Reflections on the Data Center Workgroup: A Decent Start, But More Needed

by Zachariah Baker, Regional and State Policy Director

The Governor’s Data Center Workgroup wrapped up its work in early November, with the final report expected by December 1. As a member of the Workgroup, I had a front row seat to the conversations and a 360-degree view, participating on both the Tax Revenue and Economic Development and Energy and Resource Impacts subgroups of the Workgroup. Given the diverse perspectives in the room (industry, public interest organizations, a Tribe, labor, and state agencies) and the complexity of the issues, agreement wasn’t easy to come by.

The Workgroup ultimately landed on 31 Findings and 8 Recommendations. While the recommendations are a decent start, more is needed—and quickly! Participants had the opportunity to submit minority reports to accompany the Workgroup report to the Governor. Given timing constraints and the cross-cutting nature of my reflections which did not readily fit into the minority report requirements, I did not submit an individual minority report. This blog serves to illuminate my thoughts on the Workgroup products, with an eye toward moving the conversation forward.

A Rapidly Growing Challenge With Potential For Substantial Impacts

The Workgroup Findings recognize data centers present a rapidly growing challenge with potential for substantial impacts. As the Findings note, data centers come with a number of potential impacts:

• Significant electricity demand and associated grid buildout (Energy Finding #6)
• Financial and reliability risks for other utility customers (Energy Finding #7)
• Air quality impacts and GHG emissions (Energy Finding #17)
• Direct and indirect impacts to tribal communities and treaty-protected resources, and the broader natural and built environment (Energy Finding #18)
• Impacts to water resources and related habitat, species, and public infrastructure (Energy Finding #19)

In addition, data centers are projected to grow rapidly, raising the stakes of these potential impacts. As Energy Finding #6 notes, data centers are the largest source of expected load growth in the Pacific Northwest. According to the Northwest Power and Conservation Council forecast cited, the most rapid data center growth is expected in the next few years. The Workgroup heard that this forecasted regional tech load could be equivalent to 2-4 additional Seattles by 2030. We also heard that in Washington, multiple Public Utility Districts are facing requests from data centers for power that is more than 2-3 times the utility’s current retail load.

As a result, it was clear that the state needs to take action swiftly to protect ratepayers, communities, and the environment.

How the Recommendations Stack Up

Given the challenges noted above, I advocated for a version of the following principles to guide the recommendations (and future action):

• Protect and further Washington’s clean energy and climate goals
• Protect ratepayers from financial and reliability impacts
• Minimize impacts to communities and natural resources
• Maximize benefits to communities

The Workgroup Recommendations are a decent start, but more is needed – and quickly! A more detailed discussion of how the recommendations stack up to the principles above follows.

Protect and further Washington’s clean energy and climate goals

Due to the large energy demand of data centers and potential to meet that demand with fossil fuels, data centers pose a threat to Washington’s clean energy and climate goals. In addition, the potential for data centers to contribute to higher electricity bills and reliability issues can also add challenges to decarbonization efforts. At the same time, data centers could potentially help further the clean energy transition if done right (e.g., making contributions to building out the grid and helping households electrify).

Workgroup Recommendation 1 aims to maintain the integrity of Washington’s climate and clean energy laws: “Ensure Washington’s Climate Commitment Act and Clean Energy Transformation Act operate as envisioned to cover any fossil or unspecified power sources used by large data centers.” This is an important cornerstone recommendation as these laws create the framework for Washington’s clean energy transition.

Given the race to build data centers, the bounds of these laws may be tested. We heard in the Workgroup that data centers are considering turning to natural gas to meet their energy demand. There may be some ambiguity around whether CETA would cover this or other fossil fuel scenarios—e.g., if power were coming from port districts or if data centers generate some of their own power. The Workgroup specifically rejected a deeper conversation about the intricacies of CETA and CCA as it relates to data centers, but it is a critical conversation moving forward.

