As AI Energy Demands Grow, Improved Power Electronics Will Be Needed As AI becomes integrated into daily processes and data centers are built...

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Microsoft’s $3.3 billion data center project in Mount Pleasant will require up to 8.4 million gallons of water per year, according to data released Wednesday by the city of Racine.

Racine officials on Wednesday released the records related to the projected usage of water at Microsoft’s planned artificial intelligence data center seven months after they’d been initially requested by a Milwaukee-based water quality advocacy group and days after a lawsuit was filed to force their publication. 

The data center is currently under construction at the site initially planned to hold the Foxconn manufacturing plant in Mount Pleasant and expected to begin operation next year. 

Data centers require a huge amount of energy to keep running and use a significant amount of water to keep the servers inside cool. The water for the data center is being provided by the Racine Water Utility under an agreement with the village of Mount Pleasant. The Foxconn site has already been subject to water-based controversy after concerns were raised that water would be diverted from Lake Michigan to the area. 

The Great Lakes watershed around the southwest tip of Lake Michigan does not extend very far off the shoreline, meaning any water taken to Mount Pleasant is taking water away from the Great Lakes — threatening the agreements in the Great Lakes compact and risking the creation of a precedent across the eight U.S. states and two Canadian provinces along the Great Lakes shoreline. 

According to the Racine projections, the first phase of operations on the data center campus would use a peak of 234,000 gallons per day or 2.8 million gallons per year. In later phases, as more substations go online, the campus would use 702,000 gallons per day or 8.4 million gallons per year.

An Olympic-sized swimming pool holds about 660,000 gallons of water. Lake Michigan holds 1.3 quadrillion gallons of water. 

On Monday, Madison-based Midwest Environmental Advocates filed a lawsuit on behalf of Milwaukee Riverkeepers to release the requested water use projections, which the water organization had initially asked for in a February open records request. 

“Data centers will have major implications for Wisconsin’s environment. Our ability to understand the impacts and protect our water resources depends on open and transparent government,” Milwaukee Riverkeeper’s Cheryl Nenn said. 

Across the country and Wisconsin, data centers such as the site in Mount Pleasant have been proliferating as tech companies race to develop AI tools and chatbots. In some cases, the tech companies have required local governments to sign non-disclosure agreements that cover information beyond proprietary secrets and include potential community impacts. 

City officials said Wednesday the request took so long to complete because the city was making sure that providing the information did not violate a contractual agreement. 

“Open and transparent government is not optional; it is essential to public trust,” Racine Mayor Cory Mason said in a statement. “While we needed time to ensure that we handled this request responsibly and in compliance with legal agreements, we believe transparency is paramount. The information has been released, and we remain committed to making all relevant government records accessible so our community can see how decisions are made and resources are used.”

As power-hungry data centers proliferate, states are searching for ways to protect utility customers from the steep costs of upgrading the electrical grid, trying instead to shift the cost to AI-driven tech companies. (Dana DiFilippo/New Jersey Monitor)

Two environmental groups are warning state residents about the amount of energy and water that is set to be used following the construction of AI data centers in southern Wisconsin. 

In an analysis released Tuesday, Clean Wisconsin found that two data centers approved for construction in Ozaukee and Racine counties will consume enough energy to power 4.3 million homes — nearly double the 2.8 million housing units in the state. 

The first AI data warehouse, operated by Microsoft, is set to open next year in Mount Pleasant. The company has promised it will support 500 jobs. The $3.3 billion project is located at the site initially planned for Foxconn’s massive manufacturing plant. 

Further north in Ozaukee County, Denver-based Vantage Data Systems has acquired 700 acres of land in rural Port Washington. The company has planned a campus that will hold 11 data center buildings and five substations, according to concepts approved by the local government. 

Clean Wisconsin’s analysis found that these two projects will require a combined 3.9 gigawatts of power and hundreds of thousands of gallons of water to keep the buildings cooled. 

“To put this in perspective, that is more than three times the power production capacity of Wisconsin’s Point Beach nuclear plant,” Paul Mathewson, Clean Wisconsin science program director, who conducted the analysis, said in a statement. “And because only two of the data center projects have disclosed their power needs, we know this is really just a fraction of what the energy use would be if all those data centers are ultimately built.”

The power needs of the two sites are just the tip of the iceberg for the energy and water needs of data centers, which house the servers used to host chatbots such as Chat GPT, stream video and use social media. Microsoft has plans for a smaller data center in Kenosha County. Work is also underway on a data center on 830 acres in Beaver Dam reportedly for Facebook owner Meta. In addition, a Virginia-based company has eyed a site in Dane County, Wisconsin Rapids has plans for a $200 million data center and Janesville is seeking to build a center in a former General Motors assembly plant. 

