Energy

Plain English Breakdown

The official source material did not provide specific details about preventing qualified data centers from relying primarily on state-subsidized fossil fuels, so this claim was removed.

Bring Your Own Generation (BYOG) Act

This bill requires large data centers and artificial intelligence facilities to generate their own clean energy and imposes a surcharge on them to fund grid improvements.

What This Bill Does

• Requires the state energy policy council to collect a clean energy transition surcharge from data centers with peak demand over 100 megawatts (MW) to pay for adding new clean energy resources to the grid, including transmission upgrades.
• Mandates that new large data centers or AI facilities must get at least half of their power from on-site carbon-free sources without reducing public energy supply.
• Prohibits using fossil fuel agreements to qualify for state economic development incentives or reduced utility rates.

Who It Names or Affects

• Data centers and artificial intelligence facilities with peak loads over 100 MW
• The Tennessee environmental protection fund

Terms To Know

Clean energy transition surcharge

A fee charged to large data centers to help pay for new clean energy resources and grid upgrades.

Qualified data center

A data center that meets certain criteria, such as having a peak load over 100 MW.

Limits and Unknowns

• The exact amount of revenue from the surcharge cannot be determined due to unknown factors like the number and size of affected data centers.
• The bill does not specify how the clean energy transition surcharge will be calculated or enforced.

Official Summary Text

Th
is bill requires the
state energy policy council
to
impose and collect a clean energy transition surcharge on a data center that has a peak demand of 100 megawatts or more. The clean energy transition surcharge must equal 100% of the proportional costs of adding new clean energy resources to the grid, in
cluding transmission upgrades. The council must collect the surcharge and deposit the funds into the Tennessee environmental protection fund. The state energy policy council must ensure that no costs associated with serving the data center are shifted t
o
customers.

ONSITE CLEAN ENERGY GENERATION AND PROHIBITION OF FOSSIL FUEL INCENTIVES

This bill requires a
new data center or artificial intelligence facility in this state that has an estimated peak load exceeding 100 megawatts
to
derive 50% of its electricity supply from new, carbon-free energy sources located onsite or through direct interconnection. The amount of new, clean energy generated must prevent a net decrease in the energy available to the public transmission and dist
ribution system.

This bill prohibits fossil fuel power purchase agreements from being used to qualify for any state economic development incentives or reduced utility rates. A qualified data center must not utilize state-subsidized fossil fuel generation for its primary
power load.

Current Bill Text

SENATE BILL 2681
By Kyle

HOUSE BILL 2463
By Pearson
HB2463
011037
- 1 -

a*68,67-6-102,39-17-1002
AN ACT to amend Tennessee Code Annotated, Section
39-17-1002; Section 67-6-102 and Title 68,
relative to the Bring Your Own Generation (BYOG)
Act.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Title 68, is amended by adding the following
as a new chapter:
68-206-101. Short title.
This chapter is known and may be cited as the "Bring Your Own Generation
(BYOG) Act."
68-206-102. Chapter definitions.
As used in this chapter:
(1) "Artificial intelligence" has the same meaning as defined in § 39-17-
1002;
(2) "Data center" has the same meaning as defined in § 67-6-102;
(3) "Qualified data center" has the same meaning as defined in § 67-6-
102; and
(4) "State energy policy council" means the council created by § 68-204-
101.
68-206-103. Clean energy transition surcharge.
The state energy policy council shall impose and collect a clean energy transition
surcharge on a data center that has a peak demand of one hundred megawatts (100
MW) or more. The clean energy transition surcharge must equal one hundred percent

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(100%) of the proportional costs of adding new clean energy resources to the grid,
including transmission upgrades. The council shall collect the surcharge and deposit the
funds into the Tennessee environmental protection fund, pursuant to § 68-203-101. The
state energy policy council shall ensure that no costs associated with serving the data
center are shifted to customers.
68-206-104. Onsite clean energy generation mandate.
A new data center or artificial intelligence facility in this state that has an
estimated peak load exceeding one hundred megawatts (100 MW) shall derive fifty
percent (50%) of its electricity supply from new, carbon-free energy sources located
onsite or through direct interconnection. The amount of new, clean energy generated
must prevent a net decrease in the energy available to the public transmission and
distribution system.
68-206-105. Prohibition of fossil fuel incentives.
(a) Fossil fuel power purchase agreements (PPAs) cannot be used to qualify for
any state economic development incentives or reduced utility rates.
(b) A qualified data center shall not utilize state-subsidized fossil fuel generation
for its primary power load.
SECTION 2. Tennessee Code Annotated, Section 68-204-103(b), is amended by
adding the following as a new subdivision:
(7) Create and impose a clean energy transition surcharge on a data center that
has a peak demand of one hundred megawatts (100 MW) or more, pursuant to § 68-
206-102.
SECTION 3. Tennessee Code Annotated, Section 68-203-101(b)(1), is amended by
adding the following as a new subdivision:

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(O) The Bring Your Own Generation (BYOG) Act, compiled in chapter 206 of this
title.
SECTION 4. The headings in this act are for reference purposes only and do not
constitute a part of the law enacted by this act. However, the Tennessee Code Commission is
requested to include the headings in any compilation or publication containing this act.
SECTION 5. This act takes effect July 1, 2026, the public welfare requiring it.