Stock Markets July 14, 2026 09:25 AM

Cities and Regulators Curb Data Centre Growth as AI Demand Rises

Authorities worldwide cite power, water, land and community impacts in new moratoria, bans and connection restrictions

By Hana Yamamoto
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A growing set of governments, municipal authorities and grid operators are pausing or prohibiting new data centre construction amid concerns that the rapid expansion supporting artificial intelligence is straining electricity supplies, water resources and local infrastructure. Measures range from one-year construction freezes and connection bans to permanent citywide prohibitions and national restrictions on hyperscale facilities.

Cities and Regulators Curb Data Centre Growth as AI Demand Rises
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Key Points

  • Policymakers and municipalities are imposing moratoria, bans or connection limits on new data centres due to concerns about electricity, water, land and community impacts.
  • Examples include a one-year New York State moratorium for projects using 50 MW or more, and a permanent citywide ban approved by Monterey Park voters in June 2026.
  • Sectors likely affected include large cloud and hyperscale operators, utilities and power providers, and local development and real estate markets.

Around the world, policymakers and local electorates are increasingly moving to restrict the construction or expansion of data centres as debate intensifies over the infrastructure needed to support the AI industry.

Officials have pointed to a cluster of pressures affecting communities and utilities - rising electricity costs, tight water availability, scarce land and the broader burden placed on local services - as the rationale for moratoria, bans and tougher permitting requirements.

New York State, U.S. - Governor Kathy Hochul enacted a one-year moratorium on the construction of data centres that would consume 50 megawatts or more of power. During this pause, the state Department of Environmental Conservation will withhold new discretionary permits while officials establish standards for evaluating the environmental consequences of proposed data centre projects.

Maine, U.S. (vetoed) - A bipartisan bill that would have imposed an 18-month moratorium on new data centres drawing more than 20 megawatts was rejected by Governor Janet Mills via veto. She indicated support for the concept of a moratorium in general terms, but objected to the legislation because it did not create an exception for a specific proposed project located in the Town of Jay.

Monterey Park, California, U.S. - Voters in June 2026 approved a permanent citywide ban on data centres, making the municipality the first U.S. city to adopt such a restriction through a ballot measure. The vote followed public opposition to a proposed facility.

Amsterdam, Netherlands - The city first imposed a one-year moratorium on new data centre development in 2019. In April 2025, Amsterdam extended restrictions by barring new data centres and expansions in the municipality through at least 2030. At the national level, the Dutch government enacted a 2022 hyperscale ban that confines large data centre projects to two specifically designated locations across the country. Separately, Microsoft received approval in January 2026 for a project that was structured as three separate towers, each falling below the national size threshold.

Dublin, Ireland (restriction now lifted) - Ireland's grid operator effectively blocked new connections for data centres in the Dublin area beginning in 2021, citing strains on the electricity network. That connection freeze was lifted in December 2025; new projects seeking grid access are now required to provide on-site power generation.


The measures outlined above illustrate a patchwork of approaches: temporary moratoria to permit policy development, local ballot-driven bans, national siting limits for hyperscale facilities and grid-connection conditions tied to self-supplied power. Each reflects distinct local priorities and constraints while collectively signalling heightened regulatory caution toward rapid data centre expansion.

Risks

  • Strains on local electricity grids and rising power costs that could constrain data centre siting and operation, affecting utilities and large cloud providers.
  • Pressure on water supplies and limited land availability that may restrict expansion and complicate permitting for new facilities, impacting construction and local real estate markets.
  • Regulatory and permitting uncertainty from a mix of temporary moratoria, ballot measures and national siting limits that could delay projects and alter investment plans for data centre developers.

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