Data centers drawing more than 25 megawatts must secure local zoning approval, cover their own electricity costs, and sign a binding agreement with the state before regulators will issue permits.
Governor Josh Shapiro signed an executive order on August 18 setting requirements that data center developers must meet before Pennsylvania approves a project. Executive Order 2026-05 covers any data center with peak demand above 25 megawatts and took effect immediately.
The order governs the buildout of AI computing capacity in the state. More than 100 data center projects have been reported in Pennsylvania, and PJM Interconnection, the grid operator covering the state and 12 others, expects data centers to drive most of the growth in electricity demand on its system. Its 2025 forecast projected 74 gigawatts of added demand by 2045 on the hottest days of the year, when the grid works hardest.
Some of that cost already reaches customers. PJM runs an annual auction that pays power plants to stay available to supply electricity in future years, and utilities pass the charge along on bills. Across the last four of those auctions, data centers accounted for $29.4 billion of the charge, or 46% of the total, according to PJM’s Independent Market Monitor.
“My message to data center developers is clear: if you can’t agree to our strict requirements and get the community where you want to build to say ‘yes,’ you’re not going to have the Commonwealth’s support either,” Shapiro said at the signing in Harrisburg.
What the order requires
The requirements come from the Governor’s Responsible Infrastructure Development standards, known as GRID, which the administration announced in February and published in May. They cover four areas. Developers must now.
- Pay the full cost of the electricity generation, transmission, and distribution their projects need, rather than shifting it to households and businesses.
- Hold public meetings and consult communities early on major design decisions.
- Hire and train local workers and sign community benefit agreements covering schools, infrastructure, and local economic development.
- Meet state environmental standards, including water conservation limits.
How the state enforces them
The Department of Environmental Protection (DEP) will not begin reviewing permits until a developer documents that the project matches the local comprehensive plan and holds every municipal zoning approval.
Developers who sign a project-specific Consent Order and Agreement committing to the GRID standards get applications reviewed on a rolling basis, with permits issued as each one clears and the GRID terms written in as permit conditions. Developers who do not sign must wait until DEP has received and reviewed every application for the project before DEP issues anything.
Data centers are no longer eligible for the PA Permit Fast Track Program. The Department of Revenue must update the sales and use tax exemption for data center equipment so only applicants meeting the GRID standards qualify.
What developers must disclose
No state agency under the governor may sign a nondisclosure agreement on a data center project. DEP must publish a map showing permitting status for every known proposed project.
Beginning July 1, 2027, operating Pennsylvania data centers must file annual reports on their electricity, gas, and water use, and on what they expect to need the following year.
What the order asks regulators to do about costs
The order directs Special Counsel for Energy Affordability Mark Szybist to ask the Pennsylvania Public Utility Commission to charge data centers for the cost of serving them. That means charges from a new PJM auction for extra supply, the cost of connecting a project to the grid, and protection for other customers if a data center cannot pay.
A governor cannot set electricity rates by executive order. The Public Utility Commission regulates utilities independently and would have to approve any of it, and federal regulators are weighing related questions in two open cases. This part of the order is a request, and its outcome is not settled.
Why the state wants signatures instead of promises
In July, seven of the largest AI and cloud companies signed a White House initiative called the Ratepayer Protection Pledge, promising to pay for the new power supply their data centers need instead of passing the cost to other customers. Amazon, Google, Meta, Microsoft, OpenAI, Oracle, and xAI are all signatories.
The pledge carries no penalty for breaking it. Pennsylvania’s order says as much, and asks developers for the same commitments in a form the state can act on, written into permits it has the power to withhold.
What happens next
DEP has not yet released the standard agreement developers will be asked to sign, so the exact terms are not public. The Department of Community and Economic Development owes municipalities model zoning rules and sample community benefit agreements to work from.
The Data Center Coalition, an industry trade group, said: “One-size-fits-all policies that stifle investment and job creation are not the path forward.” Other states are moving in the same direction. New Jersey passed a law this year requiring data centers to fund their own energy costs, and New York has moved to restrict large projects.
