Key takeaways:
- Data centers are growing rapidly across Oregon and Washington, using more electricity than ever before and stressing our grid and resources.
- Data centers should help strengthen, not hinder, the electric grid, support clean energy goals, and pay their fair share.
- A SMART standard for data centers would deliver community benefits, protect utility customers, and increase transparency.
Utility bills are rising and demand for electricity is growing fast across Oregon and Washington. Data centers’ growth and unprecedented demand to power the AI boom creates huge pressure on our region’s shared grid and energy system, as well as health, water, climate, and communities.
Oregon is already the third largest data center hub in the country, and many gigawatts-worth of new data center projects are proposed across the Northwest. Governor Tina Kotek has issued a statewide pause on permits for new data centers (effectively a temporary moratorium) until July 2027, giving the state legislature time to pass stronger protections for air, water, energy, and communities. We believe this is the right move until common-sense guardrails like a SMART standard for data centers can be put in place.
The SMART standard for data centers
We believe the Northwest needs stronger protections to ensure data centers don't drive up costs for households, undermine climate progress, or leave communities bearing the impacts without seeing meaningful benefits in return. Climate Solutions developed the following “SMART” framework with the standards we believe data centers should be required to meet before moving forward. This will help ensure any future data center development benefits Oregon and Washington communities, protects ratepayers, and advances our clean energy future.
The SMART Standard for Data Centers
- Strengthen the grid: Improve grid reliability and resilience through flexibility, storage, and planning.
- Maximize community benefits: Ensure economic growth benefits communities by investing in resilience, workforce development, and energy affordability.
- Advance the clean energy transition: Accelerate, not hinder, Oregon and Washington’s clean energy future by pairing growth with new clean energy, storage, and efficiency.
- Reduce costs for families and businesses: Protect energy affordability by paying their fair share and preventing cost shifts onto other ratepayers.
- Transparency that builds trust: Provide public reporting on energy, water, emissions, and impacts.
Data centers consume enormous amounts of electricity and transmission capacity while expecting utilities and the grid to meet that unprecedented demand without contributing to the reliability or resilience of the system. The power demand from these facilities can fluctuate dramatically, which is very difficult for a utility to balance and risks widespread blackouts. They also push system peaks higher and higher, which threatens grid reliability and is a major cause of rising utility bills. Combined, this threatens the availability, reliability, and cost of existing energy resources, grid capacity, and transmission that serves all people and businesses in the Northwest.
Because these facilities are among the largest new sources of electricity demand, they should be required to support the grid’s reliability through demand flexibility, energy storage (in front of and behind the meter), capability to cut back on power demand (i.e., curtail) during grid emergencies, and more transparent load forecasting. Many utilities and states are starting to require greater flexibility (like shifting computing loads) during peak times, and curtailment if there’s a grid emergency instead of risking a power blackout for vulnerable residents.
In Oregon, new data centers in PacifiCorp utility territory will be required to have flexible energy use to protect households from blackouts, thanks to new PUC rules implementing the POWER Act. A Duke study showed huge energy and cost savings from this approach, and a recent Sylvan Energy study found that requiring data center flexibility could help keep the Northwest’s power grid reliable as electricity demand grows.
Utilities and regulators also need greater visibility into future data center development so they can plan responsibly and avoid unnecessary and costly infrastructure investments, like building new, expensive gas power plants to serve a phantom projected load that never materializes as expected.
M = Maximize community benefits
People should see clear benefits when data centers are sited or choose to grow in their communities. Any public incentives should be tied to measurable public value, commitments, and outcomes that support responsible growth.
Data centers can place significant demands on local infrastructure and natural resources like water, while also receiving lucrative tax breaks that otherwise would fund local and statewide benefits like schools and services. Their backup generators also pump diesel pollution into the air. While some (not all) data centers contribute to the local tax base and economic development, residents and their local governments expect more in return for hosting facilities with such significant impacts. In Oregon, data centers’ tax breaks already exceed $750 million per year, with no strings attached.
Communities should see tangible benefits through investments in energy bill savings, resilience improvements like solar and storage, microgrids, and investments in home and business weatherization, energy efficiency, storage, and heat pumps. These types of investments also benefit the data center operators themselves by freeing up more grid capacity, and are often paid for by fees or per kilowatt surcharges assessed on data centers.
Data centers should also replace backup diesel generators with battery storage and microgrids that emit no air or climate pollution. In the near-term, using cleaner-burning renewable diesel in existing diesel generators would cut some local air and climate pollution as well. Utilizing project labor agreements, community benefit agreements, and workforce development programs would help ensure good jobs, worker protections, and strengthen peoples’ quality of life.
A = Advance the clean energy transition
Data center growth should support, not undermine, state climate and clean energy goals.
The Northwest is working toward a 100% clean electricity system while also electrifying much of the transportation, buildings, and industry sectors. If data center growth drives additional fossil fuel generation or delays clean energy deployment, it will make the clean energy transition much harder and more expensive to achieve.
