Connecticut legislators are considering various ways to regulate data centers that power artificial intelligence.
The growth of AI has driven the widespread demand for data centers, which house servers that process and store digital information. But in Connecticut, some legislators are concerned about how to mitigate the amount of power needed for data centers. They are concerned it can further strain an already busy power grid in Connecticut.
U.S. Senator Richard Blumenthal has introduced a bill called the Guaranteeing Rate Insulation from Data Centers (GRID) Act. It would require companies that build new data centers with a power demand of 20 megawatts or more to find their own power sources outside of the electric grid.
Dr. Ayse Coskun is the Director, Center for Information and Systems Engineering at Boston University. Coskun said that, unlike other facilities, AI data centers can be much more energy-intensive. Training or building large AI models like ChatGPT, Gemini, Claude, or other query tools requires massive amounts of GPUs, graphics processing units, to perform calculations needed to run the programs.
“[Training] can require thousands of GPUs operating simultaneously, continuously for weeks or even months at a time. So that concentration of computing power translates directly into high electricity demand,” Coskun said.
Coskun said power grids are public infrastructure that serve many and are overseen by a regulatory authority. She said a ‘bring your own power’ approach may be beneficial for some companies, but not for all. Companies that establish their own power source only serve one source and would operate outside of that authority.
“This practice, essential to how we build things, changes. Maybe some of these big companies will bring their own power, but overall it's not a scalable solution,” Coskun said.
Because data centers can vary in size and function, Coskun said each facility might require a different approach. She said microgrids, or a small grid not connected to the main power grid, have been in use for some time. Coskun said that at the end of the day, data centers should work with local officials and instead become more “grid aware” when it comes to sourcing power for facilities.
Connecticut legislators will also consider a bill that seeks to eliminate certain tax incentives for data centers in the state. Gov. Ned Lamont signed into law a measure in 2021 that incentivizes data center operators to locate facilities in Connecticut. Data centers that meet certain requirements can forgo state taxes on property and other fees. The state’s Energy and Technology Committee hosted a public hearing on Tuesday to discuss several bills, including Senate Bill 245, which would revoke said incentives.
Claire E. Coleman spoke on behalf of the Office of Consumer Council to question how data centers might impact ratepayer financial risks and electricity reliability. Coleman said Connecticut needs to begin conversations to ensure that ratepayers are being adequately protected. Coleman said while there can be economic benefits to data centers, the decision to approve construction should be weighed against how it could affect neighboring communities.
“The contracts have to reflect that we have an extreme grid reliability challenge here in New England and all energy is precious,” Coleman said. “We want to make sure that rates are set in a way that is protective of residential and nonparticipating commercial rate payers.”
Opponents of the bill said that the tax incentives help offset the costs of constructing, renovating and operating the facilities, which in turn can create more jobs. Several speakers in the hearing questioned whether removing tax incentives would send the message to companies that the state does not want data centers at all. Committee Vice Chair Rep. James Sanchez said he was concerned that the state would miss out on opportunities for innovation.
“Connecticut seems to be falling behind when it comes to advancement in technology, one of them being the AI data center,” Sanchez said. “So how does Connecticut become as competitive, if not with some kind of incentive to bring new investment? How do we handle that if we eliminate this incentive?”
