Global Authorities Restrict Data Center Construction Amid AI-Driven Resource Strain

A growing number of governments and local authorities worldwide are freezing or restricting new data center development, creating potential headwinds for the infrastructure needed to power the artificial intelligence boom. The moves come in response to mounting concerns over the immense strain these facilities place on local electricity grids, water supplies, and land resources, according to a Reuters report.

Growing Resistance to AI Infrastructure

The rapid expansion of AI has fueled unprecedented demand for data centers, which house the servers and computing power necessary for training and running complex models. However, the significant consumption of power and water by these facilities is leading to pushback from communities and regulators who are weighing the economic benefits against the environmental and infrastructural costs.

This trend represents a critical consideration for investors in the technology, utility, and real estate sectors, as regulatory hurdles could become a significant bottleneck for the physical build-out of AI capacity. The restrictions highlight a growing tension between technological advancement and resource sustainability.

U.S. States and Cities Take Action

In the United States, several jurisdictions have implemented or considered restrictions on data center construction:

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• New York State: Governor Kathy Hochul enacted a one-year moratorium on new data centers that use 50 megawatts (MW) or more of power. This makes New York the first state to impose a full, albeit temporary, ban while it develops standards to assess the environmental impact of such projects.
• Monterey Park, California: In June 2026, residents voted to permanently ban data centers, the first U.S. city to do so at the ballot box, following public opposition to a planned facility.
• Maine: Governor Janet Mills vetoed a bill that would have created an 18-month moratorium on new facilities using over 20 MW. While expressing support for the principle, the governor objected to the bill's lack of an exception for a specific project.

European Hubs Impose Curbs

Similar measures are being enforced in key European technology hubs that have historically been attractive locations for data center investment:

• Amsterdam, Netherlands: After a one-year moratorium in 2019, the city in April 2025 barred new data center construction or expansions until at least 2030. The Dutch national government also has a hyperscale ban in place, limiting large facilities to two designated areas.
• Dublin, Ireland: From 2021, Ireland's grid operator effectively halted new data center connections near Dublin due to grid strain. While the freeze was lifted in December 2025, new connections are now required to provide their own on-site power generation.