Illinois Governor Proposes Pause On Data Center Tax Credits

Gov. JB Pritzker floated a two-year moratorium on new data center tax credits in his Illinois State of the State address Wednesday.

Citing concerns over costs and increased demand for energy, Pritzker proposed pausing the authorization of tax credits for new data centers to allow grid operator PJM to complete new renewable energy projects. The hope is that these projects will help reduce the financial burden on non-data-center consumers.  

"With the shifting energy landscape, it is imperative that our growth does not undermine affordability and stability for our families," he said.

Any pause in tax credits would need to be voted on by the state legislature.

Pritzker's proposal is in line with mounting pushback against the sector, which is scorching-hot in Illinois and nationwide.

In January, the Naperville City Council struck down a proposal for a data center in the suburb that sparked backlash from neighbors worried about energy consumption, noise pollution and emissions. Naperville City Councilwoman Supna Jain told the Daily Herald she was concerned that approving the proposal might constrain the city's ability to support future development without substantial additional investment.

Aurora has a moratorium on new data center development, though it is set to be lifted next month. The city will consider new regulations for data centers in the area at the next full-council meeting Tuesday.

Illinois has 164 data centers in operation and another 81 planned for construction, according to ABC 7 Eyewitness News.

The biggest challenge facing communities with a heavy data center presence is the costs imposed on energy consumers.

"Affording to have a home is one thing. Affording to live in it is quite another," Pritzker said during his address. "Electricity bills are eating up more and more of household budgets across the country, and that's got to stop." 

PJM said the price of power during peak load is poised to skyrocket 1,000% in the next five years, which would lead to a 60% spike in electricity costs for homeowners and businesses.

Lawmakers in Virginia, California, Texas, Utah, Georgia and Ohio have pursued measures to require data center companies to cover a larger share of the billions of dollars in grid infrastructure upgrades they need to operate. Additionally, some state-level bills have focused on reducing environmental impacts or defining local municipalities' control over data center development.