Boost Energy Supply to Meet Data Center Surge

At Issue

By Ray Cantor, NJBIA Deputy Chief Government Affairs Officer On Jul 30, 2025

Data centers have burst onto the policy scene in New Jersey both because they advance AI technology and because of their enormous need for energy. 

How to handle the anticipated growth of data centers, and their energy needs, is a hot topic in Trenton. NJBIA believes the answer to energy capacity challenges is not to discourage the growth of data centers – and the economic activity and jobs they will bring – but to expand the energy supply.

From the start, the Murphy administration’s energy policy objectives have been to eliminate electric generation through fossil fuels, primarily natural gas, in favor of renewable energy, such as wind and solar. Department of Environmental Protection regulations put these policies into effect by lowering carbon emission levels for natural gas electric generation units.

At the same time, the state has been promoting the electrification of both the building and transportation sectors. The state’s Energy Master Plan anticipated that these electrification policies would require a doubling or even tripling of our electric generation needs.

The results were easy to predict. New Jersey went from a net exporter of electricity to a net importer. This scenario was repeated in other states with similar carbon-reduction policies, resulting in less energy capacity in the face of higher demand. PJM, our regional grid manager, has issued numerous warnings for states not to continue to shutter nuclear and fossil plants until we can grow alternative supplies. Those warnings were ignored.

While the electrification policies themselves have yet to have a substantial impact on demand, the unexpected growth of data centers has. Because the PJM’s rate-setting structure considers future needs in a market-dominated system, the recent capacity auction has seen a tenfold increase in costs, resulting in a 20% increase in New Jersey’s electricity bills.

Some lawmakers have promoted bills to either require data centers to “bring their own energy” or “punish” them through higher rates. If New Jersey is to be the AI innovation state, as Governor Murphy has proclaimed, we must be able to attract high-tech data centers.

Rather than discourage data center growth, we should be like Pennsylvania, which has developed ample energy supplies. As a result, Amazon recently announced it is spending $20 billion to develop data centers in that state. New Jersey is on the sidelines watching our neighbor prosper.

If we want to be a leader in AI, we need to also be a leader in energy development.

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