The rapid expansion of artificial intelligence is prompting governments, regulators and local authorities across the world to introduce stricter controls on new data centre developments. Rising concerns over electricity demand, water consumption, land availability and pressure on local infrastructure have led several regions to either freeze, restrict or completely prohibit new projects.
The growing use of AI applications has significantly increased the need for large-scale data centres, which require substantial electricity and cooling resources to operate. As a result, many governments are reviewing whether existing infrastructure can support further expansion without affecting households, industries and public services.
In the United States, New York State has become the first state to impose a full moratorium on the construction of data centres that require 50 megawatts (MW) or more of electricity. During the one-year pause, the state's Department of Environmental Conservation will not issue new discretionary permits while it develops environmental assessment standards for such facilities. The move is aimed at evaluating the long-term environmental and infrastructure impact of large data centres before allowing additional projects.
Another proposal in the U.S. emerged in Maine, where legislation seeking an 18-month moratorium on new data centres consuming more than 20 MW of power was ultimately vetoed. Governor Janet Mills said she supported the concept of a temporary pause but opposed the legislation because it did not include an exemption for a specific proposed project in the Town of Jay.
Local governments are also taking action. In Monterey Park, California, residents voted in favour of permanently banning data centres following opposition to a proposed facility. The decision, taken in the past month, made Monterey Park the first city in the United States to approve such a ban through a public ballot.
In Amsterdam, restrictions on data centre expansion have become progressively stricter. The city first introduced a one-year moratorium in 2019 and, in the past year, decided to prohibit new data centres and expansions within the municipality until at least 2030. At the national level, the Netherlands introduced a hyperscale data centre policy in 2022 that limits such facilities to only two designated locations. Despite these restrictions, Microsoft received approval earlier this year for a project designed as three separate towers, each remaining below the regulatory size threshold.
Ireland had effectively restricted new data centre grid connections around Dublin from 2021 after concerns that growing electricity demand from these facilities was placing excessive pressure on the national power network. The restriction was lifted in the past year, but new projects are now required to provide their own on-site electricity generation before receiving grid access.
In Australia, the federal government is preparing new legislation as part of a broader artificial intelligence regulatory framework. Prime Minister Anthony Albanese said the country will establish a dedicated government office to oversee AI standards, including rules governing the location of large data centres as well as their electricity and water consumption. The legislation is expected to be introduced early next year. Australia currently does not have dedicated AI legislation and instead relies on existing privacy laws, consumer protection regulations and voluntary AI ethics guidelines.
Denmark has also moved towards tighter controls by introducing draft legislation that would give new data centres the lowest priority when allocating electricity grid connections. The proposal has broad political backing, representing around 80% of the country's parliament, and seeks to prioritise electricity access for households, healthcare services, industrial businesses, transport infrastructure and renewable energy projects.
The Danish government said the country's electricity network is facing increasing pressure because of rising power demand and a growing number of connection requests, particularly from large data centre developments. The proposed changes are intended to ensure that limited grid capacity is first allocated to essential sectors before new data centre projects are considered.
The increasing scrutiny of data centres reflects a wider global debate over balancing digital infrastructure growth with environmental sustainability and resource management. While AI investment continues to accelerate, governments are placing greater emphasis on ensuring that future data centre developments align with power availability, climate goals and long-term urban planning policies.
Source Reuters