Massachusetts Governor Maura Healey has signed an executive order requiring data centers with peak demand above 25 megawatts to bring their own clean power or pay into a ratepayer protection fund, making the state the latest to push back against the rapid expansion of AI infrastructure. The order, which also pauses new applications for a data center sales tax exemption that took effect last month, reflects a sharp reversal from the incentive-heavy approach many states took just a few years ago.
What the new rules require
Under Healey’s executive order, developers building data centers larger than 25 megawatts of peak demand must guarantee that their electricity adheres to Massachusetts’ clean energy standards. The governor’s office said it prefers that data centers generate that clean power onsite. If they cannot, developers must fund the construction of new clean generation nearby or contribute to a ratepayer protection fund designed to shield residents from higher electricity costs.
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The order also directs communities to “avoid signing non-disclosure agreements” with data center developers, a move aimed at increasing transparency as towns negotiate with companies seeking to build large facilities. Regulators now have time to implement the new restrictions while the sales tax exemption pause remains in effect.
Clean energy standard provides flexibility
The clean power commitment may be less stringent than it initially appears. Data centers must meet the Massachusetts clean energy standard enshrined in state law, which means they are not required to source 100% of their power from renewables immediately. Instead, the standard ratchets up over time. In 2030, for example, approved sources like wind, solar, and hydro must contribute at least 40% of total electricity. The percentage increases in subsequent years.
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This structure gives data center developers a pathway to compliance while still aligning with the state’s broader climate goals. Massachusetts has one of the most aggressive clean energy agendas in the country, and the Healey administration has framed the order as a way to balance economic development with grid reliability and consumer protection.
A broader shift against data centers
Massachusetts is the third state in as many months to tighten oversight of data center development. In August, Texas Governor Greg Abbott announced that all new data centers in the state would need to submit to audits by the public utility commission and the grid operator, ERCOT. In July, New York’s governor halted construction of data centers 50 megawatts or larger.
The moves mark a notable shift from the recent past, when states competed aggressively to attract data centers with tax breaks and expedited permitting. Now, with AI-driven electricity demand straining grids and raising concerns about rate hikes, politicians are responding to voter pressure. Public opposition has grown as communities worry about noise, water usage, and the visual impact of massive facilities.
Industry pushback and political implications
The tech industry is beginning to push back against the regulatory tide. Pro-AI super PAC Leading the Future — funded by Marc Andreessen, Ben Horowitz, and Greg Brockman — is buying advertisements in battleground states ahead of the midterm elections, seeking to sway voters on AI-related issues, including data center development.
Industry groups argue that data centers bring jobs and tax revenue, and that clean energy mandates could slow investment at a time when the United States is competing with China on AI infrastructure. But state officials counter that without guardrails, data centers could drive up electricity prices for residents and undermine climate commitments.
TechCrunch was unable to reach Healey’s office prior to publication. The executive order is expected to face legal challenges from developers who argue that state clean energy standards are already difficult to meet given current grid constraints.
This article is for informational purposes only and does not constitute financial, legal, or investment advice. Regulatory environments and market conditions are subject to change.
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