Data centers’ growing demand is a focus of Hobbs’ Arizona energy plan

Article originally posted on AZ Central on April 6, 2026

An energy task force convened by Gov. Katie Hobbs has outlined plans to expedite new projects to meet demand from data centers and Arizona’s semiconductor boom, while keeping the costs of doing so from driving up Arizonans utility bills.

“We have this really big issue of needing to plan strategically for our energy future and … really the future of Arizona depends on that,” Hobbs said. The goal was to make “sure that we can meet the energy demands that are allowing us to continue to create opportunity for Arizonans in high-paying, high-tech jobs and keeping energy affordable for everyday Arizonans who are already struggling right now,” she said.

The task force delivered its final report and 31 broad recommendations to Hobbs on April 2.

The recommendations are a to-do list for the months and years ahead. Many will require other groups and elected regulators, including the Arizona Corporation Commission, to take action. The recommendations include ending the state’s tax incentive for data centers, which Hobbs has previously backed, while suggesting new incentives for nuclear power generation.

The governor established the Arizona Energy Promise Task Force in a September executive order. It was made up of three dozen government officials, higher education leaders, utility company executives, environmental and renewable energy advocates, economic groups and representatives of private industry. The membership was broad to build buy-in for non-binding recommendations.

“Many people here, many nametags, are used to disagreeing with each other in very public forums, and this was a forced moment to sit together and say where do we agree, where do we disagree, and where can we find opportunity for collaboration,” Rikki Seguin, executive director of the Interwest Energy Alliance, told Hobbs when the task force presented its recommendations at the state Capitol’s Executive Tower.

The alliance represents large-scale renewable energy developers. Seguin highlighted the task force’s recommendation for a central permitting council. If established, the council would bring together government officials whose jurisdictions play a role in permitting or approving energy projects to serve as a single point of contact for developers. The report recommends expediting state-issued permits as much as possible, and mapping potential development sites on state land.

Diane Brown, executive director of the Arizona Public Interest Research Group, praised a recommendation for a statewide public education campaign. Brown said that could help Arizonans cut their energy use and save money, and raise awareness of programs that can help families pay their utility bills.

The report also calls for developing an energy and energy efficiency workforce training program that engages rural and tribal communities in particular. It favors renewable energy sources like wind and solar, proposes cutting red tape that can hold up those projects, and aims to establish Arizona as fertile ground for geothermal power generation.

The task force report recommends using federal funds to finance any new nuclear projects and explore state incentives to reduce upfront costs.

“The federal government is looking to accelerate more nuclear energy, and I think obviously there’s safety concerns, environmental concerns that we have to make sure that we’re attending to, but we’re absolutely making sure that Arizona is a part of those conversations,” Hobbs said.

While Hobbs said she would not support new coal power plants, she said closing existing ones can have a harmful impact. She borrowed a catchphrase more commonly used by Republicans when discussing energy policy.

“We are not in a position where we can pick winners and losers in the energy space,” Hobbs said. “We have to have an all-of-the-above approach.”

While some politicians on the left have lately incorporated similar language into their vocabulary, it has more frequently been used by Republicans to address how to approach a looming energy crisis. An all-of-the-above energy strategy was an explicit part of the GOP’s national platform in 2016, as well as the late Sen. John McCain’s 2008 campaign for president.

Within the report are some notable areas of alignment with the Trump administration, such as encouraging geothermal generation and nuclear power production. But President Donald Trump’s administration has doubled down on fossil fuels, too, pushing for coal production while attacking wind and solar projects.

Data center incentives create division

The report supports the Arizona Corporation Commission’s review of how data centers and the energy grid operate, and calls for more research on what other states are doing to encourage data centers and other large users to generate their own energy. It also recommends that developers of data centers and other major users work with residents, a collaboration that could avoid contentious council meetings that have taken place in Chandler and Tucson.

Nick Myers, the Republican chair of the Corporation Commission, said the report offered a “serious look” at the state’s energy needs and supported commission priorities.

“The Commission will continue work with the Governor’s office and all interested stakeholders on ensuring that growth pays for growth in the energy sector and that Arizona is the state of choice for continued expansion in energy infrastructure as well as for the people and business that support and benefit from it,” Myers said in a statement.

While the recommendations were largely consensus-driven, there was some disagreement.

Representatives of tech giants Microsoft, Google and the Data Center Coalition, an industry lobbying group, objected to Hobbs’ proposal to eliminate a state tax incentive for data centers, according to the report. The incentives cost Phoenix taxpayers over $12 million a year in revenue, according to a recent audit backed by Mayor Kate Gallego, who has pushed back on data center development. Gallego was a member of the task force.

The report recognizes that data centers are a key part of Arizona’s economy and a source of good jobs, particularly when warehouses are under construction.

“We want to continue that economic investment, of course,” Maren Mahoney, director of Hobbs’ Office of Resiliency and task force chair, said in an interview. “There’s that balance to be struck.”

The report recommends “making sure that the communities feel that they’re empowered and that they have resources so that they can engage and attract these developments, and then they can attract investments in a way that is productive and constructive,” she said. “Transparency and ensuring that growth pays for growth are the abiding principles.”

Long-term solutions to a power problem

“The governor recognized her power here is in convening, and building that consensus, and the planning,” Mahoney said. “Different organizations are going to have to take them up.”

The task force recommended urgent action on divisive policy areas, where solutions could take years and span administrations.

Hobbs, a Democrat, is up for reelection this November. One of the leading Republican opponents, Rep. Andy Biggs, R-Ariz., has supported fossil fuel power generation and President Donald Trump’s rollback of environmental regulations. Two of the five members of the Corporation Commission, currently entirely made of Republicans, are also on the ballot.

“The work of this task force really is about the long term and the longevity, and that there is a recognition no matter what happens in this building that we’re committed to Arizona’s future and that’s not just about who’s governor,” Hobbs said. “It’s about the people driving the energy future. … I think there is commitment to move forward regardless of the politics involved.”