Pennsylvania Governor Josh Shapiro signed Executive Order 2026-05 on August 18, directing the Department of Environmental Protection to withhold permits from data center projects with peak demand above 25 MW unless developers sign a binding Consent Order and Agreement committing to the administration’s GRID Requirements. Developers that sign get rolling permit review, but only after documenting that a project has secured all required local zoning and municipal approvals. Developers that decline face a slower path: DEP will not begin reviewing any permit application until local approvals and any required water permits are already in hand, and will not issue permits piecemeal, only after every application tied to the project has been reviewed. The GRID framework itself, announced in February and detailed further in May, rests on four pillars: energy affordability, transparency and community engagement, local workforce development, and environmental protection.
Cost Allocation Sits at the Center of the Order
The order’s core financial requirement is that data centers pay the full cost of new generation, transmission and distribution infrastructure their projects require, without shifting those costs onto other ratepayers. The administration cites PJM Interconnection’s own numbers to justify the move: PJM’s 2025 Load Forecast projects 74 GW of summer peak load growth across its territory through 2045, driven largely by data centers, and across PJM’s last four base residual capacity auctions, data centers accounted for $29.4 billion, or 46%, of total capacity charges billed to ratepayers, according to PJM’s Independent Market Monitor. Pennsylvania’s Special Counsel for Energy Affordability is separately directed to push the Public Utility Commission toward rules that would curtail data center load first during grid emergencies, bar utilities from classifying data centers as critical-load exempt from curtailment, and assign PJM reliability-backstop auction costs directly to the data centers that trigger them rather than spreading those costs across other customers.
Fast Track Exit and New Reporting Requirements
DEP is also removing all data center projects from Pennsylvania’s Permit Fast Track Program, effective immediately, and making future data center projects permanently ineligible. It also bars state agencies from signing nondisclosure agreements with data center developers and requires DEP to publish a public map tracking every proposed project’s permitting status. Starting July 1, 2027, and annually after that, operating data centers must report detailed energy and water consumption data to the state, including peak hourly demand, total water use by source, and any on-site generation. Compliance with GRID also becomes a condition of Pennsylvania’s sales-tax exemption on data center equipment: DEP had received permit applications tied to 20 of the more than 100 proposed projects in the state as of the order’s effective date, and only 14 locations currently hold active exemption certificates.
Pennsylvania’s move follows a pattern showing up across other PJM-territory and high-growth states, where New York froze new data center permitting in July pending its own environmental review and community-benefit framework. The order also builds on the administration’s prior involvement in PJM’s capacity market. After a 2025 legal challenge helped negotiate a lower capacity price cap, the state says it has saved consumers more than $30 billion to date, a dispute that unfolded against broader federal scrutiny of whether PJM’s governance can keep pace with load growth. For developers, the takeaway is simple: a Pennsylvania data center permit now depends on local approval and a binding cost commitment before state review can move at all.