But the industry’s rapid growth has also raised concerns among state lawmakers, who are now pushing to limit AI data centers’ impact on utility bills, water use and the electric grid.
At least five bills now moving through the state Legislature aim to put new limits on the AI industry. The legislation targets everything from who pays for the electricity at data centers to how much oversight the public has into their operations. (See summaries of the 5 bills listed below.)
Dozens of data centers are already operating across New Jersey, with many more proposed or awaiting approval from local planning boards.
From the outside, data centers look like large warehouses, but inside, rows of high-tech servers process massive amounts of data
Newer artificial intelligence facilities demand far more computing power than traditional data centers. The AI facilities can use as much electricity as tens of thousands of homes and require millions of gallons of water each year to cool the computer systems running continuously inside.
In New Jersey, residents are already feeling the impact. Electric bills jumped by roughly 20% last summer — a spike many state lawmakers and advocates say was driven by the electricity used by data centers.
Industry representatives argue data centers are a significant driver of the state’s economy. Data centers supported more than 96,000 jobs and contributed more than $17 billion to the economy in 2023, according to the Data Center Coalition, a nationwide trade association for the sector.
“Data centers are the essential digital infrastructure behind every online purchase, telehealth appointment, online news article, and digital classroom,” Khara Boender, director of state policy for the Data Center Coalition, said in a statement to NJ.com.
But as more projects move forward in New Jersey — including data centers coming to Vineland, Piscataway and East Greenwich — residents and local officials are raising concerns.
Officials in Harrison Township, Logan Township and Millville have introduced or advanced measures to ban or restrict data centers over concerns about infrastructure, environmental impact and quality of life. In New Brunswick, public opposition has already led officials to back away from a proposed project.
As tensions grow at the local level, the issue is now moving to Trenton, where lawmakers are weighing how to support the industry while limiting its impact on residents.
Here’s a look at the five key bills under consideration:
A ‘prenup’ agreement with large data centers
One of the newest data center bills, S731/A796, was approved by the state Assembly last month by a 55-18 vote and is now being debated in the Senate.
The law is designed to limit how much New Jersey residents pay to power large data centers.
The bill imposes tariffs for “large load” data centers or facilities that use 100 megawatts or more of electricity at a single site. Under the proposal, those facilities would have to pay for at least 85% of the electricity they request for a minimum of 10 years.
Democratic supporters say the measure is intended to stop operators from passing infrastructure costs onto local utility customers. The law could also push AI data centers to embrace more energy-efficient practices.
Data centers are measured by their power capacity in megawatts. Larger facilities, including the DataOne project under construction in Vineland, can be designed to reach over 300 megawatts — enough electricity to power a small city.
Assemblyman Dave Bailey Jr., D-Gloucester, the bill’s sponsor, has described the measure as a “prenup” with the industry. He said the new law would allow data centers to come to New Jersey while making sure residents are not left subsidizing their energy use.
“Data center growth will drive up the cost of electricity if we don’t create guardrails,” Bailey said in a statement. “This bill is about protecting ratepayers while supporting responsible economic growth.”
The proposal has also drawn support from environmental groups, including the New Jersey Sierra Club.
The bill will protect New Jersey residents “from paying for the increased energy demand from power-hungry data centers and ensure that big tech pays their fair share,” Anjuli Ramos-Busot, director of the Sierra Club, said in a statement.
The Data Center Coalition dispute that claim, saying large-scale facilities help fund grid upgrades and can ease pressure on electricity prices over time.
“States with the highest load growth experienced reductions in real prices, whereas states with contracting loads generally saw prices rise,” Boender said, citing a report from Lawrence Berkeley National Laboratory, a research center in California.
A similar bill to increase how much data centers pay for utilities passed the Legislature last year but was killed by a pocket veto from then-Gov. Phil Murphy.
The New Jersey Business & Industry Association said it initially opposed the bill because it could inaccurately classify smaller facilities as large load centers. Lawmakers later revised the bill to make clear it applies only to data centers using at least 100 megawatts per month, and the NJBIA now says it is neutral on the legislation.
“The amended changes help clarify the policy and better protect ratepayers while still allowing innovation and business growth to move forward,” Jack Ramirez, NJBIA Policy Research Analyst said in a statement.
Requiring data centers to report energy and water use
Another bill, S3379, under debate in Trenton would require data center operators to submit detailed reports on their energy and water use to the state Board of Public Utilities twice a year for three years.
Those reports would include total energy use at each site, the electric utility serving the facility, total water consumption, the source of that water and other key details.
The bill passed the Senate in March in a 34-2 vote and is now under consideration by the Assembly.
Lawmakers say the measure comes in response to growing strain on the region’s electric grid as more data centers come online.
