New Jersey is charting a path and building a regulatory framework that requires large data centers to bring clean power, gain state approval, and bear grid costs. Additionally, through Senate Resolution No. 18 (SR18), New Jersey aims to extend these rules across the PJM region.
The backdrop: data center growth, grid stress, and rate impacts
The legislative push comes against a backdrop of surging electricity demand driven by rapid expansion of AI-powered computing infrastructure in the US and in the PJM region specifically.
- Data centers currently account for approximately ~4% of total US electricity consumption, a figure projected to reach 9% by 2030 according to the Electric Power Research Institute.
- In PJM, data center load drives rising peak demand and capacity prices.
- NJ residential electric bills rose ~20% in 2025, with AI-related data centers accounting for ~70% of new state power demand.
- As part of the 13-state PJM market, NJ ratepayers face capacity cost increases from data center growth regionwide—driving calls for coordinated multi-state action.
New Jersey is simultaneously experiencing its own significant data center build‑out:
- More than 80 data centers are currently operating or under construction across the state, including several hyperscale AI campuses with significant power and water demands.
- Individual facilities under development are projected to consume electricity equivalent to hundreds of thousands of homes, with substantial water requirements for cooling operations.
- Community opposition has emerged in several municipalities, driven by concerns over noise, air emissions, water usage near sensitive aquifers, and potential impacts on property values&emdash;resulting in project delays and heightened political attention.
Against this backdrop, New Jersey lawmakers have moved swiftly to establish a more structured regulatory framework governing data center development, both in NJ and across the PJM region.
Senate Resolution 18: regional clean energy mandate for data centers
Senate Resolution No. 18 (SR18), sponsored by Senators Bob Smith and Linda R. Greenstein, calls on all states within the PJM Interconnection footprint to enact measures requiring data centers to source their electricity from new zero- or low-emission energy generation.
SR18 rests on several legislative findings:
- Data center electricity consumption is accelerating nationally and is expected to nearly double by the end of the decade.
- Existing grid infrastructure is insufficient to absorb projected load growth, creating cost pressures and reliability risks across the region.
- States that proactively foster clean energy development are positioned to attract both computational infrastructure investment and clean-power technology companies.
- State legislators are identified as playing a critical role in accelerating the deployment of clean energy solutions to meet growing demand.
Operative SR18 provisions:
The resolution urges all PJM-region states to require data centers to procure electricity from new clean energy sources, with copies to be sent to each PJM state governor. Key points include:
- Projected data center load growth is expected to outpace regional grid capacity, threatening both reliability and energy security.
- Dedicated clean energy for data center load is characterized as “critical” to alleviating grid strain and ensuring long‑term sustainability for both existing and future facilities.
Senate Bill 680: clean energy sourcing for AI and crypto facilities
Senate Bill 680 (S680) would mandate clean energy sourcing for new AI data centers and cryptocurrency mining facilities in New Jersey—but with an important condition: the obligation takes effect only after a majority of PJM states enact comparable requirements.
The bill cites rapid data center growth, transmission infrastructure strain, and rising capacity costs as justification for requiring new facilities to source all electricity from new Class I renewables or newly-constructed nuclear power plants, or a combination thereof—with the express condition that there be no net reduction in clean energy available on the grid.
Clean Energy Sourcing Obligation
Once the regional adoption threshold is satisfied, all electricity supplied to covered AI data centers and cryptocurrency mining facilities must be derived from new renewable or nuclear generation (i.e., Class I renewables (solar/wind) or nuclear), rather than existing grid power), measured on an hourly basis, with no net decrease in clean energy on the broader grid.
Energy Usage Plan Requirement
Once the regional majority trigger is met, applicants for new covered facilities must submit a detailed energy usage plan to the New Jersey Board of Public Utilities (BPU), which demonstrates, at a minimum, how the facility will: (i) derive all electricity from qualifying clean energy sources; (ii) minimize overall energy and water consumption; and (iii) utilize waste heat generated by computing equipment for heating or other productive purposes. No facility may connect to the transmission and distribution system without BPU approval of its energy usage plan.
Regional Coordination Trigger
S680’s most notable feature is its regional coordination mechanism. The BPU must monitor policies across PJM states, and NJ’s requirements activate only when a majority of PJM states adopt similar mandates. This reflects NJ’s legislative judgment that unilateral action could disadvantage NJ by driving investment elsewhere while still imposing regional grid impacts.
Related New Jersey measures targeting data centers
SR18 and S680 are part of a broader package of NJ legislative and executive actions directed at the data center industry:
Grid Cost Responsibility and Reporting Requirements
Under S-3379/A-3969, data centers with a peak demand of 100 megawatts (MW) or more must pay for their own grid upgrades and requires all NJ data center owners and operators to submit semi-annual reports to the BPU detailing water and energy usage, with certain performance data treated as confidential.
Large-Load Tariffs
A-796 and S-4307 direct public electric utilities to design special tariff rates for “large load data centers” consuming 100 MW or more per month. The tariff must protect non-data-center ratepayers from incremental cost increases and incentivize data centers to adopt energy-efficiency measures, including waste heat capture. The legislation also requires service commitments and financial guarantees from large-load customers.
PJM Interconnection Advocacy
The governors of New Jersey and Illinois have jointly urged PJM to lower eligibility thresholds for its expedited interconnection track and to include battery energy storage systems and hybrid resources in that process, reflecting the states’ view that current interconnection timelines are inadequate to meet near-term capacity needs.
Executive Orders
Governor Sherrill has also signed certain executive orders[1] addressing capacity auction-driven rate spikes, redirecting state clean energy funds, and accelerating the development of solar and storage resources to increase in-state generation capacity.
Key takeaways
For Data Center Developers and Operators
New facilities must secure dedicated clean energy for full load, not just contract for grid power. BPU approval of energy plans is required before grid interconnection. Operators will bear grid upgrade and capacity costs.
For Utilities and PJM-Region Policymakers
Utilities must develop new rate classes that balance economic development with protecting other customers from costs. SR18 pressures PJM states to harmonize requirements; without alignment, strict rules may drive projects elsewhere while no standards lets costs rise for all ratepayers.
For Local Governments
Municipalities retain siting, zoning, and permitting authority. Community concerns (noise, emissions, water use near aquifers, property value impacts) will shape local approvals. State policy balances economic benefits against clean energy and efficiency requirements, but municipalities remain the front line for community impacts.
What’s ahead for Mid-Atlantic data centers?
New Jersey is moving to require large data centers to secure dedicated clean energy, obtain state approvals, report resource consumption, and bear grid costs. SR18 seeks to extend these principles across PJM to balance data center growth with grid reliability, consumer protection, and clean energy goals. Stakeholders should closely monitor the progress of these measures closely, as the contemplated reports and regulatory actions could reshape how data centers are developed and powered across the Mid-Atlantic region. Ongoing public and industry participation and engagement will be essential as the process unfolds.