- Data centers have become a topic of intense debate in Michigan as tech giants rush to build the computing facilities
- A Bridge Michigan panel explored the tension between Michigan’s economic goals and the environmental realities of data centers
- The discussion caps Bridge Listens, a yearlong experiment in reader-led journalism
Michigan lawmakers are under intense pressure to regulate data centers more strictly as public opposition to the computing facilities becomes too strong to ignore.
That’s a key takeaway from speakers on an expert panel at the inaugural Bridge Michigan Issues Summit at Marygrove Conservancy, titled “Innovation Collision: Balancing High-Tech Ambitions with Energy and Water Realities.”
The half-day Issues Summit featured expert speakers on some of the most pressing issues facing Michigan ahead of the November election, from education outcomes to healthcare costs and housing affordability.
The event capped Bridge Listens, the news organization’s yearlong focus on top issues identified by more than 6,400 Bridge readers in survey responses.
Environmental topics including data centers ranked high on readers’ list of concerns. In response, Bridge has spent much of the year digging into Michigan’s data center debate, including reporting on candidates’ policy stances, documenting the public pushback and exploring Michigan’s strategy to absorb the facilities’ massive energy and water demand.
More than 375 people attended the Issues Summit in Detroit, virtually or at a watch party at Alpena Community College.
During the data center discussion, audience members heard from:
- Brenda Stumbo, Ypsilanti Township supervisor
- Michelle Martinez, director of the University of Michigan Tishman Center for Social Justice and the Environment
- Erik E. Nordman, director of Michigan State University’s Institute of Public Utilities
- Jeff Guilfoyle, senior strategist at Public Sector Consultants
All agreed that intense pushback against data centers has begun to reshape Michigan’s policy landscape just two years after lawmakers first passed tax breaks meant to lure data center developers to the state.
By exempting qualifying data centers from sales and use taxes, lawmakers “opened the floodgates” to development with little input from residents, said Martinez.
It left many feeling “blindsided by the scope, the speed and the lack of channels to have a voice in the decision-making,” she said.
The panelists offered differing perspectives about how the industry may shape the state, with some expressing concerns about negative environmental and quality-of-life consequences from data center development while others argued Michigan stands to reap meaningful returns from the multi-billion-dollar investments.
In Saline Township, for example, annual property tax revenue from Oracle and OpenAI’s forthcoming Stargate data center will boost local tax revenue from a few hundred thousand annually to more than $10 million annually, said Guilfoyle, who has studied the potential economic benefits of data center development.
“That’s a significant increase and that money is a driver in the community,” Guilfoyle said.
The facility is also expected to employ 450 people permanently on-site while supporting thousands of temporary construction jobs.
The promised benefits so far haven’t won over many Michigan residents, nearly two-thirds of whom oppose the building of data centers in the state, according to recent polling.
Ypsilanti Township Supervisor Brenda Stumbo is familiar with that pushback, which she blames in part on lawmakers welcoming the industry to Michigan without consulting voters or local public officials who’d be left to negotiate the details with some of the world’s wealthiest companies.
“It was rushed,” Stumbo said of Michigan’s process, “and we know as individuals, in our personal lives and professional lives, when you rush something, it doesn’t really go well.”
Data center developers have since fanned out across Michigan looking for land and available energy. A single 1-gigawatt facility demands as much power as a large US city, prompting questions about how Michgian utilities can absorb the spiking demand without raising rates on residential customers.
“It’s the million-dollar question,” said Nordman.
And so far, the answer is unclear.
In some areas, increased demand from data centers has helped tamp down on residential rates by adding a new customer to split the cost of maintaining poles, wires and power plants, Nordman noted.
But in others, data center demand has outstripped existing capacity on the grid, creating a mismatch between energy supply and demand that has driven rates up.
Michigan should be insulated from at least some of that rate shock, he said, because state policy prohibits utilities from forcing other customers to shoulder the cost of investments needed to serve data centers.
Asked whether Michigan utilities can absorb data centers’ skyrocketing energy demand while still meeting Michigan’s mandate to transition to 100% clean energy by 2040, Nordman was less optimistic.
“It will be challenging,” he said. “Very, very difficult. Because, when we put these laws in place, we had relatively flat demand growth … now we have to work twice as hard.”
Even if Michigan utilities manage to meet the 2040 deadline, Martinez noted, data center demand in other states is likely to lead to new investments in fossil fuel infrastructure that drives climate change.
“In Texas, they have a 424 GW backlog for data centers alone,” Martinez said. “The air that comes from Texas does not stay in Texas.”
Watch the entire Issues Summit here:
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