Governments tighten data centre limits as AI infrastructure demand rises

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Governments tighten data centre limits

Highlights

Pennsylvania, Texas, and New York introduce new data centre restrictions, including moratoriums, stricter permitting, and public disclosure requirements in response to AI-driven infrastructure demand.
Amsterdam extends municipal data centre ban until at least 2030, Ireland ends its connection freeze in December 2025 with new on-site generation rules, and Denmark lowers grid priority for new facilities from October 2026.
Portugal drafts environmental regulations mandating renewable energy use and non-competitive water cooling for data centres, impacting investments such as the 1.2-gigawatt Start Campus project in Sines.

Restrictions spread across permits, moratoriums and grid access

As reported by Reuters, authorities in multiple markets are adopting tougher rules for data centres as concerns mount over the environmental and infrastructure costs tied to the AI boom.

In Pennsylvania, Governor Josh Shapiro signed an executive order requiring companies setting up AI data centres to meet environmental and transparency safeguards and secure local community approval. The order takes effect immediately, removes all data centres from the state's Fast Track permit program and bars offices or agencies under Shapiro's jurisdiction from signing non-disclosure agreements with developers.

In Texas, Governor Greg Abbott orders a pause on approvals of new data centre projects through the state's grid interconnection process, citing reliability risks from surging electricity demand and growing opposition to the projects. Developers must provide more information on power demand, water use, tax incentives, ownership structures and efforts to limit local impacts.

New York State imposes a one-year construction moratorium on data centres using 50 megawatts or more of power, becoming the first U.S. state to enact a full moratorium. During the freeze, the state's Department of Environmental Conservation will not issue new discretionary permits while officials develop standards to assess environmental effects.

Maine does not adopt a similar step after Governor Janet Mills vetoes bipartisan legislation for an 18-month moratorium on new data centres using more than 20 MW of power. Mills says she supports a moratorium in principle but objects to the bill because it does not include an exception for a specific project in the Town of Jay.

At the local level, residents in Monterey Park, California, vote in June 2026 to permanently ban data centres, making it the first U.S. city to do so through a ballot measure after backlash over a planned facility.

Energy and water concerns reshape investment conditions

Outside the U.S., several governments are also tightening the terms for new projects or limiting where facilities can be built. The moves reflect pressure on electricity grids, water resources and local planning systems as operators expand capacity for AI workloads.

Amsterdam imposed a one-year moratorium on new data centre developments in 2019 and, in April 2025, barred new data centres or expansions in the municipality until at least 2030. Separately, the Dutch government's 2022 hyperscale ban restricts large facilities to two designated locations nationally, although Microsoft wins approval in January 2026 for a project split into three towers, each below the size threshold.

In Ireland, the grid operator effectively blocks new data centre connections around Dublin from 2021 after warnings that the facilities are straining the network. That freeze ends in December 2025, with new connections now required to bring their own on-site power generation.

Australia is preparing a regulatory framework rather than an immediate ban. Prime Minister Anthony Albanese says the government will establish an Office of AI to manage AI standards, including rules for large data centres covering location, power and water use, with legislation due early next year.

Denmark adopts legislation giving new data centres the lowest priority for electricity grid connections as capacity shortages worsen. The law, effective from October 2026, replaces a first-come, first-served system and prioritises households, healthcare, industry, transport and renewable energy projects.

Portugal is preparing stricter environmental rules that would require data centres to run on renewable energy and use cooling systems that do not compete with household and business water supplies. The tighter framework comes as the country still seeks investment in AI infrastructure, including the 1.2-gigawatt Start Campus project in Sines, one of Europe's largest planned data centre campuses.

Our earlier article on the growing strain on U.S. AI data center buildouts explained that many large projects are being delayed or shelved as financing costs rise and construction budgets overrun. It also highlighted how grid capacity limits and local opposition are increasingly forcing developers to secure power solutions and rethink expansion plans, raising doubts about how quickly new AI computing capacity can realistically come online.

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