'Behind-the-Meter' Enters Council Vocabulary as Data Center Projects Rise

On April 15, 2026, the Pinal County, Arizona Board of Supervisors gathered to talk about data centers. The county sits at ground zero of the AI buildout with a multi-gigawatt pipeline of proposed projects. Supervisors were working through how to absorb that growth without overwhelming local resources.

About forty minutes in, after a presentation on indirect water use, one supervisor interrupted. "Excuse me. What happens if you have behind the meter going on?"

Staff explained. Behind the meter (BTM) is when a facility produces its own power on-site instead of buying it from the utility grid. The data center becomes its own little power plant. After staff finished, Chairman Jeffrey McClure laughed. "So you're basically talking about what I'm trying to do up in my cabin behind the meter. Got it."^[1]

McClure's analogy was funny, but it captures something real about how data center policy is moving. BTM is rising fast in industry deal flow. Among the people approving these projects, the term is new—and that's starting to cause problems.

# Councils are learning about BTM

Discussion of behind-the-meter is rising sharply, particularly at the state level where legislation is being drafted.

Mentions of "behind the meter" in city, county, and state government meetings nearly tripled between February 2025 and November 2025, then tripled again by spring 2026. A phrase that barely registered in early 2024 is now showing up 350 to 400 times per month across publicly recorded local government proceedings.

The transcripts behind those mentions reveal a consistent pattern. Local officials are encountering the term faster than they're being equipped to evaluate it. Across dozens of meetings, supervisors and planning commissioners are asking what BTM means, who pays for what, and whether they should be worried. The vocabulary is arriving ahead of the analysis.

For developers and capital partners working on data center projects, that gap has to be closed in every entitlement hearing.

# Why BTM is suddenly everywhere

The pressure is coming from the industry side. Hyperscaler patience for utility interconnection queues—now running five to ten years in major markets—has run out. AI buildout schedules cannot accommodate that timeline. BTM arrangements promise faster and cheaper power than waiting for grid capacity. McKinsey estimates that 25 to 33 percent of incremental data center demand through 2030 will be met by behind-the-meter solutions.^[2]

Recent numbers underscore that estimate. Roughly 90 percent of identified BTM data center projects were unveiled in 2025 alone.^[3] Most cities and counties saw their first BTM-related agenda item in 2025 or 2026.

That recency matters. Council opinion of BTM is often shaped by whoever happened to present it that day. In Pinal County, the presenters were two investor-owned utilities and a water-policy academic. In North Dakota, the November 2025 hearing on Coal Creek Station featured the operator presenting directly to the legislative committee. The frame each official takes home depends heavily on who held the microphone.

# The dream versus the reality

BTM gets pitched as the solution to the energy bottleneck blocking data center growth. The Pinal County session showed why the reality is more complicated. Three sets of experts walked supervisors through four reasons BTM is harder than it sounds.

The tax problem. Arizona's data center sales-and-use tax exemption, one of the most aggressive incentive packages in the country, is conditional on grid interconnection. A facility that goes fully behind the meter and starts selling electrons off-property forfeits the exemption. This creates a 'huge disincentive' for BTM projects.^[1] Large operators in Arizona route power through the grid even when on-site generation might be technically faster.

The reliability problem. BTM in current configurations does not deliver the reliability hyperscalers actually require. Running a data center on on-site generation typically requires overbuild—two gas turbines instead of one, or gas plus solar plus battery storage—to cover maintenance windows and unplanned outages. BTM therefore does not provide the level of reliability a data center expects.^[1]

The cost-and-complexity problem. Operating a private power plant requires staff, fuel contracts, emissions permits, and operational sophistication most data center developers prefer to outsource. The utility model exists for a reason. Rebuilding it on every campus is capital-intensive and operationally heavy.

The local-oversight problem. Supervisor Goodman raised the question that should have been obvious from the start: how does the county even know if a project is going BTM? Staff's answer was practical—the information would surface through industrial well permits, water-provider scrutiny, and standard zoning review. But the question itself revealed the underlying issue. Local governments do not have a clean disclosure framework for BTM yet. They are inferring it from adjacent permit applications.

