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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 this month introduced a bill 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. ​“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.

Ohio, by contrast, provides a cautionary tale, Content said. After state regulators enshrined provisions that protected customers of the utility AEP Ohio from data center costs, developers simply looked elsewhere in the state.

“Much of the data center demand in Ohio shifted to a different utility where no such protections were in place,” Content said. ​“We’re in a race to the bottom. Wisconsin needs a statewide framework to help guide data center development and ensure customers who aren’t tech companies don’t pick up the tab for these massive projects.”

Clean energy quandary

Limiting clean energy construction to data center sites could be especially problematic as data center developers often demand renewable energy to meet their own sustainability goals.

For example, the Lighthouse data center — being developed by OpenAI, Oracle and Vantage near Milwaukee — will subsidize 179 megawatts of new wind generation, 1,266 megawatts of new solar generation and 505 megawatts of new battery storage capacity, according to testimony from one of the developers in the We Energies tariff proceeding.

But Lighthouse covers 672 acres. It takes about 5 to 7 acres of land to generate 1 megawatt of solar energy, meaning the whole campus would have room for only about a tenth of the solar the developers promise.

We Energies is already developing the renewable generation intended to serve that data center, a utility spokesperson said, but the numbers show how future clean energy could be stymied by the on-site requirement.

“It’s unclear why lawmakers would want to discriminate against the two cheapest ways to produce energy in our state at a time when energy bills are already on the rise,” said Chelsea Chandler, the climate, energy and air program director at Clean Wisconsin.

Renew Wisconsin’s Wierzba said the Democrats’ 70% renewable energy mandate for receiving tax breaks could likewise be problematic for tech firms.

“We want data centers to use renewable energy, and companies I’m aware of prefer that,” she said. ​“The way the Republican bill addresses that is negative and would deter that possibility. But the Democratic bill almost goes too far — 70%. That’s a prescribed amount, too much of a hook and not enough carrot.”

Alex Beld, Renew Wisconsin’s communications director, said the Republican bill might have a hope of passing if the poison pill about on-site renewable energy were removed.

“I don’t know if there’s a will on the Republican side to remove that piece,” he said. ​“One thing is obvious: No matter what side of the political aisle you’re on, there are concerns about the rapid development of these data centers. Some kind of legislation should be put forward that will pass.”

Bryan Rogers, environmental director of the Milwaukee community organization Walnut Way Conservation Corp, said elected officials shouldn’t be afraid to demand more of data centers, including more public benefit payments.

“We know what the data centers want and how fast they want it,” he said. ​“We can extract more concessions from data centers. They should be paying not just their full way — bringing their own energy, covering transmission, generation. We also know there are going to be social impacts, public health, environmental impacts. Someone has to be responsible for that.”

Utility representatives expressed less urgency around legislation.

William Skewes, executive director of the Wisconsin Utilities Association, said the trade group ​“appreciates and agrees with the desire by policymakers and customers to make sure they’re not paying for costs that they did not cause.”

But, he said, the state’s utility regulators already do ​“a very thorough job reviewing cases and making sure that doesn’t happen. Wisconsin utilities are aligned in the view that data centers must pay their full share of costs.”

If Wisconsin legislators do manage to pass data center legislation this session, it will head to the desk of Evers. The governor is a longtime advocate for renewables, creating the state’s first clean energy plan in 2022, and he has expressed support for attracting more data centers to Wisconsin.

“I personally believe that we need to make sure that we’re creating jobs for the future in the state of Wisconsin,” Evers said at a press conference, according to the Milwaukee Journal Sentinel. ​“But we have to balance that with my belief that we have to keep climate change in check. I think that can happen.”

A version of this article was first published by Canary Media.

Disputes over clean energy may doom Wisconsin data center bills is a post from Wisconsin Watch, a non-profit investigative news site covering Wisconsin since 2009. Please consider making a contribution to support our journalism.

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On a dry, rocky patch of his family’s farm in Door County, Wisconsin, Dave Klevesahl grows wildflowers. But he has a vision for how to squeeze more value out of the plot: lease it to a company that wants to build a community solar array.

Unfortunately for Klevesahl, that is unlikely to happen under current state law. In Wisconsin, only utilities are allowed to develop such shared solar installations, which let households and businesses that can’t put panels on their own property access renewable energy via subscriptions.

Farmers, solar advocates and legislators from both parties are trying to remove these restrictions through Senate Bill 559, which would allow the limited development of community solar by entities other than utilities.

Wisconsin lawmakers considered similar proposals in the 2021-22 and 2023-24 legislative sessions, with support from trade groups representing real estate agents, farmers, grocers, and retailers. But those bipartisan efforts failed in the face of opposition from the state’s powerful utilities and labor unions.

Community solar supporters are hoping for a different outcome this legislative session, which ends in March. But while the new bill, introduced Oct. 24, includes changes meant to placate utilities, the companies still firmly oppose it.

“I don’t really understand why anybody wouldn’t want community solar,” said Klevesahl, whose wife’s family has been farming their land for generations. In addition to leasing his land for an installation, he would like to subscribe to community solar, which typically saves participants money on their energy bills. 

Some Wisconsin utilities do offer their own community solar programs. But they are too small to meet the demand for community solar, advocates say.

Utilities push back on shared solar 

Around 20 states and Washington, D.C., have community solar programs that allow non-utility ownership of arrays. The majority of those states, including Wisconsin’s neighbor Illinois, have deregulated energy markets, in which the utilities that distribute electricity do not generate it.

