AI Datacenter, New York Introduces Unprecedented Moratorium on Large Facilities
The State of New York has decided to temporarily suspend the construction of new large-scale datacenters intended for artificial intelligence. Governor Kathy Hochul has signed an executive order introducing a moratorium lasting up to one year for all new facilities with an electric power capacity equal to or greater than 50 megawatts, a typical threshold for so-called hyperscalers used by major players in the AI sector.
This is the first initiative of its kind adopted at the state level in the United States and represents a signal of the intensifying debate on the energy and environmental impact of expanding infrastructure dedicated to AI. According to the state administration, the growth in energy demand from these facilities risks putting pressure on the power grid, contributing to increased costs for citizens.
In presenting the measure, Hochul emphasized that large datacenters consume such amounts of energy that they could exceed the available capacity of the grid, with potential repercussions on electric bills. Among the cited motivations are also the consumption of freshwater and the potential impact on air quality and the environment, issues that have fueled numerous local protests against new development projects in recent months.
According to data released by the state administration, the average price of electricity for residential users in New York State has increased by approximately 68% since 2019. This context has contributed to strengthening some of the public's opposition to new large-scale facilities. A survey by the Siena Research Institute conducted in June indicates that 46% of respondents favor an annual moratorium on new datacenters, while 21% view it negatively. The consensus cuts across political alignments, albeit with varying intensities.
During the suspension period, the Department of Public Service of the State will need to develop a new regulatory framework aimed at defining stricter criteria for the authorization of future structures. The goal is to introduce standards that more thoroughly assess energy and water consumption, effects on air quality, and the overall impact on local communities. The agency must also evaluate possible obligations for operators to finance new electric production capacity from clean sources dedicated to their facilities, including energy storage systems with batteries and other distributed energy resources.
The decision comes as the state legislature had already approved an even more restrictive bill. This measure included a moratorium for new datacenters with a power demand equal to or greater than 20 megawatts and introduced further obligations, such as funding for local infrastructure and independent assessments. The executive order signed by the governor raises the threshold to 50 megawatts and does not include some of the provisions set out in the bill approved by the State Senate.
America is rebelling against datacenters: projects worth $130 billion have been blocked or postponed in three months. Environmental organizations and numerous representatives of local communities have welcomed the moratorium, seeing it as an opportunity to establish stricter rules before authorizing new investments. Several Democratic politicians have supported the need to ensure that the development of artificial intelligence does not lead to higher bills or worsen environmental conditions.
On the opposite front, representatives of the Republican Party and part of the technology industry believe that the moratorium could slow down investments and compromise the competitiveness of the United States in a strategic sector like artificial intelligence.
The measure adopted by New York fits into an increasingly complex national context. Legislative proposals to limit or regulate the construction of new datacenters have been introduced in numerous American states, but none have so far come into effect. At the same time, the Hochul administration has announced plans to also consider eliminating tax breaks granted to large datacenters.