NJ Ready to be an AI Hub?

By Anthony Birritteri, Editor-in-Chief On May 29, 2025

Gov. Phil Murphy wants to make New Jersey an AI hub. That means making room for larger data centers that consume more power. During a panel discussion at yesterday’s New Jersey Utility Association’s (NJUA) annual conference in Morristown, the pros and cons of this endeavor were discussed, detailing the possible energy cost impacts on residents and businesses alike.

On the regulatory side, Dr. Zenon Christodoulou, a commissioner at the New Jersey Board of Public Utilities, was concerned about the power load requirements new data centers need to handle AI processing. He told the audience that land can be found, “but at what cost?”

“How much will it cost ratepayers and other businesses?” he asked. “Will other businesses [in a community] be crowded out and prevented from accessing the power they need to run their factories? Will it make energy prices so expensive for residents that they will move to Pennsylvania or other states? These are the things we need to work through in the short-term to make sure we don’t make any mistakes.”

In response, Ed Gray, vice president of asset management planning at Public Service Electric & Gas (PSE&G), said that data centers are like other large industrial users in that they pay “more into rates” than other users (residents and businesses). “When you spread out the load among larger [users] it will typically draw down distribution and transmission rates. … It’s just like a tax ratable. You want an industry in your town because it lowers the tax rate.”

Gray did say that energy generation is the real issue in the discussion, with Christodoulou adding the state and region are in a very constrained energy supply environment.

“Every megawatt and gigawatt you are going to take off the system (for a data center) is going to impact people significantly,” Christodoulou said.

Referring to an earlier session at the conference that discussed rising energy costs, as high as 20%, that will go into effect on June 1, he said, “Increases will happen again if we take a gigawatt or two off our grid for [large-scale] data centers.”

PSE&G’s Gray rebutted, “If we don’t build them in New Jersey, (data centers) will go across the Delaware River and be built in Pennsylvania, while (New Jersey) will still have all the concerns about price increases and get none of the associated benefits.”

Fishing for Data Centers

Panelist John DaCosta, global director, design and engineering at Google Data Centers, was asked by session moderator Tom Bergeron of BINJE what Google looks for when searching for a data center location.

DaCosta first responded that the amount of land required for new centers has “increased dramatically because “AI is power hungry.”

He said the footprint must be larger, water usage (for cooling) has to be available, there has to be redundant power and communication lines, and the location must have a low probability for natural disasters.

Additionally, he said there must be access to a skilled workforce that can build and operate the new centers.

Dan Kennedy, CEO of the New Jersey chapter of the National Association of Industrial & Office Properties (NAIOP), said warehouses can be turned into data centers and avoid some of the criticisms that usually come along with warehousing – mainly truck traffic. He added that the state has “wasted space close to its ports” because of environmental regulations, and that conflicting policies continue, such as turning the state into an AI hub, while limiting where data centers and warehouses can be built. “It’s a complete juxtaposition,” Kennedy said.

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