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Data Center On-Site Power Brings Pollution Risks Closer to Home The data center industry’s shift to on-site power generation to overcome grid constraints is creating new environmental compliance challenges. New Jersey’s recent $1.07 million penalty against a Vineland, New Jersey, AI data center operator has put a broader challenge for the industry into focus: Operators seeking alternatives to constrained electricity grids must also account for the environmental consequences of generating power on-site. The New Jersey Department of Environmental Protection (NJDEP) said the facility installed and operated 62 natural gas generators without required permits. A state official announced the enforcement action on Sept. 22. The operator, identified as DataOne, disputed NJDEP’s determination regarding the temporary generators but said it would apply for air permits and is communicating with regulators, according to the New Jersey Monitor. As AI buildouts accelerate, on-site generation is changing what communities need to understand about proposed computing facilities. Electricity supply, air emissions, cooling demand, and noise increasingly belong in the same discussion. “AI data centers are increasingly becoming power plants as well as computing facilities,” said Abhijit Sunil, senior analyst at Forrester, in an interview with Data Center Knowledge. “AI infrastructure can now be deployed faster than traditional permitting and inspection processes were designed to oversee.” Behind-the-Meter Power Doesn’t Eliminate Environmental Costs Sunil said on-site generation, often using natural gas, has emerged in conversations with data center vendors as one response to grid constraints. Other approaches include battery storage and shifting workloads to align with grid availability. Generating electricity behind the meter can reduce a facility’s demand on the utility network, but that does not, by itself, establish an environmental benefit. “Taking pressure off the grid doesn’t eliminate an environmental cost,” Sunil said. “Taking pressure off the grid doesn’t eliminate an environmental cost." – Abhijit Sunil, senior analyst, Forrester For nearby residents, relevant effects include combustion-related air pollutants (such as NOx, CO, and particulate matter) and continuous or frequent noise. Evaluating a project, therefore, requires more than comparing a data center’s electricity demand with available grid capacity. Sunil recommends assessments that encompass electricity consumption and grid upgrades, as well as water use, land use, emissions, and noise. Those impacts should be weighed alongside a project’s socioeconomic benefits. The broader accounting also helps distinguish different concerns: greenhouse gas emissions, local air pollution, water consumption, and continuous noise are separate issues requiring different measurements and responses. Operator Priorities Skew Toward Power and Uptime Power availability and operational reliability can dominate investment decisions, leaving other environmental issues with less attention. Luis Fernandes, IDC senior research manager for cloud and data centers within enterprise infrastructure, told Data Center Knowledge that a recent IDC worldwide operator survey found energy efficiency and renewable energy among the leading resilience and sustainability priorities. He noted that waste heat reuse ranked last, while reducing water usage was third from the bottom. “We see operators more concerned about rising power intensity and operational risk, and less inclined to commit to environmental and sustainability targets,” Fernandes said. Those findings suggest that improvements in energy performance should not be treated as a proxy for progress across every environmental measure. An operator’s efficiency strategy does not explain how it manages cooling demand, local noise, or the operation of on-site generators. For communities and customers, the distinction makes facility-level information important. Broad sustainability commitments offer limited insight into how a particular site operates and how its impact changes over time. Make Site-Level Impacts Transparent Sunil suggested that large facilities with on-site generation disclose their equipment, fuel, capacity, and permitting status. Reporting should also cover runtime, electricity generated, greenhouse gases, and relevant local air pollutants. Material changes to generation or cooling capacity should trigger updated disclosures, he said, because information presented during initial project discussions may no longer describe the operating facility. “The goal for new projects should be that communities [are not] surprised at any given stage,” Sunil said. He argues that monitoring should make impacts visible before residents experience consequences, rather than leaving neighbors to identify changes through generator noise or other observable effects. That recommendation goes beyond publishing an annual corporate environmental report. It requires information that connects a specific operation to the surrounding community. Permitting Lapses Can Halt Operations Across the industry, environmental obligations depend on the equipment and activities at each site. Speaking generally about data center operations, Pat Fanning, a trial attorney at Lathrop GPM, distinguished computing equipment from associated power infrastructure. “The servers in operation within a data center would not typically be associated with the generation of environmental pollutants,” Fanning told Data Center Knowledge. He noted that complaints about facilities often concern continuous low-frequency noise from cooling or HVAC systems, as well as demands on electricity and water resources. On-site fossil fuel generation introduces additional permitting considerations. “If, however, a particular data center maintains its own on-site power source that consumes fossil fuels, there may be certain regulatory requirements or permits the data center would need to comply with before it could begin to operate,” Fanning said. For operators, the potential consequences extend beyond absorbing a financial penalty. Permitting needs to be part of the development schedule because enforcement can jeopardize the facility’s ability to operate. “If the data center goes online without complying with the requirements to secure a permit, it will likely face stiff administrative penalties and the possibility of being subject to an injunction that could prevent it from being able to continue to operate,” Fanning said.
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