Recommendations 7-9 aim to accelerate clean energy. These recommendations focus on transmission, siting and permitting, and deploying existing and emerging clean energy technology. These actions are important not just for data centers, but for achieving the state’s climate and clean energy goals more generally.

At the same time, there is no actual requirement that data centers are powered only with clean energy from the start, or soon thereafter. Setting aside the potential ambiguities on CETA coverage for data centers mentioned above, CETA requires 80% clean (and carbon neutral) by 2030, but does not require 100 percent clean until 2045. The current tax exemptions for data centers allow data centers to claim exemptions for power infrastructure whether it is fossil fuel or clean.

Given the massive amount of power data centers need, and the significant economic resources of tech companies building data centers, and their own clean energy commitments, it is important that they are required to go further and faster to power data centers with clean energy. This can be done through regulatory or tax incentive requirements for higher levels of and/or a faster transition to 100 percent clean energy.

Recommendation #5, which was voted down, included a bullet focused on adding clean energy requirements to the tax incentives. Depending on the details, this could be an important piece of the puzzle per the joint minority report I submitted with others on the topic.

The clean energy portion of Recommendation #5 also included the idea of data centers contributing to transmission or grid capacity in lieu of bringing their own clean energy. There was also an idea offered in the Workgroup conversation about data centers contributing to home upgrades that support decarbonization and energy efficiency including heat pumps and weatherization inspired by this Rewiring America report. The role of companies building data centers to contribute to furthering our efforts to decarbonize the grid is worthy of more discussion.

Protect ratepayers from financial and reliability impacts

Due to the massive energy demand of data centers and the associated build out of utility energy infrastructure that is needed to serve that demand, there is a potential for higher electricity bills for residential and other non-data center utility ratepayers. In addition, the large amount of energy needed can cause reliability issues and increase the risk of blackouts, which can add to costs in addition to other problems. Thankfully, a number of Workgroup recommendations are aimed at addressing these issues.

Recommendation 2 is the crux of protecting ratepayers from financial impacts. It states:

“Require the UTC and consumer-owned utilities develop model tariffs or model contracts for a new rate class that: (1) identify a MW threshold for the tariff serving new large loads; (2) specify the characteristics of these new loads; (3) require new large loads pay for the direct interconnection costs caused by their interconnection; (4) require new large loads cover any costs of generation, transmission or distribution systems required to serve new large loads and avoid shifts of costs or risks to other customer classes, including potential stranded assets.”

Many states are developing large load rate classes or tariffs like what was recommended to ensure non-data center ratepayers are not paying for the costs to serve data centers, including our neighbor to the south—Oregon. Unlike Oregon, this recommendation covers all utilities, not just investor-owned utilities. This is particularly important given that a lot of the data center build out in Washington has been in consumer-owned utility territory. In addition, this new rate class or tariff should cover both new and existing data center loads (the Workgroup conversation was focused on all data centers paying their full costs).

Getting a better handle on the actual projected load (Recommendation 6) can avoid utility overinvestment and stranded assets. We heard in the Workgroup that some data centers are forum shopping with their requests, which is potentially inflating load projections.

Demand response, load flexibility, and load management programs would allow the data centers to moderate power at peak times to weather grid stress and market price spikes. But Recommendation 3 only suggests incentivizing these items. Texas requires data centers to curtail their power during emergencies. Data centers curtailing power during emergencies should be a minimum in Washington. It not only would help avoid blackouts and financial costs to ratepayers, but also ensure salmon recovery efforts are not thwarted during energy emergencies.

Similarly, data centers generating their own power on-site or having energy storage systems on-site could also alleviate stress on the grid. But Recommendation 3 only recommends studying the potential and does not distinguish between clean energy or fossil fuels. A study in Washington should focus only on clean energy given our climate and clean energy goals. And a study is not enough as we already know this is a key solution.

A portion of unsuccessful Recommendation 5 would have included data centers bringing their own clean energy including via on-site generation as a requirement of receiving the tax exemption. While it did not pass, this again could be an important tool for addressing financial and reliability risks as discussed in the joint minority report I submitted with others.