Policies should ensure that data center loads do not impede utilities’ clean energy targets nor the state’s greenhouse gas emissions goals. New demand by data centers must be paired with additional clean energy resources, storage, demand flexibility, and energy-efficient technologies along with shaving peak capacity (sometimes called BYONCE: Bring Your Own New Clean Energy). These solutions ensure data center investment strengthens the grid, maximizes community benefits, and hastens the region’s clean energy transition.
R = Reduce costs for families and businesses
Large corporate energy users like data centers should pay their fair share for the grid and energy resources needed to serve them. Households and businesses should not be expected to subsidize data centers’ growth and energy costs in their utility bills.
Serving large new loads often requires expensive investments in generation, transmission, substations, and other infrastructure. Data centers can compete for limited existing energy and transmission capacity too, outbidding and increasing utility spending on energy resources and transmission upgrades needed to serve future growth and maintain system reliability. Increasingly, more energy resources are required (or expensive wholesale market purchases are needed) to serve a peak capacity driven higher by data centers.
Strong regulatory protections and fees are needed to ensure data centers are responsible for paying all of the costs they create, both directly and indirectly, and that those costs are not shifted onto other customers through higher utility bills. Protections also must address the risk of stranded assets if energy demand and accompanying projects requested to meet data center load are later delayed, scaled back, or abandoned. Oregon’s POWER Act offers a strong example of how to better shield ratepayers from these costs and risks, but comprehensive statewide frameworks for responsible data center growth are still needed in both states.
T = Transparency that builds trust
Trust begins with transparency. Communities and decision makers deserve access to meaningful information about projects that affect them.
Today, policymakers and the public often have limited visibility into planned data center development due to non-disclosure agreements (NDAs), as well as data center energy use, water consumption, greenhouse gas emissions, backup generation sources, and future growth and demand projections. A newly released Oregon data center report underscores why these guardrails are urgently needed. Researchers found significant gaps in publicly available information about data center impacts, including water use, emissions, tax, and community effects. At the same time, the report found that accommodating future growth will require substantial new electricity resources, transmission capacity, and coordinated infrastructure planning.
These are exactly the kinds of challenges that call for clear standards, transparency, and public oversight. While limiting or ending NDAs for data center deals has received a lot of attention, more transparent reporting of planned, actual and forecasted data centers and their use is also needed to enable better planning, stronger oversight, and more informed public discourse. This can also help ensure data center operators are held more accountable for their commitments and impacts.
Why data center protections matter
Growing concern about data center impacts has understandably led some communities to consider moratoriums (i.e., a temporary pause) on data center development. These are especially called for while policymakers evaluate the implications and need for tools to better manage this rapid growth. People want real answers about, and better accountability for, rising energy demand, utility costs, water use, and other community and resource impacts of data centers.
A moratorium may create needed time to answer those questions and demand greater responsibility of data centers. But a pause alone won't solve the underlying problem or provide enough certainty about future growth unless lawmakers also put lasting guardrails and protections in place.
Ultimately, every state will still need to decide what standards data centers must meet to continue to operate and expand. This region knows better than to wait for the federal government to act. There are already hundreds of data centers in Oregon and Washington, and dozens (if not hundreds) more proposed on the horizon.
We can and should ask for more from data centers, especially AI hyperscalers, before they continue to build and operate in our region.
How the Pacific Northwest can build on the POWER Act
Climate Solutions has been working on these issues for years because data centers sit at the intersection of climate pollution, clean energy deployment, energy affordability, and electric grid reliability.
From the 1970s until recently, the Pacific Northwest maintained reliable and relatively clean electricity supplies without major transmission buildouts due to significant energy efficiency gains and modest load growth. The current AI data center rush has driven growth unlike anything our electric system has experienced before. A new hyperscale data center demands as much electricity as a mid-size city within a matter of months to years.
Oregon is already one of the biggest data center hubs in the country, according to a new data center report by ECONorthwest and University of Virginia. Together, these facilities consumed approximately 23% of Oregon's retail electricity in 2025 (equivalent to 71% of Oregon households’ use). Data center electricity demand is projected to grow to over 30% of statewide electricity demand by 2030, which is equivalent to powering about 2.5 million homes (more than exist in the state).
Rising public awareness and concern about the impact of data centers’ rapidly growing electricity demand on utility bills helped lead to the passage of Oregon's POWER Act in 2025. The legislation, led in partnership with Citizen’s Utility Board of Oregon, helps ensure data center growth does not come at the expense of households, small businesses, or Oregon's clean energy goals. Passed by legislative leadership and signed into law by Governor Kotek, the POWER Act has positioned Oregon as a national leader in starting to address the emerging challenges associated with data center growth.
But the POWER Act was only a first step. Significant questions remain around transparency, community benefits, water use, statewide regulation, and long-term planning as data centers and their energy demand continue to grow in Oregon. Washington continues to lack many protections and guardrails for the significant data center growth proposed across the state.
That’s why we believe the SMART standard can help policymakers address these challenges and establish clear expectations for more responsible data center growth. With the 2027 legislative sessions rapidly approaching, Oregon and Washington have an opportunity to build on recent progress and continue emerging as leaders in strong data center protections that better serve the public interest.
