States and nations freeze data center builds amid AI power surge

A growing wave of governments and regulators across the globe are freezing, restricting, or banning new data center construction as concerns over electricity costs, water supplies, and community impacts intensify alongside surging AI demand. From state capitals across the United States to national governments in Europe and Australia, the backlash against the infrastructure powering artificial intelligence has become one of the defining policy battles of 2026.

U.S. States Lead the Crackdown

Pennsylvania became the latest state to act when Governor Josh Shapiro signed an executive order on August 12 removing all data centers from the state's Fast Track permit program and requiring developers of facilities over 25 megawatts to secure local community approval and bring their own power sources. The order also bars state agencies from signing non-disclosure agreements with data center developers.enterpriseai.economictimes.indiatimes+1

New York in July became the first U.S. state to impose a full statewide moratorium, with Governor Kathy Hochul's executive order halting construction of data centers using 50 megawatts or more of power for one year while the state develops environmental standards. Texas Governor Greg Abbott ordered a pause on all new data center grid connections on August 3, directing the Public Utility Commission and ERCOT to audit all proposed projects before any can move forward. "Simply put, Texans must come first," Abbott said.sheppard+3

In California, Monterey Park voters approved a permanent ban on data centers with 86 percent support in a June 2026 special election, becoming the first U.S. city to do so at the ballot box. Florida's gubernatorial primary on Tuesday featured candidates racing to distance themselves from data centers, with one candidate calling for bans in all 67 counties.cnbc+2

International Restrictions Spread

Australia is planning legislation through a new Office of AI established within the Prime Minister's Office, with rules for large data centers covering location, power, and water use due in early 2027. Assistant Minister Andrew Charlton warned on August 18 that "unless we take timely action, Australia is on course to be a large and permanent importer of intelligence". New polling shared with Politico found two-thirds of Australians want a cautious approach to AI, even at the cost of missed opportunities.politico+1

Denmark has introduced a draft bill giving data centers the lowest priority for power grid connections, backed by parties representing 80 percent of parliament. Amsterdam has barred new data centers or expansions until at least 2030. Ireland's grid operator lifted a freeze on data center connections around Dublin only in December 2025, after requiring new facilities to bring their own on-site power generation.enterpriseai.economictimes.indiatimes

A New Regulatory Era

The Federal Energy Regulatory Commission in July directed the North American Electric Reliability Corporation to develop mandatory reliability standards for "computational loads" — including data centers and AI server farms — with a filing deadline of December 31, 2026. The order reflects a broader shift: data centers are no longer treated as routine infrastructure but as instruments of energy, industrial, and security policy.smartbrief

Microsoft ↘ 0.99%, Google Alphabet Inc. ↗ 0.78%, and other hyperscalers now face a patchwork of local, state, and national restrictions that could reshape where and how fast AI infrastructure gets built.