By the end of the session, one supervisor summed up what he had heard—"two for two saying behind the meter does not work, and whoever was listening should understand that."^[1]

That summary is accurate as a read of what staff and presenters told the room. It is also narrower than the conclusion a developer would draw from the same facts. BTM at full island-mode scale, under current technology and Arizona's specific tax regime, is hard. BTM as a partial supplement, or in jurisdictions with different incentive structures, is a live and growing strategy. Both can be true. The supervisors were not wrong; they were working with the slice of the picture their experts presented.

# The same conversation, at different speeds

Where BTM is being discussed reveals the underlying market—and the uneven pace of policy education.

Pinal County's learning curve is not unique. The same conversation is unfolding across the country, but the depth of understanding varies enormously by state. The geography of mentions reveals where local officials are equipped to evaluate BTM proposals and where they are not.

The states writing the rules. California (288 mentions) and Oregon (197) are the furthest along. California has been processing BTM through CPUC rate cases and net energy metering successor tariffs for years, so the vocabulary is established and the regulatory frame is mature. Oregon is actively writing it. The AR 681 docket and its November 2025 microgrid rulemaking workshop are producing the legal definitions other states will copy. A developer walking into a hearing in either state can assume baseline literacy.

The states with concentrated expertise. North Dakota (261) has more transcript references than most states, but almost all of them come from a single venue—the Coal Creek Station hearings before the legislature's Energy Development and Transmission Committee. The state has deep expertise on one project and limited reach beyond it. Massachusetts (240), New Hampshire (214), are similar in shape but different in source. New England's municipal light plant network produces routine BTM discussion at the local level because these small public utilities run their own procurement debates. Sophistication is wide but shallow.

The states catching up in real time. Oklahoma (176), Ohio (139), and Illinois (116) are where data center load growth is restructuring the grid faster than planners can model. BTM is showing up in legislative committees and council chambers at the same time, and officials are learning the concept while voting on it.

The states where the conversation has not started. Idaho, Missouri, Arkansas, Alabama, Alaska, and DC have zero recorded mentions. Hawaii has six, Delaware eight, West Virginia twelve. These jurisdictions are the leading edge of the education gap. When BTM proposals arrive the local officials processing them will do so without the benefit of any prior public hearings to draw on, no template ordinances from neighboring counties, and no state-level rulemaking to lean on.

The shops that win these entitlements will be the ones tracking the signal early. GatherGov is built to surface data center pipelines, zoning agenda items, and policy shifts across thousands of local jurisdictions before they show up in industry press—turning the education gap into a window of strategic advantage.

# FAQ

What is behind-the-meter (BTM) power for data centers? Behind-the-meter power is electricity generated on the data center's own property and consumed there directly, without flowing through the public utility grid. It typically takes the form of on-site natural gas plants, fuel cells, or solar-plus-storage systems. BTM lets operators bypass long utility interconnection queues, but it shifts the regulatory and permitting work onto local governments.

Why are data centers going behind the meter in 2025 and 2026? Utility interconnection timelines for large loads have stretched to five to ten years in many markets, which is incompatible with AI buildout schedules. BTM generation can come online in 18 to 36 months. Texas SB 6 has codified BTM for new ERCOT loads above 75 MW, and most major data center markets are seeing BTM emerge as a serious contracting structure.

Does behind-the-meter power affect data center tax incentives? In Arizona, yes — the state's data center sales-and-use tax exemption requires grid interconnection. A facility that goes fully BTM and exports power forfeits the benefit. Other states treat the question differently. Verify state-specific tax treatment before underwriting a BTM site.

Why did experts at the Pinal County meeting say BTM does not work for data centers? APS and SRP, the two presenting utilities, said BTM in current configurations does not meet data center reliability requirements without significant overbuild — typically two gas turbines, or gas plus solar plus battery storage. ASU's water-policy presenters added that Arizona's tax incentive structure makes BTM economically unattractive. Both points are accurate within their frames; both are also state-specific and configuration-specific.

How can a county or city tell if a proposed data center is going behind the meter? There is no standard disclosure framework yet. Local governments typically infer BTM status from adjacent permit applications — industrial well permits for water, air quality permits for on-site generation, gas pipeline easement requests. Formal disclosure requirements are starting to appear in zoning ordinances.

What is the difference between a behind-the-meter PPA and a virtual PPA? A behind-the-meter PPA is a physical contract for power generated on or adjacent to the site that flows directly to the load. A virtual PPA is a financial contract for differences — the offtaker does not take physical delivery, and the power flows into a wholesale market. Both can support data center electricity costs and renewable energy goals, but only BTM provides on-site reliability.