A packed marathon hearing at the state Capitol in Colorado highlighted the sharp divide between two competing approaches to the effects of data centers, one of America’s fastest-growing technology sectors.

Data centers are the physical facilities that host the servers, networking equipment and storage systems — the backbone of the world’s digital infrastructure.

Senate Bill 26-102, sponsored by Sen. Cathy Kipp and Rep. Kyle Brown, imposes several conditions on large-load data centers, notably requiring that 100% of electricity come from new — not existing — renewable resources by 2031. The proposal requires long-term contracts to cover infrastructure costs, water and power reporting, and cumulative impacts analyses, plus community benefit agreements in what’s called “disproportionately impacted neighborhoods.”

The committee delayed the vote on the bill, with sponsors planning to bring it back with amendments.

Opponents said the restrictions would drive artificial intelligence projects elsewhere.

Dan Diorio of the Data Center Coalition, who testified during the Senate Transportation and Energy Committee hearing on Wednesday, said SB 102 “would close off Colorado for development by the industry.”

Opponents also warned the strict rules would deter billions in investment and thousands of construction jobs, pushing the industry toward competing states.

Sandra Hagen Solin, director of the Data Grid Consortium, the industry coalition headquartered in Colorado, emphasized what she described as potentially missed opportunity for economic development in communities transitioning away from coal.

“The practical effect of the policy itself … is that we will not see future investment of data centers into Colorado,” she said.

Supporters, who outnumbered opponents nearly four to one during the hearing, argued the measure would protect ratepayers from subsidizing grid upgrades, while ensuring new data centers bring additional renewable energy online.

“We are supporting SB 102 because it is a responsible regulatory framework that does not contain tax breaks to a booming and profitable sector,” said Caroline Nutter of the Colorado Fiscal Institute.

Deborah Kapiloff of Western Resource Advocates added, “SB 102 recognizes that data centers are coming to Colorado and provides a path forward that will ensure that large data center development advances climate goals… and doesn’t add costs for other utility rate payers.”

Meanwhile, another legislation would create a nine-member Colorado Data Center Development Authority to certify projects that meet labor, wage, efficiency and environmental standards in exchange for a 100% state sales-and-use tax exemption for 20 years.

Under House Bill 26-1030, projects must invest at least $250 million within five years, create jobs at 110% of the county average wage, use prevailing wages and apprenticeships, and install closed-loop cooling systems that don’t need water supplies.

The measure is sponsored by Reps. Alex Valdez and Monica Duran and Sen. Kyle Mullica.

The core philosophical difference in the two measures lies in how eligible energy sources are defined.

SB 102 limits large-load centers to “renewable resources” — solar, wind, geothermal, biomass and limited small hydro. HB 1030 uses the broader term “renewable and clean energy,” including small modular nuclear reactors.

Solin of the data grid group called the distinction decisive.

“The group considers a 2031 requirement for 100% renewable energy unrealistic, given current timelines,” she said in a Feb. 18 interview with The Denver Gazette. “We most certainly need that reliability.”

“A mandated draw-down of power is not workable,” she added.

HB 1030 allows nuclear and small modular reactors, which Solin called “very exciting,” adding that consortium members are already pursuing the technology in other states. The bill also permits flexible backup generation — natural gas, ammonia, biodiesel or battery storage — to meet the industry’s non-negotiable need for uninterrupted power 100% of the time, she said.

In analysis released last October by the global consulting firm Bain & Company, data centers could account for 44% of new U.S. electricity load growth through 2028, requiring utilities to boost annual generation by 7% to 26% above 2023 levels. Meeting global data center demand could cost more than $2 trillion in new generation resources.