As data centers become an increasingly prominent development issue in communities across New Jersey, a new state law will require operators to disclose how much electricity and water their facilities use.
Gov. Mikie Sherrill recently signed legislation as part of a broader state effort to address the demands data centers can place on the electric grid, water supplies and the communities where they are built.
The new law, S3379/A4096, requires data center owners and operators to report their energy and water use to the New Jersey Board of Public Utilities twice a year. Much of that information will be made publicly available.
At the same time, the Sherrill administration announced new guidance and technical assistance intended to help municipalities evaluate proposed data centers and negotiate with developers over their impacts on host communities.
The actions come as the growth of artificial intelligence and cloud computing increases demand for data centers, while proposals for the large facilities have raised questions about electricity use, water consumption and the infrastructure needed to support them.
Tracking energy and water use
Under the new law, data centers will have to report total energy consumption, including energy used for cooling and information technology equipment, along with information about their utility provider and on-site and backup power systems.
Operators will also report total and peak daily water use and identify where that water comes from, including public water systems, groundwater or surface water. Facilities using public water must identify the system that supplies them.
The BPU will be required to publish the basic energy and water information online, giving residents and local officials access to data about the resource demands of individual facilities.
Assemblyman Michael Venezia, D-Essex, one of the bill’s sponsors, said New Jersey has lacked the state-specific information needed to understand the industry’s impact.
“When we talk about addressing energy affordability, data centers are a constant in the conversation, as they place new demands on our energy grid and water resources,” Venezia said. “We need a clearer picture of what that impact actually looks like here in New Jersey.”
He said having consistent information about facilities operating in the state will help officials plan as the industry grows.
Guidance for communities considering data centers
The administration also announced new guidance aimed at municipalities where data centers are proposed.
The Department of Community Affairs guidance focuses on community benefits agreements, which municipalities can negotiate with developers to address a project’s local impacts and secure investments for the host community.
The guidance calls on municipalities to consider demands on local infrastructure and resources, emergency response needs and other potential impacts. It also identifies possible community investments ranging from infrastructure improvements to schools and workforce development programs.
The state is also making technical assistance available to municipalities through the Economic Development Authority, BPU and Department of Environmental Protection.
Sherrill said the goal is to allow New Jersey to benefit from the growth surrounding artificial intelligence while addressing the costs and impacts associated with the facilities that support it.
“When it comes to data centers, we’re doing that by putting power back in the hands of communities and ensuring data centers play by our rules,” Sherrill said.
Part of broader data-center effort
The new law follows legislation Sherrill signed in July creating a separate utility rate class for data centers, part of an effort to have the facilities bear costs associated with their electricity demand and necessary grid infrastructure rather than shifting those costs to other utility customers.
The administration’s broader data-center policies also include labor standards for construction projects and guidance for municipalities seeking to address issues such as noise, light and pollution through community benefits agreements.
The new energy and water reporting law took effect immediately.
