
- On an investor call last week, DTE Energy CEO Jerry Norcia said Gov. Gretchen Whitmer and other Michigan lawmakers supported controversial data center bills.
- The tax incentives for large computing facilities could trigger an “offramp” provision in Michigan’s renewable energy legislation that would allow fossil fuel plants to be built or continue operating.
- Environmental advocates also say data centers could imperil Michigan’s water resources and increase residents’ water and energy bills.
DTE Energy is touting the potential of controversial data center bills to deliver benefits for investors, with company CEO Jerry Norcia saying on a Thursday earnings call that there was the political will to pass the legislation that had stalled before the summer recess.
“The governor has indicated a great willingness to sign these bills if they come to her desk,” Norcia said. He added that there was strong support in the Michigan House and Senate and that company expected the legislation to be passed this year.
Gov Gretchen Whitmer’s office did not respond to Planet Detroit’s questions about her position on the legislation.
The bills would provide tax incentives for companies like Google, Microsoft, and Amazon to locate data centers in the state, which can use massive quantities of energy and water.
Bringing these facilities to Michigan could generate profits for DTE shareholders by allowing the company to sell more power, but environmental groups and rate-payer advocates say they threaten the state’s transition to renewable energy, imperil water resources and may increase residents’ energy and water bills.
Michigan’s recently passed renewable energy legislation contains an “offramp” provision that allows fossil fuel power plants to be built or continue operating if there aren’t enough renewables to meet demand. Without amendments protecting the state’s climate goals, the bills could effectively negate the legislation that requires 100% renewable energy by 2040.
DTE has spent heavily to influence lawmakers in the past. DTE’s PAC gave $1.2 million to Gov. Whitmer, lawmakers and legislative caucus funds between 2017 and 2022.
Pitching Michigan’s ‘fresh, cool water’ for data centers
Fielding questions from financial analysts on Thursday, Norcia pitched the growth potential for data centers in terms that may only underscore environmental advocates fears.
“The access to water, fresh water, cool water…and, of course, our energy rates and the fact that we’ve got capacity available that we could offer immediately, I think makes us attractive,” he said.
The energy rates Norcia said are advantageous for businesses stem from 2016’s energy legislation, which shifted costs from large commercial users to residential customers. Clean Water Action Director Sean McBrearty previously told Planet Detroit that grid improvement costs to enable data centers could fall on residential customers.
And the explosion in power consumption driven by data centers could keep dirty power plants online. This has already happened in Wisconsin and Virginia, where data centers delayed coal plant closures. Georgia lawmakers are considering a pause in incentives for large computing operations after realizing how much generation capacity the state would need to power facilities that create few jobs, although they can help communities through property taxes.
Data centers can also use as much as 5 million gallons of water a day to cool servers, equivalent to the usage of a town of 50,000. This is far more than water bottling operations like the proposed Nestle facility in Evart, Michigan, which was going to draw roughly half a million gallons a day. Environmentalists said such large-scale water extractions could have caused creeks in the area to dry up.
Environmental advocates want guardrails while DTE eyes profits
To address climate concerns, advocates are pushing for guardrails that require companies to build or purchase renewable energy to meet their energy needs if receiving public subsidies. They’re also seeking protections for ratepayers and guarantees that companies won’t use water-intensive evaporative-cooling techniques to cool data centers.
State Sen. Kevin Hertel, one of the bills’ authors, told Planet Detroit in early July that amendments would protect consumers from paying for building or maintaining gas plans to power the data centers. Draft legislation shared by Hertel also included a provision requiring data centers to hook up to municipal water systems that use surface water, which was supported by some environmental groups. However, this provision could increase rates for other water customers.
David Arcaro, an analyst with Morgan Stanley, asked on Thursday’s earning call if tech companies may look to locate data centers in the state even without legislation.
Norcia said a lack of natural disasters in the state and water access could attract investments, but that the tax incentives exemption would make the state “even more attractive.”
Dave Rudd, DTE executive vice president and CFO, cited data centers and electric vehicles’ energy use as potentially important sources of growth for the company going forward.
In a statement to Planet Detroit, DTE spokesperson Jill M. Wilmot said large data centers present “an enormous opportunity” for Michigan and that “DTE Energy is confident that we can both meet the state’s ambitious 2023 clean energy standard and work with the state to grow our economy to the benefit of our customers.”