In states with ​“vertically integrated” energy markets, like Wisconsin, utilities serve as regulated monopolies, both generating and distributing power. That means legislation is necessary to specify that other companies are also allowed to generate and sell power from community solar. Some vertically integrated states, including Minnesota, have passed such laws.

But monopoly utilities in those jurisdictions have consistently opposed community solar developed by third parties. Minnesota utility Xcel Energy, for example, supported terminating the state’s community solar program during an unsuccessful effort by some lawmakers last summer to end it.

The Wisconsin utilities We Energies and Madison Gas and Electric, according to their spokespeople, are concerned that customers who don’t subscribe to community solar will end up subsidizing costs for those who do. The utilities argue that because community solar subscribers have lower energy bills, they contribute less money for grid maintenance and construction, meaning that other customers must pay more to make up the difference. Clean-energy advocates, for their part, say this ​“cost shift” argument ignores research showing that the systemwide benefits of distributed energy like community solar can outweigh the expense.

The Wisconsin bill would also require utilities to buy power from community solar arrays that don’t have enough subscribers.

“This bill is being marketed as a ​‘fair’ solution to advance renewables. It’s the opposite,” said We Energies spokesperson Brendan Conway. ​“It would force our customers to pay higher electricity costs by having them subsidize developers who want profit from a no-risk solar project. Under this bill, the developers avoid any risk. The costs of their projects will shift to and be paid for by all of our ​‘non-subscribing’ customers.”

The power generated by community solar ultimately goes onto the utility’s grid, reducing the amount of electricity the utility needs to provide. But Conway said it’s not the most efficient way to meet overall demand.

“These projects would not be something we would plan for or need, so our customers would be paying for unneeded energy that benefits a very few,” he said. ​“Also, these credits are guaranteed by our other customers even if solar costs drop or grid needs change.”

Advocates in Wisconsin hope they can address such concerns and convince utilities to support community solar owned by third parties.

Beata Wierzba, government affairs director of the clean-power advocacy organization Renew Wisconsin, said her group and others ​“had an opportunity to talk with the utilities over the course of several months, trying to negotiate some language they could live with.”

“There were some exchanges where utilities gave us a dozen things that were problematic for them, and the coalition addressed them by making changes to the draft” of the bill, Wierzba said.

The spokespeople for We Energies and Madison Gas and Electric did not respond to questions about such conversations.

A small-scale start 

To assuage utilities’ concerns, the bill allows third-party companies to build community solar only for the next decade. The legislation also sets a statewide cap for community solar of 1.75 gigawatts, with limits for each of the five major investor-owned utilities’ territories proportionate to each utility’s total number of customers.

Community solar arrays would be limited to 5 megawatts, with exceptions for rooftops, brownfields and other industrial sites, where 20 megawatts can be built.

No subscriber would be allowed to buy more than 40% of the output from a single community solar array, and 60% of the subscriptions must be for 40 kilowatts of capacity or less, the bill says. This is meant to prevent one large customer — like a big-box store or factory — from buying the majority of the power and excluding others from taking advantage of the limited community solar capacity.

Customers who subscribe to community solar would still have to pay at least $20 a month to their utility for service. The bill also contains what Wierzba called an ​“off-ramp”: After four years, the Public Service Commission of Wisconsin would study how the program is working and submit a report to the Legislature, which could pass a new law to address any problems.

“The bill is almost like a small pilot project — it’s not like you’re opening the door and letting everyone come in,” said Wierzba. ​“You have a limit on how it can function, how many people can sign up.”

Broad support for community solar

In Wisconsin, as in other states, developers hoping to build utility-scale solar farms on agricultural land face serious pushback. The Trump administration canceled federal incentives for solar arrays on farms this summer, with U.S. Department of Agriculture Secretary Brooke Rollins announcing, ​“USDA will no longer fund taxpayer dollars for solar panels on productive farmland.”

But Wisconsin farmers have argued that community solar can actually help keep agricultural land in production by providing an extra source of revenue. The Wisconsin Farm Bureau Federation has yet to weigh in on this year’s bill, but it supported previously proposed community solar legislation.

The bill calls for state regulators to come up with rules for community solar developers that would likely require dual use — meaning that crops or pollinator habitats are planted under and around the panels or that animals graze on the land. These increasingly common practices are known as agrivoltaics.

The bill would let local zoning bodies — rather than the state’s Public Service Commission — decide whether to permit a community solar installation.

Utility-scale solar farms, by contrast, are permitted at the state level, which can leave ​“locals feeling like they are not in control of their future,” said Matt Hargarten, vice president of government and public affairs for the Coalition for Community Solar Access. ​“This offers an alternative that is really welcome. If a town doesn’t want this to be there, it won’t be there.”

A 5-megawatt array typically covers 20 to 30 acres of land, whereas utility-scale solar farms are often hundreds of megawatts and span thousands of acres.

“You don’t need to upgrade the transmission systems with these small solar farms because a 30-acre solar farm can backfeed into a substation that’s already there,” noted Klevesahl, a retired electrical engineer. ​“And then you’re using the power locally, and it’s clean power. Bottom line is, I just think it’s the right thing to do.” 

A version of this article was first published by Canary Media.

Wisconsin lawmakers look to break utility grip on community solar is a post from Wisconsin Watch, a non-profit investigative news site covering Wisconsin since 2009. Please consider making a contribution to support our journalism.