Disputes over clean energy may doom Wisconsin data center bills

A debate playing out in Wisconsin underscores just how challenging it is for U.S. states to set policies governing data centers, even as tech giants speed ahead with plans to build the energy-gobbling computing facilities.

Wisconsin’s state legislators are eager to pass a law that prevents the data center boom from spiking households’ energy bills. The problem is, Democrats and Republicans have starkly different visions for what that measure should look like — especially when it comes to rules around hyperscalers’ renewable energy use.

Republican state legislators introduced a bill last week that orders utility regulators to ensure that regular customers do not pay any costs of constructing the electric infrastructure needed to serve data centers. It also requires data centers to recycle the water used to cool servers and to restore the site if construction isn’t completed.

Those are key protections sought by decision-makers across the political spectrum, as opposition to data centers in Wisconsin and beyond reaches a fever pitch.

But the bill will likely be doomed by a ​“poison pill,” as consumer advocates and manufacturing-industry sources describe it, that says all renewable energy used to power data centers must be built on-site.

Republican lawmakers argue this provision is necessary to prevent new solar farms and transmission lines from sprawling across the state.

“Sometimes these data centers attempt to say that they are environmentally friendly by saying we’re going to have all renewable electricity, but that requires lots of transmission from other places, either around the state or around the region,” said State Assembly Speaker Robin Vos, a Republican, at a press conference this week. ​“So this bill actually says that if you are going to do renewable energy, and we would encourage them to do that, it has to be done on-site.”

This effectively means that data centers would have to rely largely on fossil fuels, given the limited size of their sites and the relative paucity of renewable energy in the state thus far.

Gov. Tony Evers and his fellow Democrats in the state legislature are unlikely to agree to this scenario, Wisconsin consumer and clean-energy advocates say.

Democrats introduced their own data center bill late last year, some of which aligns closely with the Republican measure: The Democratic bill would similarly block utilities from shifting data center costs onto residents, by creating a separate billing class for very large energy customers. It would require that data centers pay an annual fee to fund public benefits such as energy upgrades for low-income households and to support the state’s green bank.

But that proposal may also prove impossible to pass, advocates say, because of its mandate that data centers get 70% of their energy from renewables in order to qualify for state tax breaks, and a requirement that workers constructing and overhauling data centers be paid a prevailing wage for the area. This labor provision is deeply polarizing in Wisconsin. Former Republican Gov. Scott Walker and lawmakers in his party famously repealed the state’s prevailing-wage law for public construction projects in 2017, and multiple Democratic efforts to reinstate it have failed.

The result of the political division around renewables and other issues is that Wisconsin may accomplish little around data center regulation in the near term.

“If we could combine the two and make it a better bill, that would be ideal,” said Beata Wierzba, government affairs director for the nonprofit clean-energy advocacy group Renew Wisconsin. ​“It’s hard to see where this will go ultimately. I don’t foresee the Democratic bill passing, and I also don’t know how the governor can sign the Republican bill.”

Urgent need

Wisconsin’s consumer and clean energy advocates are frustrated about the absence of promising legislation at a time when they say regulation of data centers is badly needed. The environmental advocacy group Clean Wisconsin has received thousands of signatures on a petition calling for a moratorium on data center approvals until a comprehensive state plan is in place.

At least five new major data centers are planned in the state, which is considered attractive for the industry because of its ample fresh water and open land, skilled workers, robust electric grid, and generous tax breaks. The Wisconsin Policy Forum estimated that data centers will drive the state’s peak electricity demand to 17.1 gigawatts by 2030, up from 14.6 gigawatts in 2024.

Absent special treatment for data centers, utilities will pass the costs on to customers for the new power needed to meet the rising demand.

Two Wisconsin utilities — We Energies and Alliant Energy — are proposing special tariffs that would determine the rates they charge data centers. Allowing utilities in the same state to have different policies for serving data centers could lead to these projects being located wherever utilities offer them the cheapest rates, and result in a patchwork of regulations and protections, consumer advocates argue. They say legislation should be passed soon, to standardize the process and enshrine protections statewide before utilities move forward on their own.

Some of Wisconsin’s neighbors have already taken that step, said Tom Content, executive director of Wisconsin’s Citizens Utility Board, a consumer advocacy group.

He pointed to Minnesota, where a law passed in June mandates that data centers and other customers be placed in separate categories for utility billing, eliminating the risk of data center costs being passed on to residents. The Minnesota law also protects customers from paying for ​“stranded costs” if a data center doesn’t end up needing the infrastructure that was built to serve it.