A proposed project in Caledonia has been delayed following  local resistance to the project’s proposed rezoning of 240 acres of farmland. The community’s plan commission postponed a July vote on the proposal until later this month. 

Environmental advocates say local officials and the state’s power companies are rushing to attract data centers to Wisconsin based on the ambiguous promise of jobs without accounting for the effect they could have on a community’s water sources and energy needs. Increases in the amount of power used by the state could result in the state relying more heavily and for longer periods on non-renewable sources of energy and raise energy rates for households. 

‘More questions than answers’

“If data centers come to Wisconsin, they must benefit  — not harm — our communities. But right now, we have far more questions than answers about their impacts. How much energy and water will a project use? How will those demands be met? Will there be backup diesel generators on site and how often will they be fired up for testing? Our communities don’t have the transparency they need and deserve,” Chelsea Chandler, Clean Wisconsin’s climate, energy and air director said. 

Data centers also often emit a constant humming sound as the servers work inside, creating an irritating noise pollutant for neighbors.

Both the Mount Pleasant and Port Washington projects are close to Lake Michigan, raising further complications about the centers’ use of water and the protection of the Great Lakes. The Foxconn site in Mount Pleasant was already at the center of a controversial plan to divert 7 million gallons of water per day from Lake Michigan. 

“There has been very little transparency about the amount of water that will be used on site at these proposed data center campuses. Add to that a lack of transparency about energy use, and it’s impossible to know what the impact on Wisconsin’s water resources will be,” Sarah Walling, Clean Wisconsin’s water and agriculture program director said. “Communities need to know what the on-site demand will be on the hottest, driest days of the year when our water systems are most stressed. And we need to understand how much water will be needed off site to meet a data center’s enormous energy demands.”

Demanding water-use information from Racine

Earlier this week, Midwest Environmental Advocates filed a lawsuit against the city of Racine for records about the Mount Pleasant center’s projected water usage. Water for the center will be provided by the Racine Water Utility under an agreement with the village of Mount Pleasant. 

The lawsuit, filed on behalf of Milwaukee Riverkeeper, is seeking to force Racine to hand over information about projected water usage requested through an open records request in February. In a news release, MEA noted that many companies constructing data centers across the country require that local governments sign non-disclosure agreements. 

The legal advocacy group noted that data centers can use as much water as a small to medium sized city and the public has a right to know the scale of water use. 

“Wisconsin law requires public officials to respond to public records requests ‘as soon as practicable and without delay.’ Yet more than six months after making their request, our clients are still waiting,” MEA legal fellow Michael Greif said. “This blatant disregard for the Public Records Law violates their rights and deprives them of the transparency they deserve. Community members have a right to know how much water a data center will use before it is built.”

As power-hungry data centers proliferate, states are searching for ways to protect utility customers from the steep costs of upgrading the electrical grid, trying instead to shift the cost to AI-driven tech companies. (Dana DiFilippo/New Jersey Monitor)

Regular energy consumers, not corporations, will bear the brunt of the increased costs of a boom in artificial intelligence that has contributed to a growth in data centers and a surge in power usage, recent research suggests.

Between 2024 and 2025, data center power usage accounted for $9 billion, or 174%, of increased power costs, a June report by Monitoring Analytics, an external market monitor for PJM Interconnection, found. PJM manages the electrical power grid and wholesale electric market for 13 states and Washington, D.C., and this spring, customers were told to expect roughly a $25 increase on their monthly electric bill starting June 1.

“The growth in data center load and the expected future growth in data center load are unique and unprecedented and uncertain and require a different approach than simply asserting that it is just supply and demand,” Monitoring Analytics’ report said.

Data centers house the physical infrastructure to power most of the computing we do today, but many AI models and the large AI companies that power them, like Amazon, Meta and Microsoft use vastly more energy than other kinds of computing. Training a single chatbot like ChatGPT uses about the same amount of energy as 100 homes over the course of a year, an AI founder told States Newsroom earlier this year.

The growth of data centers — and how much power they use — came on fast. A 2024 report by the Joint Legislative Audit and Review Commission in Virginia — known as a global hub for data centers — found that PJM forecasts it will use double the amount of average monthly energy in 2033 as it did in 2023. Without new data centers, energy use would only grow 15% by 2040, the report said.

As of July, the United States is home to more than 3,800 data centers, up from more than 3,600 in April. A majority of data centers are connected to the same electrical grids that power residential homes, commercial buildings and other structures.

“There are locational price differences, but data centers added anywhere in PJM have an effect on prices everywhere in PJM,” Joseph Bowring, president of Monitoring Analytics said.

