HARRISBURG — Data center developers must opt into new standards unveiled Wednesday by Gov. Josh Shapiro to benefit from speedy and assured permitting plus tax incentives, but the latter part requires buy-in from a politically divided Legislature entering the annual budget push.
Shapiro rolled out a plan he first touted during his annual budget address in February — the Governor’s Responsible Infrastructure Development (GRID) Standards his office says will establish “clear guardrails and accountability standards for data center development” across the commonwealth.
Data centers have faced fierce pushback in communities, especially rural places, across Pennsylvania.
“If companies want the commonwealth’s full support — they must meet strong standards on energy affordability, clean energy generation, transparency, workforce development, community impact and environmental protection. This is about setting a higher bar for projects and ensuring development happens responsibly and in a way that benefits Pennsylvanians,” Shapiro said.
There are four standards in GRID: protect energy affordability, promote transparency and community engagement, support the workforce and economic development, and protect the environment.
The standards detailed at dced.pa.gov include paying all costs for new or incremental electric generation, utilizing a minimum 32% of energy from “clean firm” sources by 2035, making at least a cumulative $250 million in new investments, hosting public meetings and communicating with all impacted local governments, issuing an impact report with details about facility size plus water and energy usage, developing a plan to train and hire local workers, creating at least 200 new construction jobs paid at prevailing wages, creating 50 full-time permanent jobs after the facility’s fourth year with at least $1.5 million combined in salaries, detailing and utilizing energy saving equipment.
Developers don’t have to commit to GRID whatsoever and can still pursue data center projects in Pennsylvania.
However, Shapiro’s carrot-and-stick approach would prevent them from inclusion in the PA Permit Fast Track Program for “high-impact economic development and infrastructure projects” that demand multi-agency permits.
He also proposes to prevent developers from qualifying for the exemption to the 6% sales and use tax for qualifying equipment purchases, a program created through a 2019 law that’s projected to explode in the coming years.
According to Shapiro’s budget, beginning with the 2024-25 budget year, developers are expected to save a combined $1.9 billion in sales taxes through 2030-31. The annual benefit is expected to balloon with each year, from $41 million last year to more than $517 million five years out.
The shift in the tax exemption incentive would require a shift in state law. Shapiro acknowledged that in making the GRID announcement. He said he’s working with leaders in the General Assembly to introduce legislation to codify GRID standards. Given the stakes, it’s sure to be part of budget negotiations as the June 30 deadline approaches but could carry on beyond that.
“Data centers have become an intense nationally debated issue, and over the last year we have seen an evolving view of data center development,” Senate Republican Majority Leader Joe Pittman said Wednesday. “The broad construct of the governor’s current proposal aligns in many ways with shared concerns expressed by many Pennsylvanians. I fully expect legislative discussions on this matter to continue throughout the coming months, as the topic requires thoughtful consideration to contemplate all consequences intended, or unintended.”
Dan Diorio, vice president of state policy for the Data Center Coalition, said data center operators are “committed to being good neighbors in the communities where they operate.”
According to Diorio, data centers in Pennsylvania supported more than 129,600 jobs and contribute $19.6 billion toward the commonwealth economy plus $2 billion in state and local tax revenue in 2024.
He said that Shapiro’s GRID proposal “creates a complicated framework” for the development and operation of data centers.
“Data centers recognize the importance of responsible development, including thoughtful engagement around energy, water, land use and community impact. At the same time, it is fair to ask why this industry — which is central to modern life, economic growth, national security, cloud computing, cybersecurity and our broader digital culture — would be held to a set of standards and requirements that are not similarly applied to other major energy users, large-scale industries, or economic development projects,” Diorio said.