State National

Big tech pushed to fund grid expansions amid state rivalry for data center development 

By Breeauna Sagdal | June 02, 2026

As data centers surge across the Midwest, Ohio is among 12 PJM states intensifying pressure on Big Tech and developers to fully fund the massive grid upgrades their power-hungry facilities require, thereby shielding residential ratepayers from higher bills.

Republican Gov. Mike DeWine’s recent announcement to pause new sales and use tax exemptions for data center construction underscores this shifting stance. While not halting ongoing projects, the pause responds to criticisms of ballooning tax revenue losses, estimated at up to $1.5 billion, from data center tax incentives that lawmakers attempted to repeal.

Meanwhile, the newly formed Ohio Joint Select Committee on Data Centers is expected to deliver recommendations on balancing economic gains with the infrastructure costs these facilities impose on the regional grid.

During the committee’s first hearing, Asim Haque, executive vice president of PJM Interconnection — the regional grid operator for Ohio and 12 other states — stressed the urgent timeline mismatches of supply versus demand. Noting that “it takes a year or two to construct a data center, Haque emphasized that new generation capacity takes four to seven years under the best of circumstances — largely due to external factors.

Citing various factors from regulatory hurdles to siting issues, Haque acknowledged that PJM has cleared prior bottlenecks and significant new projects while seeing “very little construction” from developers expected to deliver roughly 53,000 MW in added capacity.

Despite nearly $400 billion invested through the Inflation Reduction Act, including $20 billion in grants and $20 billion in loan guarantees, the so-called transition to green energy failed to materialize as reliable energy plants — especially coal — were simultaneously retired under the Biden administration.

Those failures have not only resulted in skyrocketing energy rates but have also exposed vulnerabilities in America’s grid as demands for energy continue to outpace load growth.

However, recent guidance documents from PJM illustrate a silver-lining strategy that will likely guide Ohio’s policy recommendations. Leveraging the growing demands for AI computing, PJM is essentially urging states to adopt policies and coordinate a regional strategy to have big tech fund the costs of load growth, grid expansions, and transmission upgrades.

The guidance document urges reforms that would allow PJM to create a separate customer class for energy auctions, “Bring Your Own New Generation” pairings, connect-and-manage policies with curtailment for loads over 50 MW, reliability backstop procurement, and strict cost causation to prevent subsidization by existing customers.

In response, all 13 PJM governors and the White House issued a bipartisan Statement of Principles urging data centers to “pay their own way.” Major tech companies stepped up, and in March of 2026, signed President Trump’s Ratepayer Protection Pledge, committing to fund new generation, accept separate rates, provide backup generation during grid strain, and even pay for unused power.

As PJM’s auction proposal progresses through the regulatory process, signaling a clear pathway for private sector investments, neighboring states have begun adjusting tax incentives in a rivalry to attract data center projects.

Ohio, which has paused to recalibrate, could potentially lose projects and economic activity, warned Dan Dorio, Vice President of Policy at the Data Center Coalition.

“Ohio is a strong growing data center market, but it is important for Ohio to remain competitive because we see states like Pennsylvania, we see states like Indiana…Michigan, which have significant development projects announced there,” he said during the committee’s first hearing.

Small modular reactors, which have long been tested by the Department of Energy, appear to be the Trump administration’s answer to catching up to supply shortages.

Multiple facilities have announced plans to use SMR technology to power data centers behind the meter. Yet, amid growing competition between states to land these multi-billion dollar projects, pressure now mounts on Buckeye lawmakers to quickly deliver recommendations.

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