New Jersey is part of a 13-state power market run by PJM Interconnection, which has said rapid growth in AI and data centers is driving much of the increased demand.
According to Senate Majority Leader M. Teresa Ruiz, D-Essex, who sponsored the bill, the goal is to create more oversight as the industry expands.
“By implementing clear oversight, we can support sustainable growth without compromising the reliability of our power grid or the affordability of utility bills for New Jersey families,” Ruiz said in a statement.
The data center industry has raised concerns about the proposal, arguing it unfairly singles out one sector.
“Data centers are among the most efficient water users in the economy,” said Boender, director of state policy for the Data Center Coalition.
Banning NDAs in data center deals
A separate bill, A6181, aimed at increasing transparency in the industry would ban data center developers from using non-disclosure agreements with local officials. The agreements with planning boards or municipal agencies often hide project details or limit public review.
The proposed ban on NDAs was introduced in December and referred to the Assembly Science, Innovation and Technology Committee, where it has not come up for a vote yet.
The proposal comes as some residents and local officials have raised concerns about limited transparency around data center projects, particularly during early negotiations between developers and municipalities.
Non-disclosure agreements are sometimes used in redevelopment discussions, but critics argue they can keep the public in the dark about a project’s size, infrastructure demands and environmental impact before approvals move forward.
A review by NBC News of more than 30 data center proposals across 14 states found that in many cases, local officials signed NDAs and negotiated with “shell” companies that made it difficult to identify project developers.
Pushing cleaner energy use
Two other proposals in the state Legislature focus on the environmental impact of the growing energy demand from data centers on the region’s power grid.
The first bill, S680, would require new AI data centers and cryptocurrency mining facilities to get their electricity from clean energy sources like solar, wind, hydropower, geothermal or new nuclear.
The measure was approved by the state Senate Environment and Energy Committee last month and is now under review by the budget committee before the full Senate can vote on it.
“Although AI data centers have huge potential for our economy, they should not come at the expense of New Jersey residents and our environment,” state Sen. Bob Smith, D-Middlesex, the bill’s sponsor, said in a statement.
The bill would also require developers to submit an energy plan to the state Board of Public Utilities outlining how they plan to use clean power and improve energy efficiency before a project can be approved.
The New Jersey Business & Industry Association testified against the clean energy bill last month, calling it “not practical.”
Ray Cantor, the group’s vice president, pointed to the state’s power shortage and said a better approach would allow data centers to use a mix of natural gas and renewable energy.
“We understand the problem. We do not oppose the solution of having large AI generators coming here and bringing their own power,” Cantor said in a statement. “But renewables alone won’t work.”
The other measure being considered, SR18, calls on other states within the PJM Interconnection grid to adopt similar requirements for data centers to use electricity from new zero- or low-emission sources.
Because PJM manages electricity across 13 states, advocates say different rules create an uneven playing field. They argue that getting neighboring states to follow similar standards would help level it.
However, critics of the clean energy requirements say they could slow down projects or push companies to build in other states. Because data centers run nonstop, they say the facilities can’t rely only on intermittent energy sources like solar or wind without backup power or storage.
“The data center industry will continue to work with New Jersey residents, communities, and policymakers to support the responsible development of this critical infrastructure,” said Boender, of the Data Center Coalition.
How New Jersey is also courting the industry
While lawmakers are debating limits on the AI data center industry, New Jersey has been actively trying to bring data centers to the state through tax incentives and other financial breaks.
In July 2024, Murphy signed the Next New Jersey Program into law, creating the state’s first tax credit program aimed specifically at artificial intelligence companies and large-scale AI data centers.
“AI has already started to revolutionize our everyday lives, and New Jersey is capitalizing on this moment to ensure we establish ourselves as a frontrunner in generative AI innovation,” Murphy said when he signed the law.
Administered by the state Economic Development Authority, the program sets aside up to $500 million in tax credits for companies focused on AI.
To qualify, companies must invest at least $100 million and create at least 100 full-time jobs. Applications are open through 2029.
The first major award went to CoreWeave, a Livingston-based cloud computing company, which received $250 million in credits in November.
The company is building a 392,600-square-foot data center campus in Kenilworth, expected to open in 2027. When fully operational, the $1.8 billion facility could require up to 250 megawatts of power, roughly equal to the electricity used by about 211,000 homes.
As part of the agreement, CoreWeave must maintain its operations and jobs in New Jersey over a 10-year period. It has also committed $25 million to partner with New Jersey-based AI startups and research institutions.
Last year, the company was named a founding partner, alongside Microsoft, in a new AI hub announced with Princeton University, aimed at supporting research and innovation in AI across the state.
© 2026 Advance Local Media LLC. Distributed by Tribune Content Agency, LLC.
