Keaton PetersWashington is the latest state to take action to manage its growing data center industry while addressing energy and environmental concerns. Governor Bob Ferguson recently signed an executive order establishing a Data Center Workgroup to evaluate the industry’s impacts on the state’s economy, energy grid and environment.
The workgroup formation comes as data centers have become increasingly critical to Washington’s economy. The state has historically courted high-tech industries from Boeing to Amazon, and the surge in data centers is no different. A recent analysis found that data center tax exemptions saved companies over $100 million during the 2017-2019 biennium. But questions remain about the new industry’s energy consumption and environmental impact.
For state governments, building the economy through technology sector growth without compromising sustainability goals is quickly becoming one of the primary challenges of the decade. As data centers consume significant electricity and require expanded power infrastructure, their environmental impact has drawn increased scrutiny even as they drive economic growth and provide essential digital services.
“Balancing economic development, state and local tax revenue, energy use, and environmental responsibility is vital to ensuring Washington state remains a leader,” Ferguson’s executive order stated.
The initiative follows similar efforts in other states to better understand and manage data center energy demands. California’s Demand Analysis Working Group (DAWG) already provides a forum for technical discussions on electricity and natural gas demand forecasting, including impacts from data centers and other large energy users. The California group focuses on building consensus around energy demand forecasts and includes specialized subgroups for electricity demand, natural gas, load modifications, and long-term scenario modeling.
In Washington, the state Department of Revenue will lead the workgroup, which includes representatives from multiple state agencies, utilities, environmental groups, labor organizations, and industry stakeholders. The group will examine data centers’ effects on Washington’s economy, tax revenue, energy consumption and environment.
While California’s DAWG focuses primarily on forecasting and technical analysis, Washington’s workgroup has a broader mandate that includes economic development and tax policy. Key areas of focus include the industry’s role in job creation and property tax revenue generation, particularly in rural communities. The workgroup will also address concerns about data centers’ strain on local power grids and increased demands for energy generation and transmission infrastructure.
The executive order tasks the workgroup with developing policy recommendations that promote sustainable industry growth while meeting tax revenue needs and addressing energy constraints. These recommendations are due to the governor by December 1, 2025.
In addition to California and Washington, the New York Power Authority is part of an initiative to optimize grid management to handle new data centers. In Virginia, a government task force issued a report on data centers to the governor and general assembly at the end of 2024.
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