House considers shielding Pa. wallets from data centers’ energy use – WPSU Penn State

Report on Data Center Regulation and Sustainable Development in Pennsylvania

Executive Summary

A hearing of the Pennsylvania House Energy Committee examined the escalating impact of data centers on the Commonwealth’s electricity grid and consumer costs. The discussion centered on proposed legislation aimed at regulating data center development to align with key Sustainable Development Goals (SDGs), particularly those concerning energy, economic growth, and inequality. Stakeholders presented conflicting views on balancing the industry’s economic contributions with the need for sustainable and equitable energy infrastructure.

Energy Infrastructure and Consumer Costs: A Challenge to SDGs 7, 10, and 11

The primary concern raised by consumer advocates is the significant strain data centers place on the state’s energy grid, which directly threatens the achievement of several SDGs.

Impact on Energy Affordability and Equality (SDG 7 & SDG 10)

• SDG 7 (Affordable and Clean Energy): The core objective of ensuring affordable energy is at risk. According to Joseph Bowring, an independent market monitor, Pennsylvanians have already incurred approximately $16.6 billion in electricity costs solely due to data center load.
• SDG 10 (Reduced Inequalities): Consumer advocates, including Patrick Cicero of the Pennsylvania Utility Law Project, argue that current policies result in the general public subsidizing the energy demands of data center developers. This places a disproportionate financial burden on families and small businesses, exacerbating economic inequality.

Grid Stability and Sustainable Communities (SDG 11)

• SDG 11 (Sustainable Cities and Communities): The stability of essential infrastructure is a cornerstone of sustainable communities. Public Utility Commission Chair Stephen DeFrank warned of an impending electricity shortage, stating, “We have an iceberg coming towards us.”
• Grid operator PJM projects that data centers will account for nearly all of the 32 gigawatts of new demand expected by 2030, posing a significant threat to the reliability of the state’s power supply for all residents.

Proposed Legislative Framework: Aligning Growth with SDGs

House Bill 1834, introduced by Rep. Robert Matzie, seeks to create a regulatory framework for data centers. The bill’s provisions are designed to mitigate negative externalities and promote sustainable industrialization, in line with SDGs 9, 10, and 13.

Key Provisions of the Bill

1. Regulatory Authority (SDG 9): Grant the Public Utility Commission authority to establish rules for data center development, promoting resilient and sustainable infrastructure.
2. Ratepayer Protection (SDG 10): Shield residential and business customers from paying any costs “directly attributable” to a data center’s electricity consumption.
3. Low-Income Support (SDG 10): Require data centers using over 25 megawatts of power to make annual payments to the Low-Income Home Energy Assistance Program (LIHEAP), starting at $250,000.
4. Renewable Energy Mandate (SDG 7 & SDG 13): Mandate that a minimum of 25% of the electricity used by a data center be generated from renewable sources, directly addressing goals for clean energy and climate action.

Stakeholder Perspectives: Economic Growth vs. Sustainability

The hearing highlighted the tension between economic development objectives and broader sustainability goals, with industry representatives and consumer advocates offering divergent views.

Economic Contributions and Industry Concerns (SDG 8 & SDG 9)

• SDG 8 (Decent Work and Economic Growth): The Data Center Coalition argued that the proposed bill is overly restrictive and could stifle economic growth. A study commissioned by the group found that in 2023, data centers supported over 18,000 jobs and contributed $1.36 billion in state and local tax revenue.
• SDG 9 (Industry, Innovation, and Infrastructure): Industry representatives expressed concern that the legislation “usurps the necessary authority” of the PUC and imposes “disparate treatment” on developers, potentially hindering the growth of critical digital infrastructure.

Challenges to Renewable Energy Implementation (SDG 7 & SDG 13)

• The bill’s 25% renewable energy requirement faced criticism for being impractical.
• Rob Bair of the Pennsylvania Building and Construction Trades Council noted that the geography surrounding a data center may not be suitable for renewable generation like solar or wind.
• The Pennsylvania Consumer Advocate also described the renewable energy component as “likely unworkable,” highlighting the practical barriers to achieving clean energy goals within this legislative framework.

