New York passes first-in-nation one-year moratorium on large data centers

This moratorium marks a major shift from industry incentives to restrictive regulation as streaming and AI infrastructure outpace grid capacity. If signed, New York becomes the inaugural state to enforce a pause, potentially creating a blueprint for other markets facing similar resource constraints. For streaming providers, it signals a period of capped capacity that could drive infrastructure costs higher or force regional shifts in server deployments. Market observers should monitor the $28 billion in planned New York projects now in limbo, as well as the December signature deadline, which will determine if this regulatory friction becomes a permanent feature of the Northeast's digital economy.

The New York moratorium is part of a broader 2026 legislative trend targeting the energy-intensive digital infrastructure sector. Per MultiState (February 2026), more than 300 bills across 30 states were filed in the first six weeks of the year, shifting focus from tax breaks to grid accountability. This surge follows significant cost increases in wholesale power. For example, data center demand contributed to a 76% rise in wholesale power costs for the PJM Interconnection region in Q1 2026, according to a May 2026 report by Monitoring Analytics. To mitigate these impacts, the New York bill includes provisions requiring utilities to establish independent service classifications to ensure data centers pay full infrastructure costs rather than passing them to residential ratepayers.

While New York may be the first to implement a formal statewide ban, other regions are pulling back on historical incentives. In May 2026, Illinois Governor J.B. Pritzker announced a suspension of tax incentives for new data center applications, while Virginia and Georgia moved to reduce or eliminate long-standing credits. These actions emerge as Goldman Sachs Research (May 2026) projects U.S. data center power demand to climb from 31 gigawatts in 2025 to 41 gigawatts in 2026. This rapid growth has already resulted in significant project delays; JPMorgan Chase noted in May 2026 that over 60% of data center capacity planned for the following year had not yet entered construction due to permitting and power bottlenecks.

Governor Kathy Hochul’s ultimate decision remains uncertain despite her January 2026 State of the State remarks, which proposed reforms to make data centers "pay their fair share" and stop "phantom loads" from destabilizing the grid. However, per TechInformed (June 2026), she previously expressed a preference for keeping permitting decisions at the municipal level, arguing against broad statewide intervention. If she allows the bill to pass, New York’s new standards will also mandate that facilities above 5 megawatts use 90% renewable energy by 2040, further tightening requirements for infrastructure providers in the state.