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Opponents of a set of controversial Michigan data center bills that critics say would almost certainly derail Michigan’s nation-leading climate legislation while draining its groundwater have defeated a tense last-minute effort to pass the measures before the summer recess. 

Though the bills are dead for now, observers expect supporters and industry to continue pressing lawmakers to change their positions before the legislative session concludes at the end of the year.

The bills offer tax incentives to tech giants like Google, Amazon and Microsoft to build data centers that consume massive amounts of energy and water in Michigan. 

Critics say the massive increase in energy demand from data centers would likely hamper Michigan’s nation-leading climate plan, which calls for 100% clean energy use in electricity generation by 2040. 

That’s because the climate legislation adopted by the state last fall includes an “offramp” that would keep gas plants running if clean sources cannot handle the grid’s demand. 

Opponents of the data center bills say that the facilities’ massive energy demands would likely trigger that provision while also increasing consumer energy rates. They demand the inclusion of language requiring tech companies to generate their own energy from clean sources. They’re also looking to include protections for water resources and ratepayers. 

“Enough members have looked at this and understand that we can’t sell out our climate goal and threaten our water resources so Microsoft can turn a slightly larger profit,” said Sean McBrearty, Clean Water Action Michigan’s director. 

The provisions would only apply to data centers that use the tax incentives, not those that build without them. McBrearty said Michigan is attractive to tech companies because of its water and climate.

A potential strain on state’s energy and water resources

Artificial intelligence is driving a nationwide boom in data centers, which tech companies use to store servers and networking equipment that process the world’s digital traffic. The facilities are quickly emerging as a serious climate threat, forcing gas plants to stay online or derailing climate goals in Wisconsin, Virginia, and Nebraska. 

The US Department of Energy found that data centers are among the most “energy-intensive building types” because they demand 50 times more energy than the typical office building. Worldwide, data centers may use more electricity than Japan by 2026.

In Michigan, a coalition of environmental groups and lawmakers oppose the bills, as do some Republicans who are against the tax incentives. Several legislators who oppose the bills either declined or did not respond to Planet Detroit’s requests for comment. 

The bills’ supporters include many centrist Democrats and some Republicans, as well as DTE Energy, Microsoft, Google, and Amazon. DTE Energy has a financial stake in the outcome because it would profit from new gas plants that may be built to accommodate data centers or by keeping existing gas plants online longer than planned. 

A spokesperson for Gov. Gretchen Whitmer did not respond to questions, and a DTE spokesperson declined to comment.

According to four lawmakers and lobbyists involved, the legislature stayed in session until after 5 a.m. on Thursday as the bills’ supporters and lobbyists from the tech companies and DTE Energy tried to flip lawmakers who were in opposition. 

Rep. Abraham Aiyash (D-Hamtramck), who told Planet Detroit he has opposed the bill and is leading negotiations, declined to comment beyond saying, “We are still in active negotiations to maximize as many ratepayer protections and to mitigate any potential climate risks, and the conversations with the data center companies and utilities have been productive.” 

Environmental group and legislators say several bill drafts and proposals have circulated in recent days. However, those seen by the groups around 5 a.m. on Thursday before the legislature went to recess did not include language that would require companies to pay for gas plants or prevent gas plants from being built. 

‘Offramp’ in Michigan climate legislation

Sen. Kevin Hertel (R-St. Clair Shores), one of the bills’ authors, told Planet Detroit on Friday that the data centers bills aim to develop tax incentives, so provisions excluding gas plants should be considered separately. 

Keeping gas plants online or derailing the state’s climate goals are “a potential consequence that should be addressed in the clean energy law,” Hertel said. However, the clean energy law was approved in November with the “offramp,” so the bill’s opponents say the issue needs to be addressed in the data center bills.  

The bills as originally drafted would likely increase customers’ electric bills, opponents say. That’s in part because Michigan’s 2016 energy bill shifted much of the state’s energy cost burden from large industrial and commercial users to individual residential customers, helping send residential rates soaring while the state has continued to lower rates for industrial users. 

Hertel said draft amendments to the legislation include ratepayer protections that would prevent residential customers from paying more for building or maintaining gas plants energy to support data centers.  

But opponents say the proposed protections would not require tech companies to pay for extending the life of existing gas plants tor building new ones, should the data centers’ energy demands trigger the “offramp” on the climate legislation. 

Hertel said new gas plants likely would not need to be built in 2040 to accommodate the data centers’ increased energy consumption.

“I firmly believe that the advancements in clean technology – in solar, wind, small nuclear technology – those are going to help us get to this end [climate] goal,” Hertel said. 

He also said the Michigan Public Services Commission could stop gas plants from being built to accommodate data centers’ spiking energy demands. However, the bills’ opponents say the extent of the MPSC’s authority is unclear. 

Water issues also remain unresolved. Data centers’ evaporative cooling systems can use up to five million gallons of water daily, potentially draining groundwater resources. By contrast, a former Nestle bottled water facility ignited controversy over a proposal to draw 576,000 gallons per day.

Ratepayer protections and Michigan data centers

Alternatives that use far less water are available, but McBrearty said evaporative cooling systems are the cheapest method. 

Some environmental groups that spoke with Planet Detroit said they would be satisfied if the legislation included a provision that required the centers to hook up to municipal water systems that draw from surface water. Draft legislation sent to Planet Detroit? by Hertel showed such a proposal. 

However, no mechanism exists to ensure that water rates don’t spike for residential customers sharing a municipal system with the data centers. McBrearty called for bills prohibiting Michigan data centers from using evaporative cooling systems. 

“It’s strange to hear that Microsoft can’t afford the most bare-bones system,” he said.