Future Outlook and Speculative Risks (SDG 11)

• Committee Chair Elizabeth Fiedler raised concerns about a potential “speculative bubble” in the data center industry, which could leave abandoned projects and negatively impact communities, undermining the goal of sustainable urban development.
• The Data Center Coalition denied the existence of a bubble, asserting that construction is currently not keeping pace with demand for digital infrastructure.

Analysis of Sustainable Development Goals in the Article

1. Which SDGs are addressed or connected to the issues highlighted in the article?

1. SDG 7: Affordable and Clean Energy
2. SDG 8: Decent Work and Economic Growth
3. SDG 9: Industry, Innovation and Infrastructure
4. SDG 10: Reduced Inequalities
5. SDG 13: Climate Action

2. What specific targets under those SDGs can be identified based on the article’s content?

1. SDG 7: Affordable and Clean Energy
   • Target 7.1: Ensure universal access to affordable, reliable and modern energy services. The article’s central theme is the rising cost of electricity for Pennsylvania residents due to the high energy demand from data centers. The proposed bill aims to “shield ratepayers from paying any cost ‘directly attributable’ to a data center’s electricity use,” directly addressing energy affordability.
   • Target 7.2: Increase substantially the share of renewable energy in the global energy mix. The article discusses a provision in the proposed bill that would “require a minimum of 25% of the electricity used by a data center to be generated by renewable sources,” which is a direct effort to increase the share of clean energy.
2. SDG 8: Decent Work and Economic Growth
   • Target 8.2: Achieve higher levels of economic productivity through diversification, technological upgrading and innovation. The article highlights the economic benefits of data centers, which represent a technologically advanced industry. A cited study found that in 2023, “data centers provided more than 18,000 direct jobs statewide and contributed more than $1.36 billion in state and local tax revenue.”
3. SDG 9: Industry, Innovation and Infrastructure
   • Target 9.1: Develop quality, reliable, sustainable and resilient infrastructure… with a focus on affordable and equitable access for all. The article discusses the massive impact of data centers on Pennsylvania’s electrical grid, an essential piece of infrastructure. The grid operator PJM projects that data centers will add “32 gigawatts of demand on the state’s power grid by 2030,” raising concerns about the grid’s reliability and the affordability of access for regular consumers.
   • Target 9.4: Upgrade infrastructure and retrofit industries to make them sustainable. The proposed requirement for data centers to use at least 25% renewable energy is an example of retrofitting an industry to be more sustainable and reduce its environmental impact.
4. SDG 10: Reduced Inequalities
   • Target 10.2: Empower and promote the social, economic and political inclusion of all. The article highlights the disproportionate burden of rising utility costs on “families and small businesses back home — people who are already struggling with rising utility bills.” The bill’s proposal for data centers to make annual payments to the “Low-Income Home Energy Assistance Program” is a specific policy aimed at mitigating the economic impact on vulnerable populations.
5. SDG 13: Climate Action
   • Target 13.2: Integrate climate change measures into national policies, strategies and planning. The proposed state-level legislation requiring a minimum percentage of renewable energy use for a high-consumption industry is a direct example of integrating climate change mitigation measures into policy and planning.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

1. Cost of electricity for consumers: The article states that “Pennsylvanians have already paid for about $16.6 billion worth of electricity ‘purely as a result of data center load’.” This monetary value serves as an indicator for Target 7.1 (Affordable Energy). Tracking this cost over time would measure progress.
2. Percentage of renewable energy use: The bill’s proposal for a “minimum of 25% of the electricity used by a data center to be generated by renewable sources” is a direct and measurable indicator for Target 7.2 (Clean Energy) and Target 9.4 (Sustainable Industry).
3. Job creation and tax revenue: The article cites a study that found data centers provided “more than 18,000 direct jobs statewide” and contributed “$1.36 billion in state and local tax revenue.” These figures are clear indicators for Target 8.2 (Economic Growth).
4. Energy demand on the power grid: The projection that data centers will add “32 gigawatts of demand on the state’s power grid by 2030” is an indicator of the strain on infrastructure, relevant to Target 9.1 (Resilient Infrastructure).
5. Financial contributions to support programs: The bill’s requirement for data centers to make “annual payments to the federally funded Low-Income Home Energy Assistance Program,” starting at “$250,000 annually,” is a specific financial indicator for Target 10.2 (Reduced Inequalities).

4. Table of SDGs, Targets, and Indicators

Source: radio.wpsu.org