Graded Moderate and tightening. 16 laws, orders, rulings and local actions, each with its source, reviewed 23 October 2026.
TVA requires a board vote above 100 MW (updated August 20, 2026) and interruption terms for early connection; SB 2128 (May 7, 2026) makes loads pay upgrades.
TVA's separate data center class with an upfront capacity charge took effect October 1, 2026; SB 2128 (May 7, 2026) bars ratepayer funding of their costs.
Nashville's July 21, 2026 size ban and moratorium, Memphis's October 20, 2026 pause and Knoxville's one-year moratorium cover three of four main markets.
No incentive item and no incentive action appears in the file, so this scores 3: nothing to lose, nothing to gain.
Statewide disclosure and water permit bills died in April 2026; the only air action is the July 2, 2025 Shelby County permit for xAI, which was granted.
Scored on rules in force, 1 to 5. 5 is the most regulated. Pending rules set the arrow.
Tennessee's legislature has little power over TVA, so the rules come from three places. A May 2026 state law requires data centers of 50 MW or more to pay for the grid upgrades they cause, and lets them generate their own power or buy from independent producers without state or local review. TVA's board moved data centers into their own rate class from 1 October 2026 with an upfront capacity charge, and still votes on any load above 100 MW. Since June 2026 Nashville, Knox County, Knoxville and several smaller counties and towns have passed moratoria or strict zoning, driven partly by the xAI gas turbine dispute in Memphis, and on 20 October 2026 Memphis City Council narrowly approved a 135-day pause after rejecting an indefinite one.
Memphis has 90 days under Mayor Paul Young's executive order to draft data center regulations and the council can extend its 135-day pause; Shelby County Commission debated a moratorium of up to 12 months and a conservation ordinance on 21 October 2026 without voting. Nashville's moratorium runs to December 2026 and survived a first federal challenge when a judge dismissed three of DC Blox's nine claims and denied an injunction in a ruling reported 7 October, with Metro's 5 October impact assessment recommending tighter permanent controls on no set timetable. Knox County's pause runs for a year from June 2026 and Knoxville's to about July 2027. The sponsor of the 2026 law says he will bring a water supply bill in the 2027 session, where the failed disclosure and permit bills are likely to return. TVA's board meets quarterly and decides each load above 100 MW, and the NAACP's Clean Air Act suit over xAI's Southaven turbines continues after a judge refused to dismiss it on 20 October.
No statewide moratorium, but 4 local pauses are in force as of 23 October 2026, in Knox County and Loudon County, Knoxville, McMinnville and Coffee County, Memphis. Proposals and expired pauses are not counted.
Tightening. Tennessee is graded Moderate, which means incentives alongside new costs, limits or local pushback. TVA data center rates in force; Memphis joins the moratorium list. The outlook above says what is pending.
Tennessee sits in PJM and TVA. The grid operator decides how a new large load is studied, what it must bring or pay, and whether it can be curtailed first; the state decides siting, permits, tariffs and incentives.
No. Tennessee's data center incentives were not pulled back in 2025 or 2026 as of 23 October 2026.
On Genloop's five-line rubric (1 least regulated, 5 most) Tennessee scores grid connection 3, power rates 4, siting and land use 4, tax treatment 3, permits and water 2, a mean of 3.2. The most regulated line is siting and land use: Nashville's July 21, 2026 size ban and moratorium, Memphis's October 20, 2026 pause and Knoxville's one-year moratorium cover three of four main markets.
16 items: each is a law, order, tariff, ruling, utility action or local decision that changes what a data center must do, pay or disclose, or where it may be built. Failed and pending measures are marked. Each links to its source.
The TVA board approved a separate wholesale rate structure for data centers on 20 August 2026, effective 1 October 2026. New or expanding data center loads above 5 MW pay a capacity commitment charge, TVA expects bills to rise about 10% phased over three fiscal years, and sites that want to connect before generation is ready must accept interruption terms.
