- At least four major data center projects are in the works in southern Michigan.
- Some communities, like Salem Township, are less than thrilled about data centers and the power demands they require.
- Data centers also use a large volume of water to cool equipment used to generate power.
As companies such as Google, Microsoft and Amazon scramble to ramp up their artificial intelligence, cloud computing and other digital capabilities, the massive amounts of computational power they need have required construction of data centers throughout the U.S. and the globe.
Now these warehouses full of computers are coming to Michigan — and high-powered computing requires high power.
Indiana-Michigan Power Co., a utility whose service area extends into southwest Michigan, in an update earlier this year, predicted its energy load will more than double from 2023 to 2030, with data centers becoming 60% of its total load. For a proposed massive new data center in Washtenaw County’s Saline Township, DTE Energy on Oct. 30 announced a 1.4 gigawatt power agreement, with an additional 3 gigawatts of power delivery in “late-stage negotiations” − enough electricity to power millions of Michigan homes.
Local governments are scrambling to protect energy ratepayers and other citizens, water resources and the environment as best they can, as some companies proposing data centers aren’t taking “no” for an answer.
The list of communities where large data centers are proposed includes:
- The more than $7 billion Stargate Data Center, a massive A.I. data center proposed on 250 acres in Washtenaw County’s Saline Township by OpenAI, the creator of the popular artificial intelligence product ChatGPT; software giant Oracle; and Related Digital, a subsidiary of New York-based Related Companies started by Detroit native and University of Michigan megadonor Stephen Ross.
- A $1.25 billion computing and AI research facility jointly proposed by the University of Michigan and Los Alamos National Laboratory in Washtenaw’s Ypsilanti Township. The facility would include a research component for U-M and top-secret national security operations for Los Alamos. Township officials have been frustrated with their lack of involvement in the process. “There is absolutely nothing transparent U-M has done with regard to their computational center,” Ypsilanti Township Attorney Doug Winters said.
- An “unnamed Fortune 100 company” is proposing a data center in Livingston County’s Howell Township. The township’s planning commission voted in late September to recommend denying rezoning for the project, which still must go before the county planning commission and township board. More than 2,000 petition signatures opposing the data center were collected.
- A $1 billion commercial data center is proposed on 810 acres west of Milan in Washtenaw’s Augusta Township by Thor Equities, a New York-based real estate firm. The township board approved a rezoning for the project, but a citizen petition drive gathered enough signatures to force a public vote on the zoning question in 2026.
The state’s utility regulator, the Michigan Public Service Commission (MPSC), is also wrestling with the issues data centers raise. The commission on Nov. 6 approved an application brought by Consumers Energy seeking a new set of standards for data centers and other very large users of energy. Consumers officials in February stated they needed these new rules in place quickly as it “has several new data center customers who are considering locating in the company’s service territory,” without specifying particular projects.
Under the rules approved by the MPSC on Nov. 6, data centers and other large-load users of 100 megawatts or more:
- Would be required to enter into a 15-year contract with the utility.
- Meet a minimum billing demand of 80% of a data center’s contracted capacity, to ensure investments in infrastructure don’t fall to other ratepayers should the data center have lower usage than anticipated.
- Automatic 5-year contract extensions, and four years’ notice for contract termination.
- An administrative fee paid by the data centers and other large-energy-usage customers .
- An “exit fee” allowing Consumers to recover funding from a data center that stops taking its full contracted power generation and distribution, though the utility is expected to help minimize the fee by reassigning leftover energy capacity to other customers. Half of the exit fee must be provided upfront as collateral.
- Large-load customers can seek a one-time reduction of their needed energy capacity of no more than 10%, with four-year written notice.
The commission did not establish specific cost allocation or rate designs for data centers and other large energy users, leaving those to be considered in general rate cases to come. Consumers must demonstrate in individual rate cases for each data center or large-load customer that “costs caused by the new user are not being subsidized by any other residential, commercial or industrial electric customers.”
Many thrilled with Stargate project, except Saline Twp. officials
The Stargate project is proposed on 250 acres of a 575-acre parcel previously zoned agricultural in Saline Township. It would consist of three, 550,000 square-foot, single-story buildings. Company officials said the data center will support 2,500 union jobs during construction, then 450 jobs onsite, with an additional 1,500 jobs countywide supporting the center.
