TRENTON – The Senate Environment and Energy Committee advanced two pieces of legislation sponsored by Senator Bob Smith that will address rising energy demand from data centers across the region served by PJM Interconnection, a regional transmission organization that operates the electrical grid across several states including New Jersey.

Artificial intelligence, or AI, use has exploded in popularity, leading to the widespread expansion of energy-hungry data centers across the world, including in New Jersey. Data centers house the physical components required for AI tasks, including computers and cooling systems, which consume enormous amounts of energy. The spike in energy demand in turn cause electricity costs for everyone to skyrocket.

“Although AI data centers have huge potential for our economy, they should not come at the expense of New Jersey residents and our environment,” said Senator Smith (D-Middlesex), Chair of the Senate Environment and Energy Committee. “These data centers must avoid pushing the state’s already stretched energy grid to the brink, which would drive up costs for consumers, businesses, and families. By ensuring these facilities have a clear energy usage plan, and are prioritizing clean energy, we can prevent rising costs for consumers while achieving our clean energy goals.”

Bill S-680, sponsored by Senators Smith and John McKeon, would require new AI data centers and cryptocurrency mining facilities to source all their electricity from new Class I renewable energy sources (such as solar, wind, hydropower, and geothermal technologies), new nuclear sources, or a combination of the two.

It would also require these facilities to submit an energy plan to the BPU to certify how they would source energy from new, clean sources and how they plan to optimize facilities for energy efficiency.

“New Jersey residents are already facing major increases to their energy bills, and with exploding demand for new data center development those increases are at risk of worsening,” said Senator McKeon (D-Essex/Passaic). “Requiring data centers to source their own clean energy will help keep electricity demand, and prices, more stable while ensuring that communities do not face more pollution.”

Bill SR-18, sponsored by Senators Smith and Linda Greenstein, would urge the District of Columbia and the 12 other states in the PJM Interconnection region to similarly require data centers to use electricity from new zero or low-emission sources.

“While we work to address rising energy costs in the short term, we need to take a longer-term, regional perspective when it comes to ensuring that demand from new sources like data centers does not disproportionately harm average families,” said Senator Greenstein (D-Middlesex/Mercer). “If we as a region act to require data centers to source their own energy, we can protect consumers from rising costs and promote clean energy without sacrificing the economic potential that AI data centers can bring.”

Given that rising energy demand is driven by demand across the PJM service territory, S-680’s requirements would not take effect until most other states in the region adopt similar measures. This would safeguard New Jersey against potential losses in economic development opportunities and ensure that these measures result in an overall decrease in the regional demand driving up energy costs.