Source: unite.aiAfter postponing the vote on 6 October 2026 (7 to 5) amid protests, the council voted on 20 October 2026. It rejected an indefinite moratorium and narrowly approved a substitute 135-day pause on data centers, far shorter than the 18-month version first proposed; residents objected that it dropped the public hearing requirement. Mayor Paul Young's executive order gives the city 90 days to draft data center regulations and the council can extend the pause.
Source: actionnews5.comOn 21 October 2026, the day after the Memphis vote, the County Commission debated two ordinances: one from Commissioner Amber Huett-Garcia on water and electricity conservation and rules for existing data centers, and one from Commissioners Henri Brooks and Erika Sugarmon for a temporary moratorium of no more than 12 months. No vote was reported.
Source: actionnews5.comDC Blox sued Metro Nashville in August 2026 over the data center moratorium and the halt to permit processing for its site next to the Nashville Zoo. In a ruling reported 7 October 2026 a federal judge in Nashville dismissed three of nine claims, denied a preliminary injunction and gave DC Blox 21 days to amend; the moratorium stays in place.
Source: wsmv.comA Metro government report released 5 October 2026 recommends pre-application meetings with NES and TVA, utility feasibility letters, permits tied to utility milestones with stage gates, a city-NES-TVA compliance working group, and legislation confirming that dedicated upgrades are customer-funded. It flags vibration, wastewater and clustering for further study; no council timetable was set.
Source: wsmv.comOn 20 October 2026 a federal judge in Greenville, Mississippi rejected the US Department of Justice's attempt to dismiss the NAACP's Clean Air Act suit over xAI's gas turbines at its Southaven plant, which serves the Memphis Colossus campus. The case continues.
Source: selc.orgAt the same 20 August 2026 meeting the board updated its policy on new power requirements above 100 MW, which need a board vote. The board also adopted a 2026 resource plan that sees a need for 11 to 32 GW of new capacity by 2040.
Source: new.chattanoogan.comOn 21 July 2026 the Metro Council banned data centers larger than 500,000 square feet, limited large ones to heavy industrial zones at least half a mile from homes, schools and parks, banned on-site gas generators and required closed-loop cooling. A separate moratorium pauses new data center construction until December 2026.
Source: wsmv.comIn early July 2026 the Knoxville City Council unanimously approved an emergency one-year moratorium on data centers needing 10 MW or more of power. It is expected to run to about 7 July 2027 unless the city adopts new zoning rules sooner, and follows Knox County's own moratorium.
Source: wvlt.tvKnox County commissioners adopted a one-year moratorium on data centers in late June 2026. Loudon County followed with a six-month pause on county approvals for data centers expected to draw at least 50 MW within three years.
Source: hoodline.comMcMinnville unanimously passed an 18-month moratorium on data center permitting on 9 June 2026 and Coffee County passed its own moratorium the same day. Warren County scheduled a vote for 22 June.
Source: tennesseelookout.comSigned 7 May 2026 and effective at once. Data centers needing at least 50 MW must pay for the infrastructure built to serve them, and utilities may not use ratepayer funds for costs that serve only a data center unless other customers also benefit. The law also lets data centers generate their own power or buy from independent producers in Tennessee without state or local oversight.
Source: local3news.comSix other 2026 bills died in committee, including SB 2653 / HB 2392 (water and wastewater permits), SB 2112 / HB 2456 and SB 1682 / HB 2061 (registration and reporting of energy and water use) and SB 1999 / HB 2054 (large-load tariffs).
Source: tennesseelookout.comIn February 2026 the TVA board approved a deal letting xAI's Memphis-area operations buy up to 300 MW, double the 150 MW approved in 2024.
Source: tennesseelookout.comThe health department approved a permit for 15 turbines at xAI's first Memphis site on 2 July 2025, after as many as 35 had run there without permits. An appeal by the NAACP and others was dismissed as moot by the local air board on 15 December 2025; in January 2026 the EPA said large temporary turbines need permits.
Source: selc.orgTVA requires a board vote for any industrial customer above 100 MW. In November 2024 the board approved 150 MW for xAI's South Memphis site after the city utility had raised supply from 8 MW to 50 MW.
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