Massachusetts Requires Large Data Centers to Win Local Approval and Cover Power Costs

Massachusetts is making large data-center projects clear a new threshold before they can move through state permitting: local approval, a plan for clean energy and protections intended to keep their electricity costs off other customers’ bills.

A permit now starts with the host community

Gov. Maura Healey’s executive order says a data center must secure local approval before state permitting agencies will advance the project. It also requires a community benefits agreement with the host community that meets state standards before a project enters that state process.

The order applies to proposed facilities with peak electricity demand above 25 megawatts. For those projects, state permitting agencies must require developers to demonstrate compliance with Healey’s data-center framework, which covers energy, environmental protection and community engagement.

The power bill is part of the permit fight

The administration’s central cost-allocation rule is that developers should pay for the electricity infrastructure and clean-energy supply their facilities need. If a company does not fully cover those electricity costs, the order calls for it to pay into a Ratepayer Protection Fund that would return money to customers.

The clean-power choices described by the order

• Generate qualifying clean power onsite.
• Fund construction of new generation nearby.
• Pay into the ratepayer protection fund when required costs are not fully covered.

The clean-power requirement is tied to Massachusetts’s existing clean-energy standard rather than a requirement that every watt come from a clean source. TechCrunch reports that approved sources such as wind, solar and hydro must supply at least 40% of total power in 2030, with the required share changing over time.

From tax incentive to tighter conditions

The policy reverses the recent direction of travel. Massachusetts legislators approved a tax incentive for data-center development in 2024, but Healey paused the incentive in June. Her administration is now pausing applications for the sales-tax exemption while regulators implement the new restrictions.

Local resistance had already made the issue tangible. Lowell and Mansfield approved moratoriums on new data-center development, while Holyoke enacted a citywide ban. Massachusetts has roughly 50 data centers, most of them in Greater Boston, according to NBC Boston.

The next test is enforcement

The framework directs developers to protect water resources, air quality, public health and safety, and to engage transparently with nearby communities. It also bars state agencies from signing nondisclosure agreements with data centers, placing transparency alongside the project’s power and permitting obligations.

The immediate change is procedural: a large facility now needs a locally acceptable bargain and a compliant resource plan before it can seek state approval. TechCrunch characterized Massachusetts as the third state in three months to add new limits on data-center development, after separate actions in Texas and New York.