As hyperscale data centers demanding 100 or more megawatts strain electric grids across the United States, a growing number of states are turning to a structural workaround: letting these facilities generate their own power "behind the meter" rather than drawing everything from the regulated grid. In 2025, data center energy legislation passed in Maryland, Ohio, Utah, and West Virginia to address how such facilities can access power without straining the grid, according to tracking by MultiState, a government relations firm. The legislative responses vary widely — from Ohio's framework for "mercantile customer self-power systems" to West Virginia's microgrid districts — but all confront the same underlying tension: how to capture the economic development data centers bring without shifting grid costs onto residential ratepayers or undermining reliability and clean energy commitments.
Understanding Behind-the-Meter Data Centers
The traditional model is straightforward: a data center signs a power purchase agreement with an electric utility and draws grid-supplied electricity, typically requiring transmission-level interconnection to the bulk power system. Behind-the-meter generation inverts that arrangement. As MultiState explains, it allows facilities to self-generate power or contract directly with suppliers instead of relying solely on grid-supplied electricity through traditional utility agreements — in some configurations bypassing the grid entirely.
The distinction matters because of what it changes legally and financially. Hogan Lovells Cadwalader, in an analysis of state initiatives on surging data center power demand, notes that states hold the primary role in regulating the supply and delivery of power to end users in the U.S. Kirkland & Ellis similarly observes that retail power sales made directly from a generator to a data center typically fall under state jurisdiction, not federal FERC oversight. A data center that generates on-site therefore steps largely outside the regulated utility framework — a move that reshapes who pays for the grid, who regulates the generation, and how quickly a facility can be energized.
Speed is a central part of the appeal. Pillsbury Law, analyzing state regulatory approaches to powering data centers, reports that projects avoiding transmission-level interconnection can reduce time to power to roughly three to six years, making "bring your own generation" a prevalent hyperscale strategy. The trade-off, the firm cautions, is that such unplugged systems may present stranded asset risk and greater financing challenges — a facility locked into on-site generation carries costs that persist even if demand or technology shifts.
