BILL
SUBJECT
DATE
Largely as the result of self-imposed limits on energy resources, New York is facing growing concerns about the adequacy, reliability and cost of its electric power system. The potential energy use by proposed data centers has helped expose, but is not the cause, of New York’s energy challenges.
We expect the state to adopt new requirements for the interconnection of large users to the grid, as being considered under an ongoing PSC proceeding. These requirements could include several provisions of this bill, such as financial surety requirements and community benefit agreements.
However, we believe the expansive and unworkable mandates proposed in this bill would result in significant adverse economic development impacts for New York State. We can adopt reasonable requirements for major energy users, including data centers, without this level of onerous mandates. For these reasons, we strongly oppose adoption of S.10642/A.11560.
Key concerns include:
- It would impose a one-year moratorium on any state approval related to a “data center” as defined in the bill, regardless of where such projects are in their review and approval process. This definition would also inadvertently capture major computer-based projects that do not function as data centers. The exact purpose of this moratorium is unclear, as other provisions of the bill, such as its environmental impact report, are not required to be complete until after the expiration of the moratorium. This seems to be a delay for the sake of delay.
- Similarly, the proposed moratorium and the mandated “environmental impact report” fail to take into account any economic development impact of data centers. This limited, one-sided review is inconsistent with SEQR. As stated in the state’s SEQR handbook,
It is not the intention of SEQR for environmental factors to be the sole consideration in agency decision-making. The purpose of SEQR is to ensure that the environmental impacts of an action are weighed and balanced with social, economic, and other considerations so that a suitable balance of social, economic, and environmental factors may be incorporated in the planning and decision-making processes of state, regional, and local agencies.
- It would impose public-works prevailing wage on any data center with energy usage over 5MW, or an expansion of an existing data center that would result in a facility that exceeds that threshold, even if the project receives no state or local economic development assistance. The state’s prevailing wage schedules, with required supplemental payments, add significantly to the cost of construction projects. This would be the first instance where such mandates would be applied to private sector projects with no state or local economic development assistance.
- The applicability of the moratorium is very unclear. The bill states that no state approval can be given for a “large data center” prior to one year after the effective date of the bill, while it also states that the moratorium does not apply to a LDC that has commenced construction on or before the effective date. This raises significant uncertainty of the status of projects that have received state and local approval but have not yet started construction.
- The bill directs NYSERDA to establish “reasonable energy consumption efficiency goals” for the design and operation of all data centers (over 1MW of peak demand), including but not limited to the “recycling of waste heat.” While the bill requires the setting of “goals,” the context seems to say that these are mandated standards. Specifically, the bill states that these “goals” “shall” be complied with within two years of their adoption by pre-existing data centers. This applicability of unknown energy efficiency standards could be especially challenging and costly for existing data centers, which could be subject to significant retrofit and replacement requirements. Likewise, waste heat recovery is not practical except for the largest data centers with proximity to a heating demand for low quality heat – which may be infeasible for existing data centers based on their location (which are often by designed site away from structures and land uses that otherwise could employ such waste heat.)
- The bill requires any data center with a peak load of 5MW or larger to procure one-third of its electricity consumption from renewable energy systems by 2030, with the mandate rising to 90% by 2040. It also requires these data centers to derive “as much of its energy needs as is technologically, environmentally, and practically feasible from on-site generation from renewable energy systems.” We have several concerns. First, this mandate is inconsistent with the CLCPA’s mandate that by 2040 the state electric grid be zero emissions, not all renewables. Second, this bill would preclude other sources of clean energy including nuclear, biogenic fuels or other yet to be identified “dispatchable emission free resources” from serving a large share of the load required by data centers. Finally, for many locations the co-location of renewables would be simply infeasible. For utility-scale solar farms, the land needed to generate 1 MW of electricity generally falls within 4 to 8 acres, and with a capacity factor of large solar at under 15% in New York State, for a 20MW data center this could require more than 500 acres for an adequate solar farm.
- Existing statute, including CLCPA § 7.3 and ECL §70-0118, require that projects be reviewed for, and avoid imposing, adverse disproportionate environmental impacts on disadvantaged communities. Likewise, the DEC has detailed policies and guidance on the assessment of environmental impact on DACs and potential environmental justice communities. In contrast, this bill would require an assessment of impacts of data centers on such communities within an arbitrary ten-mile radius of any potential data center.
New York residents and businesses are increasingly reliant on technology applications that require data center services. While the growth of data centers poses energy and environmental challenges, a moratorium on the approval of new data centers is both unnecessary and damaging to the state’s economic development efforts and will adversely impact a wide range of day-to-day activities relied on by New York residents and businesses alike.
Instead of the moratorium and mandates of this legislation, New York should complete a holistic review of energy, environmental and economic development issues related to data center growth. This approach (which could be accommodated through the ongoing Public Service Commission proceedings) would address a wide range of policy issues related to large energy-dependent facilities including data centers, covering the interconnect process, utility rate structures and related energy system issues including potential impact on overall customer rates, as well as factors impacting the state’s climate change policies and overall environmental protection goals, and the role of data centers in supporting statewide economic activity and new investments.
For these reasons, we strongly oppose adoption of S.9144-A/A.10141-A.
Summary of S.10642/A .11560
Applicability
- Over 20 MW (i.e. “large data center), subject to all provisions of the bill
- Over 5 MW, subject to the bill’s prevailing wage and renewable energy mandates
- Over 1 MW, subject to energy efficiency standards, and will be covered in the
environmental impact report.
Key provisions
- One year moratorium on any state approval of data centers over 20MW
- Public hearing mandate for new large data centers
- DEC to develop environmental impact report (includes some additional factors, but
no consideration of economic impacts/benefits)
- Requires electric, gas and water utilities to develop separate rate classes for large
data centers to capture all related costs, including financial surety requirements.
- Energy efficiency “goal” (really mandates) for all data centers, existing data centers
have 2 years to comply
- Renewable energy usage and production mandate for data centers over 5 MW
- Host community benefit program mandated for large data centers (most benefit projects over $1 million subject to prevailing wage)
- Prevailing wage and other labor mandates, and USA-made structural steel,
applicable to new construction and expansion of data centers over 5MW regardless
of whether the project receives any state or local incentives.