The hope and fear of Minnesota's data center boom
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Illustration: Brendan Lynch/Axios
Massive, energy-sucking data centers are coming to Minnesota amid a national surge in demand driven by artificial intelligence and cloud computing.
Why it matters: The proliferation of data centers raises questions about how Minnesota utilities can satisfy this demand while simultaneously meeting a state mandate for 100% carbon-free energy by 2040.
State of play: Virginia, California and Texas have been leading states for data center development over the last decade, but real estate firm Cushman & Wakefield recently identified Minnesota as a top 5 emerging market in the U.S.
- There are a slew of projects in the pipeline: Facebook/Instagram parent company Meta is building one in Rosemount; Microsoft and Amazon have both bought land in Becker; and Colorado-based Tract has plans in Farmington and Rosemount.
Between the lines: One reason Minnesota is an emerging hot spot for data centers is that operators have made corporate commitments to power them with carbon-free electricity, and the state's mandate will force that, according to Energy News Network.
Staggering stat: If the 10 large-scale data centers proposed for Minnesota are built over the next seven years, Xcel Energy and Great River Energy anticipate they'll need to supply 2,300 megawatts for those facilities, according to the Star Tribune.
- That's the equivalent of all of Minnesota's 2.3 million households, the paper reports.
What they're saying: Xcel Energy executive Ryan Long said at an October Public Utilities Commission conference that the growth of data centers won't prevent the utility from reaching the state's 2040 mandate.
- However, he acknowledged that it might require the firm to keep operating some of its gas plants longer than anticipated.
The other side: Pete Wyckoff, deputy commissioner for energy at the Minnesota Department of Commerce, raised doubts about that, according to Energy News Network.
- He said utilities are unlikely to be able to deliver "power of any sort — much less clean power — in the size and timeframes that data centers are likely to request."
Reality check: Aaron Tinjum, vice president of the industry association Data Center Coalition, said at the PUC meeting that these facilities offer essential services for everything from medical records and secure financial transactions to online education and media streaming.
- Data centers may not employ many permanent workers, but they cost billions to build and pay big property taxes.
- Plus, at a time when residential building has plummeted, the construction industry is being pulled up by data center projects, the Minneapolis Federal Reserve Bank's Ron Wirtz said during a December presentation.
The bottom line: If state utilities are going to meet this demand, they'll need to drastically ramp up renewable energy development.