New Executive Order Targets Data Center Growth
New Executive Order Targets Data Center GrowthPennsylvania Governor Josh Shapiro has signed an executive order that significantly changes how large data center and AI infrastructure projects are developed in the state. Announced on August 18, the order transforms the Governor’s Responsible Infrastructure Development (GRID) Requirements from a voluntary framework into mandatory standards for any data center seeking state support. The move reflects growing concerns across the power sector about the impact of rapidly expanding AI-driven electricity demand on grid reliability and customer costs.
Developers Must Cover Infrastructure and Power Costs
A central component of the new policy is the requirement that data center developers bear the full cost of the electricity infrastructure needed to serve their projects. Under the order, developers must fund any new generation, transmission, distribution, and related grid investments required to support their facilities, rather than passing those costs on to residential and commercial ratepayers. The administration also directed state officials to work with the Pennsylvania Public Utility Commission to ensure data center customers cover PJM Interconnection backstop auction costs and all interconnection expenses associated with their projects.
Greater Transparency and Local Oversight
The GRID framework establishes four mandatory standards for projects: energy affordability, transparency and community engagement, workforce and economic development, and environmental protection. Developers must submit a formal notice of intent to comply with these standards and provide detailed information on expected electricity and water consumption to the Pennsylvania Department of Environmental Protection (DEP). The order also strengthens local oversight by allowing the DEP to withhold permits until projects receive all necessary local approvals, giving communities a greater role in determining whether projects move forward.
Community Benefits and Workforce Commitments Required
In addition to infrastructure cost responsibilities, developers will be expected to demonstrate tangible benefits for host communities. Projects must engage local stakeholders, commit to hiring and training local workers, and establish community benefit agreements that support priorities such as schools, infrastructure improvements, and long-term economic development. Governor Shapiro emphasized that major technology companies have the resources to meet these requirements and should contribute meaningfully to the communities where they operate.
Implications for Energy Markets and Grid Planning
The executive order positions Pennsylvania among a growing number of states seeking to balance economic development opportunities from AI and data center investments with concerns over affordability, reliability, and local impacts. For utilities, grid operators, and energy market participants, the policy signals increasing scrutiny of large-load interconnections and a stronger push toward cost allocation models that ensure new demand sources pay for the infrastructure they require. As data center electricity consumption continues to accelerate across PJM and other regions, Pennsylvania’s approach could serve as a model for future state-level policies governing large-load development.