Headlines tell us that Data Centers were the biggest losers in last week’s elections. For a Perfect Storm of reasons, DCs blew up as everyone’s favorite punching bag, for both the left and the right, in the last year. A great deal of that anxiety has to do with the justifiable paranoia about AI and a surveillance state run by sentient terminator robots – got it. We need investigations and strong guardrails in that area, and I think the new congress will get on that.
Much of the concerns relate to more prosaic issues like the cost of electricity, water supplies, local governance, and land use. Polling shows more nuance. A poll by the Southeast Michigan Regional Chamber showed that, while two thirds of those polled said they were against a nearby data center – follow up questions showed that if there were guarantees on electric rates, water use, and restrictions on tax abatements – a plurality of all voters, and a majority of self identified Democratic voters would be willing to reconsider.
Democratic candidates, by and large, proved more adept at leveraging that voter unease, in part at least because of the President’s intemperate rhetoric in favor of unbridled AI, and toxic relationships with Billionaire Tech Bros.
Now the campaign is over, and it’s time to govern, so pragmatism has to set in. For Democrats, that means a recognition that an important part of their coalition, Labor, loves Data Centers, which provide thousands of well paying professional careers for young people in a tough job market, made all the more so, of course, by AI itself.
In addition, there is the simple, compelling momentum of the technology itself, which is quickly finding users among businesses small and large, and the middle class. It’s not going away, and too many restrictions in one locality will just drive development elsewhere, which, if we are concerned about climate change, could mean more centers powered by poorly regulated fossil fuel generators.
As the first video at the top argues, it is possible to do Data Centers well, or poorly – and if done well, they can apply a downward pressure on rates, as well as creating significant community benefits.
I’ve collected here a few videos that help clarify some of the most egregious areas of concern, and I’m pleased that the journalists here are finding much the same set of facts that I’ve been seeing in the last 6 months.
At the top of the page, the CNBC video looked at Google’s Pine Island facility in Minnesota, which is widely regarded as a model of how to go forward. Minnesota is requiring a number of financial safeguards, as well as a “Bring your Own Clean Energy” approach to providing needed electricity. (the acronym is BYONCE, which helps)
Google will be building, on their dime, 1400 MW of wind, 200 MW of solar, and a 300 MW, 100 hour Iron-Air battery, across the whole state, to power the facility.
A similar approach is being followed in Michigan, another state that has been pro-active in this area. Google recently signed an agreement with state regulators to commit to financial requirements, and build local clean energy.
Michigan Public Service Commission:
Continuing ratepayer protections that have been highlighted as some of the strongest in the country, the Commission approved DTE Electric’s PSA with Google that includes:
- A contract length of 20 years, compared to 5-year contracts normally required under DTE Electric’s large-load D11 rate. This reduces the risk of stranded infrastructure costs were a data center to leave before costs to serve it are paid.
- A minimum billing demand of 80%, compared to 50%-65% in the general D11 rate. This means Google will have to pay a minimum of 80% of the contracted electric use, even if its actual use is lower.
- An early termination payment requiring Google to ultimately pay for at least 15 years of minimum monthly charges, ensuring that the costs to serve the project are fully recovered from Google even if it cancels the project early.
- Credit and collateral requirements to cover costs in the event Google were to cease operating the data center sooner than planned.
In addition, the CCAA terms require Google to pay for DTE Electric to develop up to 1,600 megawatts (MW) of renewable energy and 480 MW of battery energy storage to serve the data center. According to DTE Electric, the data center is expected to begin taking service in December 2027 with a maximum load achieved by December 2028.