Wisconsin residents look for more input from state on mushrooming data centers

This story was originally published by the Wisconsin Examiner.

The efforts of some of the largest companies in the world, including Microsoft, Meta, Oracle and OpenAI, to develop data centers in communities across Wisconsin have sparked heated local debates among residents, government officials and even comedians. 

Those debates have often been over the data centers’ use of water and electricity, the net impact of local government deals with big corporations, the value of handing over large tracts of land for big warehouse-like buildings and the secrecy in which the plans are often shrouded. 

Data centers, buildings that house computer servers to store information for cloud-based software and, increasingly, to support the expansion of artificial intelligence, are becoming more and more prevalent in the Upper Midwest, according to the Minneapolis branch of the U.S. Federal Reserve. 

While Wisconsin still lags behind its neighbors, the state is now home to 47 data centers with more on the horizon. As communities across the state weigh the merits of accepting data center development, critics and proponents say the state needs more than the current, piecemeal local approach. 

In Port Washington, a Milwaukee suburb on the shore of Lake Michigan, the local government has supported a proposal from tech giants Open AI and Oracle to develop an AI-focused data center on 2,000 acres of farmland in the community. That project is moving forward despite local backlash. 

In Mount Pleasant, a village in Racine County where state and local officials have been trying to salvage a failed Foxconn development, Microsoft has spent billions of dollars for the construction of two data centers in the community. 

But in nearby Caledonia, Microsoft was forced to back off a planned development after backlash from local residents led to the denial of a requested zoning change. 

Overwhelmingly, the largest complaints about data centers are the electricity and water usage. A recent Bloomberg News report found that the construction of data centers has caused electric bills in nearby communities to surge because of the high energy needs of the centers. A recent report from Clean Wisconsin found that just the data centers in Mount Pleasant and Port Washington will use enough electricity to power 4.3 million homes. 

Many data centers need to use water to cycle through their cooling systems, which are necessary because computer equipment can’t be allowed to overheat. While proponents of data centers have downplayed the amount of water required to run the cooling systems, critics point to the water use associated with the increase in electricity demand. Wisconsin’s existing power plants use a high amount of water.

These demands on water have become especially fraught as the data centers have become increasingly concentrated in southeast Wisconsin, where residents are very protective of Lake Michigan and the Great Lakes watershed. 

Melissa Scanlan, the director of UW-Milwaukee’s Center for Water Policy, says Wisconsin’s failure to address data centers comprehensively could quickly put an overly burdensome strain on the state’s utilities.

“There should be a state level review of all of the potential proposals, so that the state can assess the impact on electricity generation and water supply,” Scanlan says. “Doing it in a piecemeal way, where you’ve got local governments deciding about hosting, but then utilities that are committed to supplying the electricity and water, is going to very quickly bump up against the realities of our ability to generate electricity in a responsible way.”

Robin Palm, a certified urban planner who lives in Milwaukee, says he’s largely supportive of data centers because they provide local governments with a consistent source of property tax revenue without requiring many city services. 

“A data center is extremely low services, they’re not going to have kids that need to go to school,” he says. “They are not going to have homeowners that are going to make demands at the village board, and they’re not going to have police calls because of crime or anything like that. So it’s a really low services, high value land use.”

He says the current approach of leaving these decisions up to local officials and zoning boards has pointed the public’s skepticism in the wrong direction. The local officials, he says, are making an easy economic development calculation when the real blame for the confusion should go to the state Public Service Commission and power companies — which have failed to support the expansion of renewable energy in the state. 

Palm points to Iowa, which has far more data centers than Wisconsin and gets more than 60% of its power supply from wind. 

“[Iowa is] getting cheap electricity. They use a lot more per capita than a lot of other states, and they’re way far ahead of us in data centers, and it’s mostly renewable,” he says. “I can’t see anything to complain about that situation. So it seems to me that the obvious culprit, I think, on our side, is the PSC and We Energies. There is something in that mechanism that’s basically screwing us.” 

Warning about a ‘data center stampede’

Late last month, state Sen. Chris Larson (D-Milwaukee) said that a “data center stampede” has started in Wisconsin and that state officials need to develop some sort of statewide plan for how to manage it. 

“We must develop a statewide plan for data centers that prioritizes the needs of our neighbors and its impact on the environment and our communities before the profit margins of private utilities and big tech companies,” he said in a statement. “If we don’t, the data center stampede will likely continue unabated, and in its wake may very well be a Wisconsin we no longer recognize — one that has abandoned its tradition of protecting our air, water, and land for future generations.”

Richard Heinemann, an attorney for Madison-based law firm Boardman Clark, says state lawmakers have already made a policy statement affirming their desire for the construction of data centers. In the 2023-25 state budget, passed by the Republican-controlled Legislature and signed by Democratic Gov. Tony Evers, a provision was included to give a sales tax rebate on the “development, construction, renovation, expansion, replacement, repair, or operation” of data centers. 

Heinemann also points to two bills signed into law by Evers earlier this year to advance the development of nuclear energy in the state. That legislation was introduced specifically to respond to the increased energy demands of data centers.

“Wisconsin must be prepared to meet soaring energy demands that will be driven by the development of data centers and other energy-intensive economic development,” the co-sponsorship memo states. 

But Heinemann says he believes local officials and residents already have the necessary tools to weigh in on data center development. 

“We already have procedural mechanisms in place to try to address some of these issues,” says Heinemann, who recently wrote an article about local government’s authority to intervene in Public Service Commission considerations of utility expansion. “I’m not saying every issue, but some of the important ones that people have looked at or pointed to. So I don’t know what sort of new legislation one could propose that would address these issues in some more comprehensive way, or in a way that would just provide some due process.” 

Hovering over the whole debate is the secrecy with which big tech companies have operated while working to build data centers. The corporations responsible for development are often hidden behind obscure LLCs and have a record across the country of trying to get local governments to sign non-disclosure agreements (though it’s unlikely such an agreement could stand up to Wisconsin’s open records laws). A group of environmental organizations recently had to file a lawsuit to force the city of Racine to disclose how much water it was estimating it would be providing to the Microsoft site in Mount Pleasant. 

Heinemann says these debates would go more smoothly if the companies worked in the open with communities. 

“Data centers themselves have an obligation to make sure that they’re doing the outreach necessary when they work to site a facility in a locality,” he says. “It behooves them to do that work of trying to address the needs of the locality.” 

Heinemann says says the state Public Service Commission, Department of Natural Resources and local communities through their zoning authority already have the resources they need to regulate data centers

“Each project is complicated. It does require a lot of infrastructure,” Heinemann adds. “There are a lot of potential benefits to communities, but there are also impacts on the communities, those can be addressed, and there are legal procedures and agencies whose job it is to do that.”

Wisconsin Examiner is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Wisconsin Examiner maintains editorial independence. Contact Editor Ruth Conniff for questions: info@wisconsinexaminer.com.