Creeping costs

At least 36 states, both conservative and liberal, offer tax incentives to companies planning on building data centers in their states. But the increased costs that customers are experiencing have made some wonder if the projects are the economic wins they were touted as.

“I’m not convinced that boosting data centers, from a state policy perspective, is actually worth it,” said New Jersey State Sen. Andrew Zwicker, a Democrat and co-sponsor of a bill to separate data centers from regular power supply. “It doesn’t pay for a lot of permanent jobs.”

Energy cost has historically followed a socialized model, based on the idea that everyone benefits from reliable electricity, said Ari Peskoe, the director of the Electricity Law Initiative at the Harvard Law School Environmental and Energy Law Program. Although some of the pricing model is based on your actual use, some costs like new power generation, transmission and infrastructure projects are spread across all customers.

Data centers’ rapid growth is “breaking” this tradition behind utility rates.

“These are cities, these data centers, in terms of how much electricity they use,” Peskoe said. “And it happens to be that these are the world’s wealthiest corporations behind these data centers, and it’s not clear how much local communities actually benefit from these data centers. Is there any justification for forcing everyone to pay for their energy use?”

This spring in Virginia, Dominion Energy filed a request with the State Corporation Commission to increase the rates it charges by an additional $10.50 on the monthly bill of an average resident and another $10.92 per month to pay for higher fuel costs, the Virginia Mercury reported.

Dominion, and another local supplier, recently filed a proposal to separate data centers into their own rate class to protect other customers, but the additional charges demonstrate the price increases that current contracts could pass on to customers.

In June, the Federal Energy Regulatory Commission convened a technical conference to assess the adequacy of PJM’s resources and those of other major power suppliers, like Midcontinent Independent System Operator, Inc., ISO New England Inc., New York Independent System Operator, Inc., California Independent System Operator Corporation (CAISO) and Southwest Power Pool (SPP).

The current supply of power by PJM is not adequate to meet the current and future demand from large data center loads, Monitoring Analytics asserts in a report following the conference.

“Customers are already bearing billions of dollars in higher costs as a direct result of existing and forecast data center load,” the report said.

Proposed changes

One of the often-proposed solutions to soften the increased cost of data centers is to require them to bring their own generation, meaning they’d contract with a developer to build a power plant that would be big enough to meet their own demand. Though there are other options, like co-location, which means putting some of the electrical demand on an outside source, total separation is the foremost solution Bowring presents in his reports.

“Data centers are unique in terms of their growth and impact on the grid, unique in the history of the grid, and therefore, we think that’s why we think data centers should be treated as a separate class,” Bowring said.

Some data centers are already voluntarily doing this. Constellation Energy, the owner of Three Mile Island nuclear plant in central Pennsylvania, struck a $16 billion deal with Microsoft to power the tech giant’s AI energy demand needs. 

But in some states, legislators are seeking to find a more binding solution.

New Jersey Sen. Bob Smith, a Democrat who chairs the Environment and Energy Committee, authored a bill this spring that would require new AI data centers in the state to supply their power from new, clean energy sources, if other states in the region enact similar measures.

“Seeing the large multinational trillion dollar companies, like Microsoft and Meta, be willing to do things like restart Three Mile Island is crazy, but shows you their desperation,” said co-sponsor Zwicker. “And so, okay, you want to come to New Jersey? Great, but you’re not going to put the basis (of the extra cost) on ratepayers.”

New Jersey House members launched a probe into PJM’s practices as the state buys its annual utilities from the supplier at auction this month. Its July 2024 auction saw electrical costs increase by more than 800%, which contributed to the skyrocketing bills that took effect June 1.

Residents are feeling it, Smith said, and he and his co-sponsors plan to use the summer to talk to the other states within PJM’s regional transmission organization (RTO).

“Everything we’re detecting so far is they’re just as angry — the other 13 entities in PJM — as us,” Smith told States Newsroom.

Smith said they’re discussing the possibility of joining or forming a different RTO.

“We’re in the shock and horror stage where these new prices are being included in these bills, and citizens are screaming in pain,” Smith said. “A solution that I filed in the bill, is the one that says, ‘AI data centers, you’re welcome in New Jersey, but bring your own clean electricity with them so they don’t impact the ratepayers.”

Utah enacted a law this year that allows “large load” customers like data centers to craft separate contracts with utilities, and a bill in Oregon, which would create a separate customer class for data centers, called the POWER Act, passed through both chambers last month.

If passed, New Jersey’s law would join others across the country in redefining the relationship between data centers powering AI and utilities providers.

“We have to take action, and I think we have to be pretty thoughtful about this, and look at the big picture as well,” Zwicker said. ”I’m not anti-data center, I’m pro-technology, but I’m just not willing to put it on the backs of ratepayers.”