New York has become the first U.S. state to halt large data center construction with a one-year moratorium, while Amazon has acquired a West Texas site to back a massive 7.65-gigawatt off-grid natural gas power plant for AI infrastructure, driving intense national debate over mounting electricity costs and environmental strain.
The artificial intelligence boom is reshaping America’s energy landscape, pitting massive technology expansion against local utility bills and environmental goals. In New York, state officials have moved to freeze large-scale server warehouse construction, while tech giants are bypassing traditional power grids altogether to secure the sheer volume of electricity required for modern AI compute workloads.
New York Imposes a One-Year Ban on Large Data Centers
New York became the first U.S. state to halt construction of large new data centers, imposing a one-year moratorium as concerns mount that facilities driving the AI boom are raising utility bills, straining water supplies, and burdening local communities.
The construction ban applies to data centers that consume 50 megawatts or more of power. During the freeze, the state Department of Environmental Conservation will not issue any discretionary permits that have not already been deemed complete by officials. New York Governor Kathy Hochul directed state regulators to develop a Generic Environmental Impact Statement to establish consistent standards,
while also examining the potential environmental impacts of building and operating these facilities.
Governor Hochul also announced plans to pursue legislation to repeal sales tax exemptions for hyperscale data centers. The executive order follows state legislative efforts last month to pass a bill targeting data centers consuming over 20 megawatts. Officials in the governor’s office noted that the legislative measure is complicated and it's going to take some time to work through
with state lawmakers.
The backlash against data center expansion reflects broader public sentiment across the country. According to a Reuters/Ipsos poll, only one in three Americans approves of the fast pace of data center construction, and most oppose building one in their own community. As of May, more than 12 gigawatts of very large energy loads were in line to connect to New York’s power grid, according to a report by the state’s independent grid operator. New York currently maintains the eighth-most expensive retail price for residential electricity nationwide, according to U.S. Energy Department data.
Amazon Backs Massive Off-Grid Gas Plant in West Texas
While New York freezes new construction, tech companies are pursuing aggressive energy strategies elsewhere. Amazon has confirmed it acquired a site in Pecos County, Texas, known as GW Ranch, where it plans to build an AI data center campus powered by on-site natural gas generation.
Permits filed for the gas plant reveal it would use 35 turbines to generate 7.65 gigawatts of electricity. At least initially, the facility would be entirely disconnected from the Texas electrical grid. In January, GW Ranch secured an air permit from the state allowing the plant to emit up to 33 million tons of carbon dioxide annually. According to reports, that level of permitted emissions would make the facility a massive single source of greenhouse gases, rivaling or exceeding the emissions of the country’s largest coal plants, though industrial plants rarely emit their full permitted ceiling.
The spokesperson added that the GW Ranch project is powered by new on-site generation that won’t raise electricity costs for Texas families and designed to transition to grid-connected service as interconnection timelines allow
. Developers also plan to build up to 750 megawatts of on-site solar generation and 1.8 gigawatts of battery storage at the site, utilizing non-potable, brackish groundwater unsuitable for drinking or irrigation.
Industry Shift Toward Behind-the-Meter Power Solutions
Amazon’s venture into off-grid gas power marks a major shift for the company, which previously powered all of its data centers using grid electricity. The pivot is driven by explosive demand for artificial intelligence infrastructure. During a July 30 investor call, Amazon CEO Andy Jassy noted that AWS grew at its fastest rate in 18 quarters due to AI demand, leaving the company with more demand for compute than it can currently supply.
Amazon is not alone in turning to behind-the-meter fossil generation. Microsoft, Google, and Meta have all invested significantly in natural gas power solutions. Data center developers have announced nearly 60 behind-the-meter gas projects since the beginning of 2025, representing a combined capacity of 90 gigawatts. In June, Microsoft partnered with Chevron to develop a 2-gigawatt off-grid natural gas campus near Pecos, Texas, located roughly 30 miles west of Amazon’s GW Ranch project.
These massive fossil-fuel investments complicate corporate climate pledges. Amazon previously pledged under The Climate Pledge to reach net-zero carbon emissions by 2040. However, the company’s overall carbon emissions have continued to climb amid the data center expansion.
Callahan maintained that the company’s commitment hasn’t changed, even as its carbon footprint rises. Beyond the West Texas campus, Amazon has confirmed it is engaged in discussions with developers regarding a separate 4.5-gigawatt gas power plant in Homer City, Pennsylvania, signaling that large-scale private power generation will remain a central pillar of the tech industry’s AI expansion strategy.
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