Data centers companies can build power plants in Oklahoma. Why most aren't
Oklahoma passed a law allowing data centers to build their own power plants, but most are opting to connect to the state's electric grid due to cost and reliability. State regulators are reviewing large-load tariffs aimed at preventing household ratepayers from bearing data center energy costs, alongside a federal ratepayer protection pledge signed by Gov. Kevin Stitt. Companies like Google are partnering with utilities such as OG&E, while others like IREN plan to work with Public Service Company of Oklahoma.
Last year, Oklahoma enacted Senate Bill 480, which allows energy-intensive facilities, particularly data centers, to construct their own "behind-the-meter" power plants, bypassing traditional utilities. Co-authored by Rep. Brad Boles, the legislation aimed to clarify state law and attract private investment while easing strain on the state's electric grid, which is managed by the Southwest Power Pool. Despite this legal provision, most data center developers with plans in Oklahoma are choosing to connect to the existing utility grid, citing the high costs and lengthy construction times for power plants, as well as the perceived reliability of the state's established grid system.
This policy development is set against a backdrop of public concern and official responses to the increasing energy demands of hyperscale data centers. Last month, Governor Kevin Stitt, along with Oklahoma electric utilities, signed a federal "Ratepayer Protection Pledge," which mandates data center developers to cover their own electricity costs and invest in local communities. Oklahoma also has its own version of this pledge, a law requiring utilities to establish distinct terms and conditions and increase transparency for large energy consumers. State regulators, specifically the Oklahoma Corporation Commission, are currently reviewing large-load tariffs proposed by utilities like Oklahoma Gas & Electric (OG&E) to ensure residential customers are not burdened with grid connection expenses for companies such as Google.
While some AI companies in states like Texas are investing in behind-the-meter natural gas plants, often facing criticism for potential pollution, Oklahoma's law requires natural gas as a component of such plants to support the state's oil and gas industry. Google, for instance, has partnered with OG&E to power its three data centers in Muskogee and Stillwater, including building two solar farms. Other major proposed projects, including the Luther Horizon Technology Park, Project Mustang in Claremore, and IREN's Kiowa Data Center, also plan to utilize local utilities, with IREN confirming its intention to secure power through Public Service Company of Oklahoma. Experts predict it will take several years to determine the full impact and adoption rate of Oklahoma's behind-the-meter generation law as developers weigh the complexities and delays associated with building private power infrastructure.