This story was originally published by the NJ State House News Service through the NJ News Commons.
The main driver in the 20% jump in electricity costs New Jerseyans faced in June was attributable to data centers, according to a news study by New Jersey Policy Perspective.
With 48 data centers already operating and 12 more in the works, the state has become a hot spot for data center construction. With the rise of data centers, comes a rise in energy costs, according to the report by the progressive tax policy think tank. Of the 20% increase in electricity costs New Jersey residents faced in the summer, an estimated 70% of that was due to data centers.
“New Jersey residents and small businesses are already paying more for electricity because of data center energy consumption,” the report said.
Data centers, typically used for artificial intelligence operations, are simply large computer warehouse that use energy to power their technology and cool down the computer software. They may be useful, but a typical large data center uses as much energy as 100,000 households use, the NJPP report said.
As data centers continue to pop up across the nation, many states have made changes to their subsidies and tax programs. In reaction to data center expenses, some states are providing tax breaks – reducing sales tax, or lowering property taxes – while others have provided exemptions on electricity taxes.
New Jersey’s plan, Next New Jersey, allows for artificial intelligence businesses to apply for up to $500 million to cover construction, building, or employment-related costs, according to the NJPP report.
