Pennsylvania Governor Josh Shapiro's executive order restricting data center fast-track permitting and requiring developers to fund their own electricity clouds investors' confidence in independent power producers and may push projects out of the state, industry analysts said.
The Aug. 18 executive order turns the Governor's Responsible Infrastructure Development (GRID) Requirements, originally created as voluntary measures, into legally mandatory requirements AI data centers must take to proceed with a project in Pennsylvania.
Projects must submit a notice of intent to comply with GRID standards and submit plans to the Pennsylvania Department of Environmental Protection for review. The executive order also allows the agency to withhold permits until the project has received all required local approvals.
Talen Energy Corp. shares fell 11% during Aug. 18 trading, while Vistra Corp. and Constellation Energy Corp. each fell about 4%. Talen shares rose less than 1.5% on Aug. 19 to close at $322.35.
Together with Texas Gov. Greg Abbott's Aug. 3 order requiring state regulators and the Electric Reliability Council of Texas to audit data center applications for grid interconnections, "these orders have propagated concern IPPs are 'unownable'" until after the November 2026 midterm elections, analysts at BNP Paribas told clients Aug. 19.
"We concede these directives could delay data center interconnect several months," they continued.
Ahead of the PJM Interconnection reliability backstop auction's bilateral contracting period that begins at the end of September, the "formalized standards likely represent a new hurdle for deal-making in Pennsylvania," BMO Capital Markets analysts wrote in an Aug. 18 report.
The GRID standards also represent "a marked contrast from his full-throated support" for Constellation's Crane Clean Energy Center Project, announced in 2024 to support a proposed Microsoft Corp. data center, Washington Analysis Director of Policy Research Rob Rains wrote Aug. 19.
Both Washington Analysis and Mizuho emphasized that many of the executive order's provisions require approval from the state legislature or the Pennsylvania Public Utilities Commission.
Still, the clear signal may push developers to move projects elsewhere.
"While we view the [executive order] as an attempt to look tough on [data centers] without the authority to dictate many of the underlying decisions, investors seeking safety may increasingly steer clear of [Pennsylvania]," Mizuho analysts said Aug. 19. "We believe the key question is not whether projects are delayed, but whether they return once the coast clears."
Analysts at BMO and Evercore agreed that the standards threaten proposed data centers in Pennsylvania.
Prohibiting non-disclosure agreements specifically "erodes commercial confidentiality," according to Evercore.
Governors across the country, several of whom are up for reelection in November, are scrutinizing data center development and electric power industry policies to address the fast-growing environmental and political opposition to data centers, including in New York, Illinois, New Jersey, Virginia and Kentucky.
In Indiana, Gov. Mike Braun in June removed Utility Regulatory Commission Chairman Andy Zay after just six months following the commission's decision approving a $71 million base rate increase for AES Corp. subsidiary AES Indiana that the governor staunchly opposed. Zay remains a member of the commission.
