In addition to regulating how large-scale data centers get built in New York state, Gov. Kathy Hochul said Wednesday that she wants to ensure there is a method for taking them down.
“Right now, we're in a phase where this seems like the only answer,” she said during a roundtable with political and business leaders in Henrietta. “But I also ask the question, when the technology does change and data centers become obsolete, who’s cleaning up the mess?”
The state is developing a framework that will impose restrictions on tax breaks for data centers and regulate the facilities’ power usage — requiring developers to generate their own power or pay higher rates to draw from the grid. The goal is to also help communities negotiate for local benefits.
But the governor said part of the plan must ensure that developers post a “decommissioning bond,” so the data centers don’t become a blight on future generations.
“Is that going to sit there forever,” she asked, raising the specter of the abandoned Bethlehem Steel plant on the shores of Lake Erie. “(It) has not been torn down because the company walked away and the community couldn't afford it. That’s what I don’t want to see.”
The moratorium pauses construction of not-yet-approved data centers larger than 50 megawatts. The smaller ones are more common, officials said, and will continue.
Hochul is traveling the state, gathering input on data centers and community concerns, which range from power and water usage to noise.
“For us, it really has really been a conversation around power,” Monroe County Executive Adam Bello said.
Bello cited projections that data centers could, without regulation, grow from 6% of the demand on the grid to more than 20% by 2035.
Another concern Hochul cited was that despite the scale of these projects and the utility demands, data centers do not deliver significant, long-term jobs.
“So I'm challenging the industry to do it in a smarter way,” she said, “understanding that we are open to innovation. We support technology. This is New York. It's who we are. But I'm asking them to do a better job at explaining why their product has to be this way because I think they can do better.”
Such is the case in Genesee County, where the moratorium could stall one of the largest data center projects currently proposed in the state.
Local officials claim the $19.5 billion, 500-megawatt Stream U.S. Data Centers project exemplifies the type of project Hochul is after — and would be transformative for a community with pressing needs.
“This is this type of investment is extraordinary for us,” said Christian Yunker, chairperson of the Genesee County Legislature.
The county has a municipal water shortage that has stalled business expansion and left some rural districts dry. Yunker estimated the necessary water improvements at $500 million to $600 million.
“Which is why technology and innovation, advanced industry investment in the county are essential,” he said, “and why we must be prepared to harness this opportunity.”
The data center project has faced significant opposition and does not yet have its required permits, which are now on pause during the moratorium.
But Yunkers told Hochul that it checks all the boxes she is after. The infrastructure is in place at the Science and Technology Advanced Manufacturing Park to support it, he said. And it would use a closed-loop or recycling water system, reducing demand, wastewater and noise. Developers also have pledged to invest in the local electrical grid, which will benefit other manufacturers and ratepayers, he added.
"We think we have a really nice project here,” he said, “and we hope we can continue this negotiation."
Hochul told reporters after the roundtable that the project is “not ready to go,” and that the pause allows time to reassess the project size and the benefits being offered, including tax breaks.
"That is something that I don't think is appropriate,” she said.
