🔒CT considers ‘bring your own power’ model for data center development

Gov. Ned Lamont signaled a potential policy shift in Connecticut’s approach to data center development earlier this month, saying the state would “slow down new data centers, unless they add more generation as well.” The remark, delivered during the Democratic governor’s Feb. 4 State of the State address, suggests Connecticut may consider linking future data center growth to additional electric generation. Lamont framed the issue by contrasting Connecticut with lower-cost states that have embraced massive data center development and faced resulting strain on their energy supplies. Any formal policy behind the governor’s comments, however, remains undefined. Lamont’s office said no specific legislation has been drafted, though discussions are underway. “While no current law or regulation exists, the governor is looking to discuss the issue with lawmakers and stakeholders en route to a potential legislative approach,” said Rob Blanchard, Lamont’s director of communications. When pressed for details about the proposal, Blanchard told the Hartford Business Journal the concept “is very premature.”

Preventing a ‘crisis’

With artificial intelligence-driven computing and other energy-intensive technologies expanding rapidly, questions about power supply — and who bears the cost of expanding it — are emerging as a central issue in Connecticut’s and the country’s data center debate.

Lee Hoffman, chairman of Connecticut law firm Pullman & Comley, said the situation underscores the need for policy discussion, noting that proactive legislation could help prevent data center demand from outpacing supply and raising electricity costs. “I’m encouraged by the fact that the governor is willing to start this conversation before it becomes a crisis,” Hoffman said. According to the Congressional Research Service, U.S. data centers consumed about 25 gigawatts of electricity in 2024. Projections from 451 Research, part of S&P Global, estimate demand could reach 134 gigawatts by 2030 as AI use surges. For Connecticut, where electric rates rank third-highest in the country, the question is not only how to attract data center investment, but how to do so without shifting additional costs onto ratepayers. Some developers are already pursuing the model Lamont referenced. Colchester-based ReNew Developers is advancing data center projects powered by on-site generation, including fuel cells, so they can operate largely independent of the grid.

“We completely align with the governor on this type of outlook for Connecticut,” ReNew Developers CEO John Matheson said in a recent interview. “The most viable way to do these projects in Connecticut is as smaller, lower-impact facilities located at the edge of technology deployments, that generate their own power and operate independently of the grid.” Matheson said electricity is the largest operating cost for data centers. Connecticut’s average commercial electricity rates — about 21 to 23 cents per kilowatt-hour — are significantly higher than the national average of 13.19 cents, a disparity that business leaders say undermines the state’s competitiveness. Matheson’s solution is: “We bring our own power.” Nationally, ReNew said it has 27 megawatts of clean energy projects permitted or under development, with more than 100 megawatts in the pipeline. The company, which has 11 employees and operates with a multistate virtual team, focuses on smaller facilities designed for “edge computing” — localized data processing that supports small businesses and government agencies — rather than the massive hyperscale data centers expanding across states such as Virginia and Texas. These smaller facilities, typically requiring 4 to 10 megawatts of power, are designed for users that need extremely fast response times and computing capacity located close to where data is generated. Matheson said sectors such as financial services, biomedical research and university labs in Connecticut are among targeted customers. ReNew also develops closed-loop cooling systems designed to minimize water consumption and pairs certain projects with greenhouses that repurpose fuel-cell waste heat to grow produce donated to local food banks. The company’s first Connecticut project is a proposed 4-megawatt computing data center in Bristol, with on-site fuel-cell generation. Matheson said the project is in the permitting stage, with construction targeted to begin this summer and operations expected next year.

ReNew's will include government and business users renting rack space for research, AI and other computing needs. The approach could offer a template for Connecticut’s nascent policy, though questions remain about whether requiring generation capacity improves project viability or adds cost and complexity. Matheson said on-site generation solves another problem faced by developers nationwide: the yearslong wait times to secure new grid connections. Projects that do not depend on traditional utility interconnection can achieve “speed to market measured in months rather than years,” he said. Building generation capacity, however, requires significant upfront investment in equipment and permitting — costs some developers avoid by relying on existing grid infrastructure. Over a 20- or 30-year project lifespan, the energy savings from self-generation can offset substantial upfront capital costs, Matheson said.

Projects in limbo

Despite the state’s seemingly cautious approach, Connecticut has tried to attract data center activity. In 2021, the legislature created the Data Center Tax Incentive Program, which offers sales, use and property tax exemptions for up to 20 years for projects investing at least $200 million, or $50 million in an enterprise zone. Investments above $400 million qualify for 30-year exemptions. So far, only one company has applied: Bloomfield-based insurer The Cigna Group for a roughly $380 million project to upgrade its Windsor data center. Jim Watson, a spokesman for the state Department of Economic and Community Development, said the state has not received additional applications. The incentive structure itself may not be settled. On Feb. 10, the legislature’s Energy & Technology Committee introduced a concept bill proposing to repeal certain data center tax incentives, though detailed language has not yet been released. Experts say Connecticut’s limited data center activity stems largely from the state’s dense population and high energy costs. Still, some large projects have been proposed. New York-based Atlas Capital Group last year outlined plans for a roughly 1-million-square-foot data center on Griffin Road North in Bloomfield but has not yet filed a formal application. An even larger proposal tied to Dominion Energy’s Millstone nuclear power station in Waterford stalled after the Connecticut Siting Council denied a required boundary amendment in January 2024, effectively halting NE Edge’s plan to build about 1.5 million square feet of data center space powered from the plant. A separate New Britain proposal pairing a data center with a fuel cell has advanced on the generation side, but the data center itself has not yet begun construction.

Other states

Connecticut is not alone in responding to concerns over the growing energy demands of data centers. Texas enacted legislation in 2025 allowing grid operators to require large energy users, including data centers, to curtail operations during periods of peak demand. Mid-Atlantic states are debating policies that would push very large data centers to secure dedicated power supplies or accept the possibility of interruptible electric service during periods of grid stress. Virginia — home to the world’s largest concentration of data centers — has created special utility rates for those customers. Hoffman, the Pullman & Comley attorney, said Lamont’s position reflects lessons learned from states that aggressively recruited large data centers without fully anticipating grid impacts. He noted that certain provisions of Connecticut law can complicate efforts by private developers to pair data centers with independent power sources. Those restrictions could become a policy consideration as Connecticut weighs how to accommodate self-powered projects. Hoffman pointed to New Hampshire as one possible model. That state recently created a category for “off-grid electricity providers” that can avoid full utility regulation if they do not rely on existing transmission or distribution infrastructure. Connecticut officials have not said whether they are considering a similar framework, but Hoffman said the governor’s approach reflects an effort to balance competing interests. “I think Connecticut doesn’t want to have a moratorium on data centers,” Hoffman said. “But by the same token, I think that the governor is essentially saying, let’s be smart about this, let’s be intentional about this and let’s make sure that we do this intelligently.”