Death of second data-center bill ends all talk of incentives or safeguards

The Colorado legislative session concluded with the failure of two significant bills concerning data center development, leaving both environmentalists and technology industry leaders without their desired outcomes. Senator Cathy Kipp's bill (SB 102), which aimed to establish nation-leading environmental and community protections, including requirements for 100% renewable energy use and for data centers to fully fund grid upgrades, was indefinitely postponed. Kipp expressed her intent to reintroduce similar legislation in 2027, urging industry leaders to negotiate in good faith regarding the potential environmental and grid impacts of data centers. Concurrently, Representative Alex Valdez's bill (HB 1030), designed to offer financial incentives such as 100% state sales tax exemptions for up to 30 years to data center operators meeting specific spending and conservation criteria, also failed. Valdez cited an inability to reconcile the concerns of environmental groups with the desires of business groups to make incentives attractive enough to draw investors to Colorado. The failure of both bills means Colorado will not join the approximately 30 other states that offer such financial incentives. Senator Lisa Cutter, chairwoman of the committee that handled Kipp's bill, voiced her disappointment, noting that the state now lacks both incentives and regulatory guardrails for data centers. She emphasized the need for compromise to establish a starting point for policy. The absence of state-level regulation means data centers will continue to be regulated solely by local governments for the foreseeable future. Future discussions on data center policy in Colorado are expected to be influenced by the 2026 gubernatorial and legislative elections, as current Governor Jared Polis, an advocate for attracting data centers, will be term-limited. Utility companies like Xcel Energy are already facing consumer concerns about rising utility bills and potential costs for grid upgrades, with a Public Utilities Commission hearing on large-load tariffs anticipated to address some of these issues. Industry representatives, such as Kaitlin Monaghan from Vantage Data Centers, indicated a strong demand for significant incentives, stating that Colorado's high operating costs make any financial opportunities highly attractive for businesses considering development in the state.