Nebraska Gov. Jim Pillen has signed an executive order removing new data center projects from eligibility for tax incentives under the ImagiNE Nebraska Act, the latest sign that power availability and resource constraints, not tax policy, are now driving where large computing campuses get built.
The order, signed July 21, applies only to new data center applications; existing projects keep their current incentive status. It also requires state economic development, revenue, water, and energy agencies to jointly review future proposals and creates a task force focused on protecting land, water, and electricity resources.
“This is not a moratorium on data centers,” Pillen said, adding that any local entity pursuing a data center project must now follow the guidelines laid out in the order.
Power, Not Tax Breaks, Now Decides Siting
Ashish Nadkarni, group vice president at IDC, said the move responds to political pressure to keep residents from subsidizing the utilities and natural resources that data centers consume. He argued developers should pay market price for power and water rather than passing costs to taxpayers.
Nebraska’s action fits a broader national pattern. Texas Gov. Greg Abbott directed regulators in June to shift more grid connection costs onto developers while protecting residential ratepayers. New York became the first state to pause permits for data centers using at least 50 MW of capacity while it studies grid, water, and community impacts. A draft Department of Energy study also found that AI data centers are a major driver of rising US electricity demand and are reshaping grid expansion plans.
Industry voices say incentives alone were never enough to guarantee a project moves forward. Bill Major, CEO of fiber provider FiberLight, said discussions now center on power, available land, and network infrastructure, and that tax breaks can’t substitute for those fundamentals.
Behind-the-Meter Generation and Pushback
Nebraska has already passed legislation letting large industrial customers work with private companies on behind-the-meter power generation, an approach officials say supports big projects without pushing new demand costs onto existing ratepayers.
Not everyone supports the tighter stance. Days before the order, the National Taxpayers Union and Platte Institute released a report arguing data centers could grow Nebraska’s tax base and generate construction, supplier, and technology jobs. The groups called instead for encouraging private generation, more transparent electricity pricing, and taxing data centers under the same rules as other businesses.
What It Means for the Industry
Nadkarni expects more states to adopt similar resource-focused policies, which could redirect projects toward areas with clearer permitting and sufficient grid capacity rather than halting construction outright. He noted the trend could slow US AI infrastructure growth even as it produces more pragmatic, better-planned buildouts.
Analysts suggest developers will need to become active participants in energy markets, through on-site generation, storage, and flexible operations, and increasingly negotiate community benefit agreements covering jobs, infrastructure investment, and protection against local utility price hikes.