Pennsylvania Governor Reverses Course on Data Centers

Pennsylvania Governor Josh Shapiro issued an executive order Tuesday that fundamentally reshapes how data centers can be built in the state, marking a dramatic reversal from his earlier support for the industry.

The order eliminates fast-track permit approvals for data center projects and imposes strict new requirements on developers, including mandates that they supply their own electricity rather than drawing from the regional grid. Shapiro cited "predatory" developers who are "running roughshod" over local communities, according to WHYY, which first reported the details.

Why it matters

Data centers supporting artificial intelligence applications are driving unprecedented electricity demand across the United States. Pennsylvania sits within the PJM Interconnection grid, where new data center projects account for 94% of projected energy demand growth over the next four years. The state's approach could influence how other jurisdictions balance AI infrastructure development against community concerns and grid stability.

What changed

Shapiro had promoted data center development in his February budget address. But mounting local opposition and what the governor described as speculative projects lacking financing, power access, or confirmed customers prompted the policy shift.

The governor specifically called out Montgomery County developer Brian O'Neill, who local officials have accused of bullying behavior, saying the developer "is attempting to sue his way into building these data centers" and "has no realistic path to getting: my support." O'Neill declined to comment through a representative.

A recent University of Pennsylvania poll found 61% of U.S. citizens now oppose new data center construction, representing a 12-point jump in opposition over just four months.

New requirements

The executive order mandates that data centers implement the Governor's Responsible Infrastructure Development (GRID) standards through signed consent orders. Key provisions include:

• Developers must supply their own electricity and cannot rely on the regional grid
• Projects must commit to using 32% renewable energy by 2035
• Water usage and pollution must receive permits from the Pennsylvania Department of Environmental Protection
• Developers must pay for all grid infrastructure upgrades rather than passing costs to ratepayers
• State approval is blocked if local municipalities reject projects
• Community benefits agreements are required when local approval is granted

If electricity shortages occur, data centers connected to the grid will be required to shut down before residential customers lose power.

Grid cost concerns

Speculative data center development has already driven up electricity costs for Pennsylvania residents, according to PJM Interconnection. The grid operator must plan for future demand through auctions, and high projected demand from projects that never materialize artificially inflates supply costs.

Patrick Cicero of the Pennsylvania Utility Law Project noted that nearly 290,000 Pennsylvania residents had electricity shut off for nonpayment in 2025, a 14% increase over 2024. "We cannot have a system where billion-dollar companies get economic windfalls and a grandmother in Pennsylvania gets stuck paying the electricity bill," Cicero said at the governor's press conference.

Industry response

The Data Center Coalition cautioned against changing rules for projects already underway. Executive Vice President Dan Diorio said the industry supported 129,600 jobs and contributed $19.6 billion in GDP to Pennsylvania in 2024, warning that "one-size-fits-all policies that stifle investment and job creation are not the path forward."

Shapiro is running for reelection against Republican Stacy Garrity, who has called for a pause on data center development. The governor is also considered a potential 2028 presidential candidate.

WHYY first reported the executive order and Shapiro's remarks.