New Jersey Weighs Clean Energy Requirements for AI Data Centers
New Jersey lawmakers are currently debating a bill that would mandate the use of clean energy by new artificial intelligence (AI) data centers within the state. The legislation, which gained approval from the state Senate Environment and Energy Committee, aims to address the increasing energy demands of AI and its potential impact on the state’s power grid.
Advocates stress the importance of sustainable energy sources to power the state’s growing AI industry. Conversely, opponents express concerns that such mandates could deter AI companies from establishing operations in New Jersey.
“The point of this bill is to say, ‘Yeah, we would love to have AI data centers in New Jersey, but don’t put your cost of being here on our ratepayers. You should bring your own electric supply with you,’” said state Sen. Bob Smith, D-Middlesex, who chairs the Environment and Energy Committee.
The bill’s provisions stipulate that AI data centers would be required to source their energy from new, clean energy options. Furthermore, these centers would need to submit an energy usage plan to the Board of Public Utilities (BPU). The requirements would not go into effect until at least half of the states in the PJM region—including Pennsylvania, Delaware, and Maryland, along with Washington, D.C.—have implemented similar regulations. PJM operates the largest power grid distributor in North America.
The proposed law has sparked a variety of perspectives. During the committee’s hearing that included nearly an hour of testimony, Taylor McFarland of the Sierra Club lauded the committee’s leadership for addressing the matter, citing the potential for the “rapid demand for data centers in New Jersey [that] will lead to a massive energy demand straining the existing grid.”
However, Michael Egenton of the New Jersey State Chamber of Commerce voiced apprehension about the potential for such policies to hinder the establishment of new businesses in the state. Egenton stated that New Jersey should be incentivizing industry growth, rather than “placing hurdles, impediments, mandates and fines,” because those could cause companies to expand in other locations.
Energy Needs and Infrastructure
Earlier this month, the state Senate Legislative Oversight Committee convened for a three-hour meeting to investigate New Jersey’s energy infrastructure requirements and how AI fits into the overall strategy. Panelists from utility companies, energy distributors, and representatives from the AI sector noted that the state’s energy supply is currently insufficient to fulfill its demand. That gap is expected to widen.
State Sen. Andrew Zwicker, chair of that committee, highlighted the significant energy consumption of data centers, which already account for approximately 2% of global energy usage.
“The environmental impact of AI is remarkable,” Zwicker said. “Training a single large language model like OpenAI’s ChatGPT consumes approximately 1,300 megawatt hours of electricity, the same amount used by 130 U.S. homes in a year.” Zwicker went on to say New Jersey’s goal should be to “foster AI, not resist it,” and to learn what can be done.
Murphy’s AI Vision
The initiative is connected to Governor Phil Murphy’s ambition to position New Jersey as a leader in AI innovation, an endeavor he has characterized as an “AI moonshot.”
Since then, Murphy has spotlighted partnerships with institutions like Princeton University to found an AI innovation hub. He also enacted legislation providing tax incentives for businesses that derive a significant portion of their revenue or workforce from AI. Companies that meet the criteria could be eligible for up to $250 million in incentives.
Industry leaders have already begun to adapt to the energy needs of their operations. Microsoft, for example, has secured exclusive access to the power generated by the recently reopened Three Mile Island nuclear plant in Pennsylvania for its data centers.
During Murphy’s tenure since 2017, five power generation facilities have closed in New Jersey, including four coal plants and the Oyster Creek nuclear power plant. Additionally, Murphy’s offshore wind initiatives experienced setbacks, with the state canceling multiple project solicitations. The executive order to freeze permits of President Donald Trump was a notable factor in the withdrawal of several bidders.
One offshore wind project remains active in New Jersey: Atlantic Shores South, which has all necessary federal approvals and is expected to generate 2,800 megawatts as early as 2028.
Between 2011 and 2023, natural gas and nuclear energy supplied 90% of the state’s total energy generation.
According to a recent Fairleigh Dickinson University poll, there is a split in the residents’ preferences for energy generation. Supporters of nuclear power and natural gas each made up about a third of the respondents. Offshore wind also garnered support.
New Jersey Governor Phil Murphy has prioritized AI development in the state.
Katie Sobko covers the New Jersey Statehouse. Email: sobko@northjersey.com
