Bills would require, incentivize Delaware data centers to bring their own power

Why Should Delaware Care?
The popularity of artificial intelligence has sparked a boom in the construction of energy hungry data centers, including in Delaware. These bills aim to prevent an energy demand spike from raising electric bills, though critics say they may also scare off the growing industry.  

Delaware legislators are scrambling to address concerns about data centers raising residents’ energy bills before the legislative session ends.

Newly-amended House Bill 233 would make data centers the first to be cut off from power in a blackout unless the project includes its own energy generation. It is sponsored by Rep. Frank Burns (D-Pike Creek) and Sen. Stephanie Hansen (D-Middletown).

The regional electric grid is struggling to produce enough energy to meet growing demand, primarily from the boom in energy-hungry data centers that power new artificial intelligence models. 

“So they have to be the first in line to take the hit,” Burns said. 

The bill also requires data center developers to enter into service agreements that are meant to ensure they pay the full costs of the energy they use, including potential transmission upgrades. 

And House Bill 445, sponsored by Rep. Debra Heffernan (D-Bellefonte), would require data center developers to supply all of the power they use within 10 years of beginning operations, and require some of that power to be renewable.

These bills come as Delaware braces for the impact of five new data centers proposals that have a combined energy demand that could double the state’s entire electricity usage.

Some fear that scenario would lead to increased energy bills across the state — both because of a limited supply of electrons, and because of the costs of the infrastructure needed to serve the demand.

HB 445 has yet to come up for debate, but HB 233 has drawn criticism from some lawmakers, business lobbyists and union representatives, who expressed fears that the legislation could prevent the growing data center industry from even coming to the state.

“We’re putting up another sign that says Delaware is not open for business. And when we continue to do this, then we hurt everybody,” Rep. Jeff Hilovsky (R-Long Neck/Oak Orchard) previously said about HB 233. 

The legislature only has 10 days left in its session to consider these and many other bills in the pipeline. 

HB 445 will likely come before the House Natural Resources & Energy committee, chaired by Heffernan, at its next meeting on Wednesday, June 10. HB 233 has already passed through that committee, and Burns said he is not sure when it will come before the House for a vote. 

What would the bills do?

The original version of HB 233 requires the Public Service Commission, the state body in charge of regulating utilities, to create a “large-load tariff,” or electricity rate and service agreement.

The Public Service Commission is already creating this tariff, but the bill added specific requirements for what it would have to include. 

The recent substitute for HB 233 combines this original proposal with Senate Bill 205, adding a requirement that large energy users like data centers enter into transmission and energy service agreements meant to prevent costs from being shifted to other electricity users. 

These agreements give the Public Service Commission and utilities some leverage to potentially stop data center projects from moving forward. 

Normally, energy utilities are required to serve any company that requests to be connected to the grid. But under this bill, if large energy users and utilities can’t come to a consensus on the service agreements — or if the Public Service Commission denies them — the utilities are not required to connect the projects.

The bill also requires data centers and other large energy users to be the first to be cut off from power in a blackout unless they generate renewable energy.

HB 445 says that data center companies must produce a quarter of the energy they use in Delaware when they begin operations, then produce all of the energy they use in the state within 10 years. 

That energy production has to follow the state’s renewable energy portfolio standards, which requires that Delaware’s utilities derive 40% of their energy from renewable sources by 2035. The bill allows nuclear energy to count toward that percentage. 

A representative from New Castle County’s Chamber of Commerce said in a written statement that it opposes both bills because there is not enough time in the session to deliberate them. The statement also says the chamber and trade unions “are concerned about the significantly negative impact that the legislation would have on Delaware’s economy.” 

Delaware Building Trades did not respond to several requests for comment. 

Public Advocate Jameson Tweedie, who is responsible for representing the public in state decisions about energy policy, said he supports both bills because they could help address the potential energy supply/demand imbalance that could drastically raise electricity prices. 

“The risks to ratepayers are dramatic if we don’t have enough generation capacity for the new enormous [energy] users,” he said.   

Increasing data center regulation across the country

Delaware joins states across the country that are proposing data center regulations to protect ratepayers and promote clean energy.

Hansen said the electric service agreement required in her bill is based on Minnesota’s new law with a similar provision. Sponsored by a Republican representative and Democratic senator, the bill passed the House and Senate there with wide margins. 

She said data center companies and other legislators were hesitant about her original proposal because it did not exist in other states. While electric services agreements are not very common in data center regulation bills, at least one state has done it before. 

“We like being the first state on a number of things, but this was not going to be one of those things,” Hansen said.

The New Castle County Chamber of Commerce called a recent Pennsylvania data center regulation bill “a more balanced approach” than the Delaware proposals. 

That bill does not create any new type of service agreement, but it directs the state’s public utilities commission, a similar public body to Delaware’s Public Service Commission, to review contracts for their impact on electric service reliability and affordability for residential customers.

Similar to HB 233, the proposal gives the commission the teeth to deny a contract if it negatively affects electric bills or reliability. 

Similar to Heffernan’s clean energy initiative, the Pennsylvania bill also requires data centers to generate 10% of the energy they use as renewable energy by 2027, 14.5% by 2030, and 32% by 2035. 

Lauren Posey, an environmental policy advocate for Pennsylvania environmental rights nonprofit Protect PT, said the feasibility of a clean energy requirement depends on a state’s renewable energy breakdown. 

According to the U.S. Energy Information Administration, about 8% of Delaware’s total in-state net energy generation came from renewable resources in 2025. Pennsylvania gets about 5% from renewables.

While she believes it would be better for data centers to use renewable energy, Posey explained HB 445 could be hard to pass since Delaware is already lagging behind in renewable energy and relies heavily on natural gas like Pennsylvania.

“Delaware certainly has a much loftier goal than Pennsylvania does,” Posey said. “I don’t think that’s a bad thing. Shoot for the moon, maybe you’ll land among the stars.”

Democrats make up all the sponsors on Pennsylvania’s bill. Republican representatives have criticized the bill, saying it doesn’t do enough to bring more power generation to the state.

The measure passed the Pennsylvania State House on March 24 and now sits in the Senate