data center-driven transmission costs are being shared with residential and other utility customers. The analysts noted that slowing data center development could lead to downside pressure on the pace of transmission investments.

## Conclusion

Pennsylvania Governor Josh Shapiro's executive order aims to regulate the development of data centers in the state by offering preferential permitting treatment to projects that commit to sourcing their electricity from new power supplies, including firm clean power. The order is expected to have a significant impact on data center development in Pennsylvania and may also affect utilities in the state.