“This historic, multibillion-dollar investment will ensure that Michigan plays a leading role in developing the digital infrastructure American companies need,” said Jeff T. Blau, CEO of Related Companies and chairman of Related Digital, in a statement.
Gov. Gretchen Whitmer also touted the project for its economic benefits. Her administration has encouraged the siting of data centers in Michigan through sales and use tax exemptions.
“This investment from Oracle and Related Digital sends a simple message to anyone who wants to build the future — you can build it in Michigan,” Whitmer said in a statement.
And DTE officials said the data center and its energy usage will actually benefit ratepayers, allowing the utility to sell excess generation and requiring contract terms that the data center absorb all new costs required to serve them.
Noticeably absent in the celebration was Saline Township. Officials there initially rejected changing the targeted land’s agricultural zoning, but Related Digital and three property owners then filed a lawsuit against the township last summer, claiming the board’s denial constituted an arbitrary refusal to permit a legitimate and economically feasible land use. Township officials then this fall agreed to allow the project with various protective conditions − “reluctantly,” Saline Township Attorney Fred Lucas said.
“We extracted as much as we could out of them,” he said. “The township would have much preferred to not have (the data center) at all.”
Negotiated provisions include:
- Minimum setbacks of 75 feet from the road, with substantial tree and other screening of the constructed buildings.
- Remaining acreage preserved as open space, farmland and woodlands.
- The project will not use water-intensive evaporative cooling technology. Any on-site water will be used for domestic purposes such as restrooms, sinks for employees, landscaping and general maintenance.
- The project can’t be taken off the township’s tax rolls by being sold or leased to a nonprofit charitable or other tax-exempt entity.
- The developer will restore the land as a natural area if the project is ever decommissioned.
Related Companies, in a statement to the Free Press, said that the project will generate at least $1.6 million annually to Saline Township in tax revenues through 2039, and $8 million annually to area school systems. Company officials also agreed to direct community benefits requested by the township board, including:
- $8 million for fire services — $7 million to the Saline Area Fire Department to invest in new trucks and other equipment and strengthen emergency services, and an additional $500,000 each to the nearby Clinton Township and Manchester fire departments.
- $4 million to a farmland preservation trust.
- $2 million to establish a community investment fund overseen by the township board to use at its reasonable discretion to benefit the township.
“We have always enjoyed significant community support in Saline Township, and from the beginning, many members of the community and neighbors greatly preferred our proposal to the alternatives that would have been developed on the site had our project not moved forward,” the company’s statement reads.
The sellers of the properties repeatedly made clear to the board and the community that they planned to develop their properties — and one family had already pulled their land from Michigan’s Farmland and Open Space Preservation tax relief program and sold off their farm equipment, Related Cos’ officials said.
“So the idea that this was going to stay agricultural was not realistic,” they said.
On that point, Lucas agreed. The property owners intending to get out of farming meant other uses, including hundreds of residential homes, could have gone on the acreage.
“In my and in the township’s estimation, it would not have been a good thing to have residential in that area,” Lucas said.
“It’s almost like you are losing your agricultural character in that particular area, anyway. What is the best way? What’s the worst way?
“This is really, truly the lesser of two evils for us.”
Michigan’s utility regulator explores tariff for data centers
The Stargate project and DTE are seeking fast-track approval from the Michigan Public Service Commission.
But Michigan Attorney General Dana Nessel on Nov. 6 filed a request for a contested proceeding with the MPSC, citing “significant unknown details surrounding the project and the potential financial risks to utility ratepayers across DTE’s service territory.”
A formal public hearing with discovery and filed testimony will allow for third-party verification of the protections and cost reductions to customers proposed by DTE and provide the commission with a full evidentiary record to decide whether the special contract is prudent and reasonable, Nessel’s office said in a statement.
The Consumers Energy rate case ruled upon by MPSC was brought “to address the unique circumstances created by data centers and to ensure that accommodating the growth attributed to data centers does not create unacceptable risks for Consumers Energy or its customers,” Consumers deputy general counsel and vice president of rates and regulation Kelly M. Hall stated in the utility’s Feb. 7 request to the MPSC.
Hall noted that data centers often require energy infrastructure upgrades to meet their needs, including substations and high-power transmission lines.
