Massachusetts Governor Maura Healey signed data center clean power rules

Massachusetts Requires Local Approval and Clean Power

Governor Maura Healey signed an executive order on September 8 requiring data centers to obtain local approval and clean energy. The new order applies to proposed projects with peak electricity demand exceeding 25 megawatts, which must meet state standards too.

Under the Bring Your Own Clean Energy framework, developers must generate renewable power onsite or fund new clean generation nearby. Companies unable to procure sufficient incremental clean electricity must instead pay into a newly created state Ratepayer Protection Fund for customers.

Governor Healey said the policy ensures that data centers do not take energy away from residents or raise their electricity costs. She said at a news conference that unless a community says yes to a data center, the state will say no.

The order also bars non-disclosure agreements between state agencies and developers, aiming to ensure a transparent and fair approval process. Massachusetts environmental regulators must set an alternative compliance payment by December 31 for developers that fall short of clean energy targets.

Tax Break Frozen as Local Projects Face Votes

The framework, first released on June 25, froze applications for a 20-year sales and use tax exemption established in 2024. That incentive had rewarded data centers for creating at least 100 jobs and investing a minimum of 50 million dollars.

New Bedford Mayor Jon Mitchell submitted a proposal this month that would ban data centers within the city, citing risks to infrastructure and quality of life for residents.

The Senate adopted an amendment from Senator Vanna Howard of Lowell that imposes similar guardrails on data center tax benefits. The measure sits within the Senate's 2026 energy affordability bill, which remains lodged in a House-Senate conference committee amid ongoing negotiations.

Lowell residents sued the Massachusetts Department of Environmental Protection in April over the agency's approval of an air quality plan. A Middlesex Superior Court judge last month temporarily blocked the installation of four diesel generators at the Markley Group data center.

Climate Goals Frame New Data Center Limits

The state's landmark climate law requires a 50 percent reduction in greenhouse gas emissions by 2030 and net-zero statewide emissions by 2050, measured against 1990 levels.

Massachusetts has also set a goal of adding 10 gigawatts of new renewable generation capacity and five gigawatts of battery storage by 2035 under that plan.

Industry forecasts project that United States data center power demand will roughly triple by 2035, straining already tight regional grids. A single large artificial intelligence training facility can require roughly 1,100 to 1,200 megawatts of electricity, comparable to a nuclear plant.

The Data Center Coalition has pushed back, arguing that the facilities do not necessarily raise electricity rates for other customers. The group points to the substantial economic contributions the industry makes to Massachusetts, including construction jobs and local tax revenue.

State officials say the rules aim to protect ratepayers as rising electricity costs and environmental concerns drive scrutiny of the sector. Some neighboring states may follow Massachusetts if regulators ultimately set an alternative compliance payment high enough to meaningfully deter developers.