The Maine Legislature has passed the first statewide moratorium on data center construction in the country. Because of concerns about the effect on the grid and the environment, lawmakers want to pause midsize and larger build-outs while the state studies the effects.
The new law is a clear sign that political sentiment is shifting. States that once competed to attract data centers are starting to question if they can withstand the surge in energy demand during the AI boom.
Targeting data centers addresses the symptom rather than the cause. The root of the problem is the ability to scale infrastructure quickly enough to keep up with demand.
Increased energy demand from data centers is evident. In 2023, they accounted for 4.4 percent of U.S. consumption, and the Energy Department expects demand to possibly triple by 2028. Estimates suggest that an additional 460 terawatt-hours is needed to keep up with rising demand. Electricity demand is skyrocketing as AI workloads strain the power grid.
No region will feel the strain of ballooning data center demand quite like northern Virginia. As home to hundreds of data centers, America’s largest data hub is experiencing stress on its electrical infrastructure. In 2024, a voltage fluctuation caused 60 data centers to disconnect from the grid, nearly triggering a mass outage.
As data centers are rapidly increasing their footprint nationwide, lawmakers are grappling with the limitations of the existing grid and rising demand. Even alternative ways to meet the influx of demand face regulatory and permitting hurdles.
Interest in nuclear energy has grown in recent years. Fifty-seven percent of Americans support nuclear generation. Vogtle 3 came online in 2023 as the country’s first new nuclear reactor in 30 years.
There wasn’t a single cause for Vogtle 3’s delay. The project encountered a combination of design changes and labor shortages. On top of the other issues, the regulatory process added another layer of friction. The NRC required multiple license amendments; these pending approvals slowed construction, extending the project timeline by seven years.
Microgrids face similar regulatory delays. Data centers with on-site power can temporarily offset pressure on the main grid. However, such systems can take up to two years to bring online. Stalled by permitting requirements and regulatory review.
On-site solutions provide individual facilities with localized power, but they cannot match the grid’s ability to transmit electricity at scale. As a result, grid expansion remains critical for long-term grid capacity.
These projects, on average, take 10 years to complete, and interstate expansions can take longer, suffering from the same regulatory “bottlenecks” and multi-jurisdictional coordination challenges, creating a structural bias toward smaller projects. This makes it difficult for our energy infrastructure to keep pace with rising demand.
Political winds are beginning to shift on data centers. Even states that have become growth magnets for the tech industry are taking a closer look at how to manage expansion.
Two of the most tech-friendly states illustrate this tension. Virginia has one of the most mature data center markets in the world. In contrast, Georgia is an emerging data hub.
Both states are debating policies that could complicate further growth. In Virginia, the high concentration of facilities is already straining the grid, raising concerns about rising electricity demand. Disputes over scaling back tax exemptions for data centers recently stalled passing of the state budget.
In Georgia, home to many data centers, the effect of hyperscale facilities has prompted lawmakers to temporarily halt tax exemptions for new projects. In both cases, policymakers are using incentives to address pain points.
However, focusing on incentives risks missing the bigger picture. Some analysts argue that restricting data centers’ energy use is like banning rail construction in the 19th century because trains might raise coal prices. AI isn’t a passing trend and will be a critical fixture of America’s modern economy. Attempts to placate public concerns with slowing development will provide only temporary relief.
Policymakers should address the underlying constraints to make our electrical systems more scalable for current and future needs. This is achievable through streamlining and simplifying the current permitting process for grid expansion. The path forward isn’t to limit growth, but to ensure the grid can support it.
Peter Clark is an Arizona-based writer. He wrote this for InsideSources.com.
