Data centers in South Carolina: The responsible path forward

Over the past several years, the United States has entered a new technological era marked by rapid advancements in artificial intelligence (AI). AI systems store and process massive amounts of data on servers housed in large facilities known as data centers.  

States across the country have adopted policies that incentivize data centers to locate within their borders. 

Data centers require an enormous amount of energy to operate. As a result, many states are expanding their energy production capacity to meet this growing demand, raising concerns among citizens about higher utility bills as energy providers increase their baseload capacity. 

Can South Carolina lawmakers keep data centers from raising your power bill? 

The South Carolina legislature has shown interest in curbing the impact data centers have on the ever-rising price of residential energy bills.  

The Senate introduced an amendment to H.3309 “S.C. Energy Security Act” that would remove data center tax incentives and require them to enter into 15-year power purchase agreements (PPA) with utilities to cover their energy costs. That amendment was removed by the House, along with required reporting for data center surface and ground water usage. 

Data centers appear to want 10-20-year power purchase agreements with utilities, with those contracts requiring data centers to pay for energy consumption alone, and not new construction to increase baseload capacity.  

It seems that data centers specifically oppose the amendment’s provision requiring them, upon termination of their electric service contracts, to pay any unrecovered costs incurred in serving or preparing to serve them, including distribution, transmission, and generation costs. 

Utilities estimate the true payment period for a new natural gas facility to last 40 years. After a payment period is completed, the facility is paid for; data centers would see a significant reduction in their energy price agreement for the rest of their operation.  

A 40-year solution 

If lawmakers reintroduce the Senate’s amendment and set PPA minimums at 40 years rather than 15, data centers would be responsible for financing their share of energy generation without burdening ratepayers or straining the grid. Longer contracts would also discourage companies from leaving once their agreements expire, since the infrastructure needed to power their operations would already be in place. 

In short, longer-term PPAs would promote energy stability and responsible growth. Utilities could safely “overbuild” to prepare for future demand without passing construction costs to South Carolinians. 

Another way to mitigate financial risk to residential ratepayers is for data centers to have ownership of the natural gas facility’s power generation from the start, with the utility operating that facility.  

Without taking the measures above, utilities currently apply for residential energy rate increases with the S.C. Public Service Commission. Then slowly increase residential energy bills over time to pay for a new energy production facility. 

If they leave, who pays? 

If a data center leaves after a plant is paid for and the utility cannot use the power elsewhere, the power becomes stranded, and the cost is shifted to the ratepayers. However, South Carolina will likely grow in population over a 40-year period in a way that will create a new customer pool for energy usage.  

During a 2025 data center floor debate, Senator Richard J. Cash of Anderson noted that a single data center consumes enough electricity to power 125,000 homes on average. (4/2/25 7:40) According to datacenters.com, South Carolina currently hosts 16 global data centers. 

After a data center completes a 40-year PPA payment period for their completed energy facility, a data center could either renew its contract at a lower rate or transfer its energy capacity to South Carolina residents; potentially setting the stage for the stabilization of rates or even a decrease in rates over time if paired with new capacity from nuclear reactors coming online. 

In a recent poll conducted by the South Carolina Policy Council, 42 percent of S.C. voters support data centers in their communities. However, when informed locating those data centers locally may result in higher energy bills, 50 percent of those previously supporting data centers switched to being opposed.  

Under the S.C. Energy Security Act, data centers can set up shop in South Carolina and push utilities to expand their baseload capacity, but there are no requirements ensuring that those data centers pay for the new construction needed to support it. 

However, if the legislature reintroduces legislation in 2026 that establishes 40-year PPA contract minimums for data centers, removes tax incentives for data center investments, and requires water usage reporting, rate payers would be protected from rate hikes and siphoning of their resources. 

South Carolina can embrace innovation without asking residents to foot the bill. 

This report may be republished in whole or in part, provided that proper credit is given to the author(s) and the South Carolina Policy Council.