North Carolina SB 730 Rewrites the Data Center Equation

Operators who have standardized on evaporative or hybrid cooling architectures face a direct redesign constraint for any new North Carolina build

Alert Level

Active monitoring — with immediate site and ownership review required. Senate Bill 730 has passed both chambers but faces a conference committee to reconcile House and Senate versions. The bill is not yet law. Given its breadth, any operator with active development, a queued interconnection, or existing holdings in North Carolina should assess exposure now, before final text is locked.

What Is Changing

The bill’s provisions hit four distinct pressure points for data center energy and infrastructure strategy.

Cooling technology exclusion. New data centers would be prohibited from using evaporative cooling systems. State regulators would be directed to establish water-use standards requiring all new cooling infrastructure to minimize water consumption. This is not a performance target — it is a technology exclusion. Operators who have standardized on evaporative or hybrid cooling architectures face a direct redesign constraint for any new North Carolina build.

Electric service cost allocation. The bill requires utility contracts with large data centers to include provisions protecting residential and other customers from costs associated with serving those facilities. The specific mechanism — whether through rate design, demand charges, or separate cost recovery classes — is not yet defined. The intent, however, structurally shifts how North Carolina utilities will price large-load interconnection agreements. Operators currently in queue negotiations should expect this to surface before final contract execution.

Ownership and land restrictions. Entities tied to the governments of China, Russia, Iran, and North Korea would be barred from owning data centers or the land beneath them. Existing owners in those categories may retain current holdings but must register with the state and are prohibited from acquiring additional interests. For operators with complex corporate structures or minority equity holders originating in those jurisdictions, this provision requires legal review before any new North Carolina commitment closes.

Incentive and site access changes. Local governments would lose authority to offer economic development incentives for new data centers. Eminent domain would also be prohibited as a land acquisition tool for data center development. These provisions close channels that have historically supported site assembly and financial modeling in competitive markets.

On the energy side, the bill would prohibit the North Carolina Utilities Commission from authorizing large power plant retirements until a nuclear facility capable of generating at least 1,000 megawatts has received construction approval. This extends the life of dispatchable generation in the state and signals a legislative preference for firm capacity — a backstop against load growth risk, but one that adds procedural complexity to the state’s carbon-neutrality timeline.

Who Is Most Exposed

Operators with active North Carolina development pipelines face the most immediate pressure. The cooling prohibition applies to new facilities, so any project in design or permitting must confirm whether its planned cooling architecture complies before construction commitments are finalized. Retrofitting a cooling design mid-permitting carries schedule and capital consequences that are difficult to recover.

Operators in the interconnection queue carry a secondary risk. If the cost allocation provisions translate into higher utility tariff structures for large loads, the economics of sites still years from commercial operation could shift materially. Interconnection queue positions do not lock in final rate structures, and utilities will draft those structures under whatever framework the final bill establishes.

Organizations with minority foreign investors from the named jurisdictions — a common feature of some infrastructure fund structures — face a compliance question that sits well above the energy team’s authority. Ownership chain review is not optional if this bill passes.

What Happens If You Do Not Act

A data center approved and built with evaporative cooling after the bill’s effective date faces an unresolved compliance position with no straightforward operational cure. Operators who do not engage utilities early in the rate design process may inherit contract structures drafted without their input — particularly problematic for long-duration service agreements where basis risk compounds over time.

The loss of local incentive authority changes the unit economics of North Carolina development in ways that do not self-correct. Tax abatements and infrastructure co-investment have historically offset meaningful portions of site development cost. Pro forma assumptions built on incentive capture require revision, and that revision may determine which sites remain viable in the portfolio.

The foreign ownership provisions carry the sharpest near-term legal exposure. Existing owners who fail to register after the bill takes effect, or who inadvertently acquire additional interests through a secondary transaction, face a compliance breach with limited cure options once the acquisition closes.

3-Step Action Path

This week: Identify all active North Carolina development projects, interconnection queue positions, and existing holdings. Flag any cooling architecture in design that relies on evaporative systems. Initiate a legal review of ownership and investor structures for any entity with exposure to the named jurisdictions.

This month: Engage North Carolina utility contacts directly to understand how cost allocation provisions are being interpreted at the utility level. Request early commercial discussions on contract structure before the bill’s final language is set. If your site selection process incorporates local incentive assumptions for North Carolina locations, commission a revised financial model without those inputs to determine which sites survive on unsubsidized economics.

This quarter: Evaluate whether cooling technology alternatives — direct liquid cooling, rear-door heat exchangers, closed-loop systems — can meet your power density requirements within the proposed regulatory framework. For sites whose viability depends on eminent domain access or incentive capture, prioritize them for deferral or reallocation within the portfolio before further capital is committed.

What Is Still Unclear

The bill is in conference committee and the final reconciled text is not yet public. It is not confirmed whether the cooling prohibition applies to expansion phases of existing facilities or only to entirely new builds. The precise regulatory standard for water-use minimization — performance-based or technology-specific — has not been defined; state regulators would draft those standards after passage, introducing a period of operational ambiguity.

The mechanism protecting residential ratepayers in utility contracts is similarly unspecified, leaving meaningful uncertainty about how utilities will price large-load agreements under the new framework. That uncertainty is most consequential for operators still negotiating interconnection and service terms.

The nuclear plant retirement restriction is the most operationally relevant energy provision for long-range grid planning, but its interaction with Duke Energy’s current integrated resource plan and North Carolina’s carbon-neutrality obligations has not been addressed in the available legislative record. How regulators reconcile those obligations remains an open and material question.