New, large-scale data centers are emerging as a contentious issue across Michigan, with polls indicating significant public opposition. Despite state leaders promoting Michigan as a suitable location for these warehouse-scale server farms, projects are encountering substantial pushback from residents concerned about potential environmental impacts and the unpredictable nature of artificial intelligence technology.
Experts clarify that the data centers sparking current debates are far larger and more powerful than the traditional facilities that have operated unnoticed in Michigan for decades, powering email and streaming services. While approximately 70 commercial data centers currently exist in the state, business leader and former US ambassador John Rakolta Jr. described the new class of “hyperscale” data centers as “the most fantastic economic development opportunity in the last 150 years.” Rakolta’s company, Walbridge, is involved in building Oracle’s 1.4-gigawatt complex in Saline Township and is a partner in the proposed 282-acre Google data center in Van Buren Township.
These hyperscale centers are distinct from standard facilities, which might draw around 50 megawatts of energy. The increasingly sophisticated AI systems driving large language models and neural networks demand significantly more power. Hengguang Li, director of the Institute for AI and Data Science at Wayne State University, stated that this technology is transforming data centers into a “new class of industrial infrastructure,” unlike anything built years ago. Near Grand Rapids, Switch, a Las Vegas-based company, operates what is likely Michigan’s biggest functioning data center in Gaines Township, expanded for AI with a planned electrical capacity of 237 megawatts. Both the U.S. and Michigan are encouraging data center development to boost the economy. In response, the Michigan Legislature in 2024 exempted qualifying data centers from the state’s 6% sales and use tax, leading to various new “enterprise” data center proposals and local debates over tax incentives.
However, communities are pushing back against these developments. Companies typically seek large land parcels with access to electricity, fiber connectivity, and water, often targeting farmland. Jean Hardy, an MSU associate professor, noted that communities feel targeted because they are perceived as less regulated, with critics expressing worry that large tech companies can effectively control development and “steamroll” rural areas. Over 30 communities statewide have implemented moratoriums on data center development. Sarah Mills, director of the Center for EmPowering Communities at the University of Michigan, suggests communities update their general expectations for industrial development rather than crafting specific data center ordinances. In Saline Township, some residents reported feeling that developers “bully their way in.” After township officials rejected zoning for a project, developers sued, leading the board to settle due to concerns about expensive legal fees. Attorney General Dana Nessel and environmentalists are now challenging the Michigan Public Service Commission and DTE over the project’s permit, citing a “fast-tracked” process and apparent “red flags.”
Regarding electricity rates, Governor Whitmer asserted that families “have been protected from any rate increases due to data center development.” Michigan’s residential electric rates are higher than the U.S. average and are the highest in the Midwest. Erik Nordman, director of the Institute of Public Utilities at Michigan State University, stated this trend is “not related to data centers,” attributing current rate impacts to decarbonization efforts, grid reliability improvements, and increasing equipment costs. Nordman acknowledged that utilities will need to build the grid both “cleaner and faster” to meet rising energy demands from data centers, posing a challenge as the state aims for 100% clean energy by 2040. He also suggested that in systems with excess energy, data centers could potentially lower rates for customers by covering utility fixed costs, referencing proposed rate reductions by Indiana Michigan Power. Consumers Energy president and CEO Garrick Rochow indicated in a July report that residential electric customers could see a monthly bill benefit, citing an estimated $7.50 per month with every gigawatt of new large load. However, Nordman cautioned that rates “could rise” under certain conditions as data centers and ratepayers share costs for grid improvements. Regulators in Michigan can directly assign costs for upgrades like substations and high-voltage transmission lines to industrial customers, and onsite generators and batteries at data centers can enhance overall utility reliability. The Michigan Public Service Commission has approved two data center contracts, for the Oracle site in Saline Township and the Google project in Van Buren Township, both requiring payment for infrastructure upgrades. Data centers are also ineligible for the state’s 2024 sales and use tax exemption if their power needs necessitate residential customer rate increases. The Saline Township data center is projected to increase DTE Energy’s energy load by 25%. DTE currently has approximately 6 gigawatts in its pipeline for other data center development, in addition to existing agreements with OpenAI and Google. One gigawatt can power about 1.2 million Michigan homes. Forecasts from the Lawrence Berkeley National Laboratory suggest data centers could account for 11.8% of total U.S. electricity usage by 2030, a significant jump from 4.4% in 2023.
Environmentally, the high energy demands of these facilities are “likely to increase greenhouse gas emissions.” While water usage is considered a “low risk,” noise pollution is a “concern.” The Ypsilanti City Council passed a resolution opposing a proposed data center collaboration between the University of Michigan and Los Alamos National Laboratory, citing its rejection of nuclear weapons research and media reports indicating “significant environmental threats” posed by data centers.
