Tennessee Senate Bill SB2681

Tennessee 2025-2026 Regular Session

• Introduced: 2/2/26

Caption

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.

Summary

SB2681, the Bring Your Own Generation (BYOG) Act, would create a new chapter in Title 68 of the Tennessee Code establishing energy and emissions-related requirements for very large data centers and artificial intelligence facilities. The bill applies to facilities with a peak demand of 100 megawatts or more and directs the state energy policy council to impose a clean energy transition surcharge on qualifying data centers. That surcharge would equal 100% of the proportional costs of adding new clean energy resources to the grid, including transmission upgrades, and the collected funds would be deposited into the Tennessee environmental protection fund. The bill also requires new data centers or AI facilities above the 100 MW threshold to obtain 50% of their electricity from new carbon-free energy sources located onsite or through direct interconnection. The clean energy generation must be structured so it does not reduce the amount of energy available to the public transmission and distribution system. In addition, the bill prohibits fossil fuel power purchase agreements from being used to qualify for state economic development incentives or reduced utility rates, and bars qualified data centers from using state-subsidized fossil fuel generation for their primary power load.

Impact

The bill would add a new regulatory framework in Title 68 governing large data centers and AI facilities, while also amending existing provisions in Titles 67 and 68 to tie the new chapter into Tennessee’s definitions of data center and qualified data center and to authorize the state energy policy council to impose the surcharge. It would affect large technology and industrial users, utility planning and rate structures, state economic development incentives, and the Tennessee environmental protection fund. The act is scheduled to take effect July 1, 2026.

Sentiment

No committee transcripts or recorded votes were provided, so there is no direct evidence of debate or formal support/opposition in the available record. Based on the bill text alone, the measure appears strongly pro-clean-energy and aimed at shifting the costs of grid expansion and decarbonization onto very large data center operators rather than general ratepayers.

Contention

The likely points of contention are the cost burden and operational requirements imposed on large data centers and AI facilities. Supporters would likely favor the bill’s pollution-reduction goals, protection of utility customers from cost shifting, and restrictions on fossil-fuel-backed incentives. Opponents may argue that the surcharge, onsite clean-energy mandate, and limits on fossil fuel power arrangements could raise development costs, reduce site competitiveness, and make it harder to attract large-scale technology investment to Tennessee.