The proposed legislation, dubbed the Colorado Data Centre Development and Grid Modernisation Act, aims to make the state more competitive in attracting hyperscale facilities, having captured just 2% of national data centre investment to date.
The bill was advanced by the state senate’s Transportation & Energy Committee this week, which also includes provisions offering operators 100% sales-and-use-tax exemptions for up to 30 years for sites with at least 25 full-time staff.
The Centennial State is a secondary market for data centres in the US, especially when compared to powerhouses like Northern Virginia, Phoenix, and Dallas-Fort Worth.
Several new data centre projects are underway in Colorado, including the hyperscale facility being built in Aurora by QTS Realty, but the state still lags.
Having seen states like Wisconsin and Tennessee attract hundreds of millions of dollars from new sites being built by Meta and xAI, Colorado is now attempting to woo data centre operators.
The bill includes incentives such as income tax credits worth up to 15% on grid enhancement investments, particularly generous for projects in rural areas, along with access to enhanced utility rate structures.
Operators that go above and beyond baseline requirements can also qualify for a second-tier “enhancement certification,” unlocking further benefits in exchange for deeper commitments to grid modernisation and community programmes like workforce training or local supplier development.
The bill does, however, stipulate that the Colorado Office of Economic Development retains the right to strip operators of their incentives if they fail to meet commitments, including requiring them to repay all tax benefits received.
Beyond incentives, the bill also includes requirements for operators setting up shop in Colorado to be environmentally sustainable, such as employing water stewardship strategies and sourcing at least 50% of power from renewable or clean energy.
It also mandates pre-construction coordination with utilities to ensure grid readiness and fast-tracks regulatory review for infrastructure upgrades needed to support large new loads.
“A structured, performance-based approach to data centre development will accelerate grid modernisation through private investment, ensure responsible development that benefits local communities, and enhance Colorado’s position as a leader in technological innovation,” the bill reads.
RELATED STORIES
How investors are meeting the continued demand for capital in data centres