But “data centers do not have significant numbers of on-site employees, and do not have significant local supply chain needs, making it easier for data centers to ‘pick up shop’ and reduce or leave (Consumers Energy’s) service,” she stated. “These factors create a greater risk for stranded assets with respect to data center customers than exists for other” large industrial energy customers.
Data centers need cooling, and that very often means lots of water
Operating warehouses loaded with powerful computers 24 hours a day, 365 days a year means heated-up hardware that requires an industrial-scale cooling. And that very often means water, lots of water.
Hyperscale data centers nationwide are expected to consume between 16 billion and 33 billion gallons of water by 2028, according to a December 2024 data center energy usage report compiled by researchers at Lawrence Berkeley National Laboratory. That approximately equals the amount of water every resident of Metro Detroit uses in three months.
And that doesn’t include indirect water usage, such as the amount of water consumed to create the energy at a power plant to provide the extra energy needed for a data center, the researchers noted.
The Great Lakes region is seeing a huge expansion of data center activity, with Illinois and Ohio ranking 4th and 5th in the nation, respectively, for the number of such centers in their state. The Great Lakes region is not prepared to manage the competing and overlapping demands that may soon lead to more conflict over water resources, said Helena Volzer, senior source water policy manager for the Chicago-based environmental nonprofit Alliance for the Great Lakes, who authored a report on the topic in March.
“It’s very tough to even get a handle on how much water these facilities are using, talking about direct and indirect use,” she said. “There are often nondisclosure agreements that are used during the siting process that obscure how much water and energy are proposed to be used at the outset. And then there is no ongoing water use reporting requirement once a data center is connected to a municipal supply − less than a third of data centers now are tracking it. And 97% of data center operators are connected to municipal (water) supplies.”
Volzer recommended agreements, such as that struck by Saline Township with the Stargate project, to restrict water use.
“We would prefer to see those kinds of requirements implemented at the state level in a consistent way, where every project has some associated water reporting requirement, not just this particular data center in this particular community,” she said.
Meeting surging energy needs slows momentum on carbon reduction
From 2024 to 2030, data center electricity consumption will grow by around 15% per year, more than four times faster than the growth of total electricity consumption from all other sectors, according to the International Energy Agency.
To meet this surging need, many electric utilities have changed plans.
For the first time in U.S. history, the Nuclear Regulatory Commission approved the restarting of a decommissioned nuclear plant, the Palisades Nuclear Plant in the west Michigan community of Covert. The plant ceased operations in May 2022 after more than 40 years of commercial operation. But less than a year later, Holtec, the license-holder for Palisades, expressed interest in returning the nuclear plant to operation. The plant is now in the final stages of inspections, testing, and maintenance, with the goal of resuming power generation by the end of 2025
The Trump Administration in May ordered Consumers Energy’s coal-fired J.H. Campbell plant in Ottawa County’s West Olive to remain open beyond its slated closure on May 31, citing the potential for an energy emergency due to heightened summer demand. Consumers Energy officials recently revealed in a filing with federal regulators that keeping the plant open has cost the utility more than $80 million.
It’s causing utilities to fall further behind on meeting carbon reduction goals, according to a report by RMI, a Boulder, Colorado-based nonprofit focused on market-based solutions to combat climate change. RMI examined utilities’ resource plans for the second quarter of 2025 and found an increasing shift by utilities across the nation toward increasing natural gas-fired power plants to help meet energy demand, as well as delaying the closure of old coal-fired power plants or converting those plants to gas.
Though natural gas burning releases considerably less carbon dioxide than coal burning, natural gas is still a fossil fuel. In 2023, natural gas emitted 790 million metric tons of CO₂ from power generation, according to the U.S. Environmental Protection Agency.
But battery energy storage, increased efficiency and continued adoption of wind and solar energy can keep meeting surging energy demands from coming at the cost of carbon reduction goals, said Mark Dyson, a managing director with RMI overseeing its electricity sector in the U.S.
“We don’t see it as a given that increasing load from a data center is definitely going to result in a new gas plant or retention of an old coal plant,” he said. “There are many other options that utilities and data center companies are working together to innovate around.”
Contact Keith Matheny: kmatheny@freepress.com.
