Rhode Island AI Plans Face Data Center Cost Test
Rhode Island is pushing an AI strategy, but faces significant questions regarding the power and water demands, tax incentives, and job creation from data centers. A proposed corporate complex in Smithfield, which may include data storage facilities, is serving as a critical local test case. State lawmakers are considering bills to make large data centers bear their infrastructure costs and to offer tax incentives, while Smithfield has discussed zoning amendments to define and potentially prohibit data centers.
Rhode Island is actively pursuing an artificial intelligence (AI) strategy, but its implementation is being complicated by unresolved questions surrounding the significant power and water costs, tax incentives, and permanent job creation associated with data centers. The most immediate local test of this policy is a proposed corporate complex in Smithfield that could include data-storage facilities.
Governor Dan McKee established an AI Task Force in 2024, directing state agencies to develop AI training and education and create AI and data centers of excellence within the government. The state's AI Action Plan outlines recommendations for training, apprenticeships, and an AI-RI hub. However, as AI policy moves into practical applications, the state is confronting the substantial infrastructure demands of data centers, particularly their electricity and water consumption.
State lawmakers have introduced bills to address these concerns, including House bill H7331 and Senate bill S2776, which propose requiring data centers with demands of at least 50 megawatts to bear the costs of necessary generation, transmission, or distribution infrastructure. These bills also call for annual disclosures on water consumption, cooling technology, and water recycling practices. Concurrently, a separate proposal, S2346, aims to create tax incentives for data centers, drawing support from the Rhode Island Business Coalition but warnings from groups like Green Energy Consumers Alliance about potential tax base erosion.
In Smithfield, Hanton City Investments LLC and ROK LLC submitted a major land-development application for a corporate complex that may feature data centers. The developers have appealed a certificate of incompleteness for their application. Separately, the Smithfield Planning Board has discussed a zoning amendment that would define data centers and potentially prohibit them in all zoning districts.