Energy is a finite resource. In New York state, the bulk electric system is managed by the Independent System Operator (NYISO), which has recently warned that our power grid is at an “inflection point.” While the state currently has enough energy, there are so many industries in the “queue” hoping to draw upon the grid, that the state’s future energy supply is in jeopardy unless we build more power.
Add to that the combination of rising demand from the electrification of the housing and transportation sectors, along with operational challenges stemming from aging generators and the limited development of new dispatchable resources, and you have a system that is under enormous pressure.
At its core, Gov. Kathy Hochul’s moratorium on hyperscale data centers is an effort to manage what is a scarce public resource.
She said in an interview withCapital Tonight on Thursday that in weighing the pros and cons of data centers against other large load users like Micron, data centers come up short. They don’t create anywhere near the number of permanent jobs that a semi-conductor facility like Micron will.
“[Micron] came here because I could offer them more affordable hydroelectric power. We have plentiful water in upstate New York and to have 50,000 direct and indirect jobs – this is transformational for upstate,” she said.
According to the NYISO, there is now 14,000 megawatts of large load requests waiting to be “plugged” into the grid. Those requests will have to undertake a lengthy interconnection process to ensure the state’s grid can manage them. Large load requests are driven by data centers, semiconductor and microchip fab facilities, and advanced manufacturing.
While construction jobs are not permanent, they are plentiful thanks to the proliferation of data centers across the country, which is why some in the construction industry are deeply unhappy with this moratorium.
A construction industry source was asked a question about the moratorium. His response was pointed: “Why was this done in a way that slams the door on projects in which millions of dollars may have already been invested, and where all the information has already been submitted to agencies like [Department of Environmental Conservation] for the required permit review?”
In turn, Hochul was asked to respond to the construction industry. She again mentioned Micron.
“I would ask the people in the construction trades, ‘how are you enjoying the 20 years of construction that we brought with Micron, the largest private sector investment in American history?’”
Over the next 60 days, Empire State Development will create a “community investment framework” which will require data centers to make significant investments into host communities.
The investments could include water and sewer upgrades, roads, libraries, housing, childcare and even broadband.
Construction advocates have raised concerns around these lucrative community benefits, arguing that they could drive data center construction to other states. One representative said a colleague in Texas sent him a brief email after the moratorium announcement that read simply, “Thank you.”
Hochul is also focused on generating more power to bring down costs for host communities and New York ratepayers. When asked if, after the moratorium, she would require data centers to use renewable energy to self-power, she said the issue is still being worked on.
“Nuclear is preferred, which is why I’m trying to get approvals from Washington as soon as possible to build more nuclear in New York state than the entire country has in 30 years,” she said. “That’s how ambitious I am. Because if I can get surplus energy by having so much more available, I can drive down costs for New Yorkers which is number one.”
The governor is also in agreement with the Independent Power Producers of New York, which is pushing for the repowering of older power plants.
“We need to have an all of the above approach without a doubt,” she said when asked. “We were perilously close, last year during the heat wave and this year during the heat wave, to having the lights go out in parts of New York. That cannot happen.”