6 Policy Levers Local Governments Can Use to Shape Data Center Energy Impacts

As local governments across the United States make progress toward their clean energy goals, a new challenge is emerging: rising electricity demand from data centers.

Data centers are not new, nor are they the only driver of growing electricity demand. However, the speed and scale of recent development have placed them at the center of conversations about land use, infrastructure investment, siting and economic development. Communities are increasingly concerned about the impacts of data centers on local energy and water systems, noise and air pollution, as well as the broader implications of the growth of artificial intelligence (AI) on economies and society.

Local officials are now grappling with how to enable responsible data center development while delivering tangible community benefits and minimizing potential harms. In most cases, existing local zoning and regulatory frameworks were not designed for today's large-scale data centers, prompting jurisdictions across the country to reevaluate their rules and processes. More than 500 local governments have passed data center-related ordinances or moratoria.

Many of the most consequential decisions affecting data center energy demand occur at the state and regional levels, including utility regulation, transmission planning and wholesale market rules. But local governments retain significant influence over facility-level energy impacts through zoning, permitting, disclosure requirements, design standards and community benefits frameworks.

This article explores these policy levers, highlights emerging practices from communities across the U.S. and offers practical considerations based on WRI’s ongoing technical assistance to local governments. Together, these levers can shape where data centers are built, how they operate and whether their energy demand supports or undermines broader community goals.