Minimize impacts to communities and natural resources

Data centers can have negative impacts on communities and natural resources due to energy and water usage and land use. The Workgroup Recommendations include a number of items aimed at addressing these issues. But, these are largely focused on reporting and studies, which are not enough.

Recommendation 3 requires data centers to publish a sustainability report prior to construction and when replacing equipment. Recommendation 4 also requires annual reporting on water use. Annual reporting of energy usage is not included. There is also no mention of whether or how these reports would factor into state or local agency analysis or decisionmaking or how they could be used to require or incentivize better practices.

Recommendation 4 suggests the Department of Ecology conduct a study and develop best practices for siting and operating data centers with input from permitting agencies, industry, Tribes, interested parties, local government, and utilities. This is an important recommendation, but it begs the question how the study would translate into action—and if so, how quickly given that data centers continue to operate and site.

Beyond reporting and studies, Recommendation 4 suggests replacing the data center sustainability provisions in existing law with a standard that more specifically encourages energy and water efficiency at newly constructed data centers. The tax exemption currently requires that newly constructed data centers must attain certification for sustainable design or green building standards. This standard could certainly be improved as suggested, but the new requirement can be additive. Green building standards can get at a number of environmental considerations including embodied carbon in construction materials. In addition, the added energy and water efficiency requirement should not just “encourage” as the Recommendation states, but “require” more energy and water efficiency. In addition, this recommendation only focuses on new data centers, but it is important to also maximize energy and water efficiency at existing data centers.

Ultimately, to adequately protect communities and natural resources there need to be at least minimum standards that all data centers (new and existing) must meet, and ideally best practices. Best practices could potentially be incentivized through tax incentives. These standards need to be reviewed and updated regularly (e.g., every 3-5 years) as technology is changing rapidly.

These standards would not only be in the best interest of communities and the environment, but in the best interest of industry. Although not noted in the Workgroup Findings, opposition to data centers is accelerating. According to Data Center Watch, in Q2 2025 alone, an estimated $98 billion in projects were blocked or delayed, more than the total for all previous quarters since 2023. “As political resistance builds and local organizing becomes more coordinated, this is now a sustained and intensifying trend.” Data centers meeting a strong set of minimum standards and a range of best practices could potentially be more welcomed by communities, especially if data centers also work to maximize benefits to communities as discussed below.

Maximize benefits to communities

The Workgroup heard about the property tax and job benefits of data centers in some communities. But these benefits are integrally intertwined with the potential negative impacts discussed above. The protections discussed above must be in place to be able to maximize benefits for communities. Building from there, there are multiple opportunities.

Data centers across the country are making deals to include workforce training, energy efficiency and affordability funds, etc. Minnesota passed a bill that includes charging data centers an annual fee that goes towards supporting energy conservation and weatherization for low-income households. Rewiring America released a report that shows that hyperscalers can unlock the capacity they need—and build a better energy future—by decreasing residential peak demand through direct investment in household upgrades including heat pumps and rooftop solar. Those upgrades have multiple benefits for households including lower electricity bills, higher comfort, better health, and other benefits. Ideas like these are important to maximize benefits to communities.

To put communities in the driver’s seat, I advocated that Community Benefit Agreements (CBA’s) be required at least as part of receiving the tax exemption. CBAs offer communities an opportunity to negotiate with developers to ensure development of a data center provides the benefits a community desires (and relatedly, addresses community concerns). While CBAs did not end up in the Workgroup Recommendations, they are a critical tool to ensure communities and developers are talking with each other about how to maximize benefits for the community.

More Needed…and Quickly!

As detailed above, the Workgroup Recommendations are a decent start, but more is needed…and quickly. There was no discussion of next steps in the Workgroup, but it is clear given the stakes at play, action is urgently needed. How do you think the Workgroup Recommendations stack up? What do you think is missing? Let’s connect!