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A coalition of electrical utilities, including two major players in Wisconsin’s power supply, is seeking federal intervention to pause competitive bidding for transmission projects needed to meet the vast energy needs of the data center boom.

The coalition filed a complaint with the Federal Energy Regulatory Commission (FERC) on Tuesday asking the agency to exempt at least some major grid upgrades from bidding, arguing “bureaucratic red tape” can tack months onto project timelines and strain the country’s ability to “achieve dominance” in artificial intelligence. 

“This complaint is about whether our country will seize, or squander, a generational chance to own the next century,” the utilities wrote.

Among the companies behind the complaint are Xcel Energy, owner of Northern States Power Company-Wisconsin, and American Transmission Company (ATC), which owns and operates transmission lines across much of Wisconsin. 

National and statewide ratepayer advocacy groups reacted with alarm, casting the utilities’ request as a recipe for higher electricity bills. 

“Utilities rushing to catch a ride on the AI investment gold rush need to slow down and think about the impact their proposals are having,” wrote Wisconsin Citizens Utility Board Executive Director Tom Content, as customers “wake up like Groundhog Day to rate hikes well above the cost of living.”

The complaint and the pushback it prompted mark the latest phase in a long-standing fight over the benefits of opening the transmission market to competition.

Stiff competition

FERC first introduced competitive bidding for regional transmission projects in 2011 after ratepayer advocates lobbied for change, arguing that the earlier process — allowing local monopolies to control all projects within their territories — all but guaranteed inflated costs.

The shift set off a race between developers angling for a piece of the action. When a developer wins a transmission project, it also picks up a new revenue stream: Regulators pre-approve developers’ “return on equity,” or profit on each dollar invested.

Dozens of developers have lined up to bid since the Midcontinent Independent System Operator (MISO), a nonprofit that manages the wholesale electricity market and grid for much of the Midwest, approved more than $10 billion in new transmission projects in 2022. A new round of projects approved in December 2024 added about $22 billion to the total, and the list of prospective bidders grew once again.

Some are local utilities hoping to maintain control of their territory; others are powerful national utilities venturing outside of their turf, international developers wading into the U.S. market, and startup transmission developers backed by private equity firms.  

While the data center rush had already begun in the Midwest by the time MISO approved the latest set of transmission projects in 2024, the approved projects often couldn’t account for the scale and breakneck pace of the data center developments that emerged in the region soon after. With the boom now in full swing, the tenor of competition for transmission projects is changing.

Debate over bidding benefits 

MISO, which is also responsible for picking a developer for each project, has favored lower-cost bids with more substantial “cost containment” measures designed to shield customers from budget overruns. Ratepayer advocates say the lower bids are proof the bidding requirements are working, pushing even major national utilities to underbid competitors.

In their complaint to FERC, the coalition of utilities — which calls itself the “Grid Acceleration Coalition” — argued the benefits of competition are “unproven.” 

Projects planned by utilities themselves aren’t subject to competitive bidding; non-competitive projects around the country routinely exceed initial budgets by millions of dollars. While cheaper bids tend to win competitive projects, the utility group argued that even those projects aren’t immune to budget overruns.

But the core of the utilities’ case is about time, not money. They argue the bidding process adds months to project timelines without clear benefits.

In their view, those delays harm customers, in part by slowing the construction of transmission lines that could expand access to cheaper electricity and prevent blackouts, and pose national security risks. 

“These projects — expressways for power — are as critical to meeting today’s challenges as the Eisenhower interstate highway system was to prevailing in the Cold War,” the coalition argued in its complaint. “China has devoted itself to overtaking America as the world’s AI leader and is just months behind.”

The utilities pointed to a recent example in Wisconsin: Last month, MISO reversed its decision to award three substations in Fond du Lac, Ozaukee and Sheboygan counties to private-equity-backed startup Viridon, instead handing the projects to ATC. 

ATC’s initial bid was more expensive than Viridon’s, but the company successfully argued it alone could build the substations in time to serve the nearby Vantage data center campus in Port Washington. 

MISO’s initial plans set a goal to complete the substations by 2033; the Port Washington data center plans to come online in early 2028. Though ATC emerged victorious, it told FERC that the 15-month delay between MISO’s initial approval of the substations and the reversal was “completely unnecessary.”

Ratepayer advocates and other observers, however, quickly pointed out that even noncompetitive projects run into delays. ATC’s Cardinal-Hickory Creek transmission line in southwest Wisconsin, for instance, came online in 2024 — more than a decade after MISO approved it — following prolonged legal battles with conservation groups. 

“All developers can experience construction delays,” said Claire Wayner, a senior associate with the clean energy nonprofit Rocky Mountain Institute. “It’s not like there’s a silver bullet.”

Opponents also underscored that two competitively bid projects in the Southwest met their in-service date goals last year. 

“Competitive transmission projects have been shown to have a better track record of adhering to cost containment and completion schedules than noncompetitive projects,” said Paul Cicio, chair of the national Electricity Transmission Competition Coalition. “A moratorium would move us backward at precisely the wrong time.”

The back-and-forth over the merits of competition is nothing new, Wayner noted. “The tricky thing with transmission competition is that there are stories of projects from both sides of the aisle that support their positions.” 

The push to pause competition

The utility group proposed two options to FERC: Allow MISO and a Southwestern regional grid operator to exempt projects from competitive bidding on a case-by-case basis or suspend competition entirely for the next five years — “a period pegged to when our country must begin building the infrastructure that will decide which nation wins the AI race.”

The utilities added that they don’t intend to “claw back” other projects already awarded or interrupt ongoing bidding processes.

During that five-year period, national forecasts estimate data center electricity demand could reach up to 25% of the country’s total energy use. MISO alone projects that it may need to double its current pace of generation growth to avoid shortfalls in the near future.

MISO’s territory, stretching from the Upper Midwest to Louisiana, has seen by far the most dramatic increase in data center capacity since 2020 relative to other regional grid networks.

The right of first refusal fight

After FERC introduced competitive bidding in 2011, utility groups turned to state legislatures. The result: right-of-first-refusal (ROFR) laws that give established local utilities first dibs on transmission projects in their territories, including those planned by regional grid operators like MISO.

Utilities prevailed in Minnesota and Michigan; Iowa’s Supreme Court struck down its ROFR law in 2023 after a national transmission developer challenged its constitutionality, and Illinois Gov. J.B. Pritzker vetoed an ROFR bill the same year.

But similar efforts have failed in Wisconsin. State lawmakers have consistently rejected ROFR proposals, including a 2025 bill sponsored by Assembly Speaker Robin Vos, R-Rochester.

Wisconsin ratepayer advocates see the FERC complaint as a work-around. “It is another effort by the utilities to defeat competition,” Todd Stuart, executive director of the Wisconsin Industrial Energy Group, wrote in an email to Wisconsin Watch. “When they lose in state legislatures and then lose out on competitive bids,” he added, “they go back to FERC.”

In the utilities’ complaint, Xcel Energy cited Wisconsin’s lack of an ROFR law, and the resulting bidding process for projects in the state, as posing a risk of delaying upgrades needed to serve a data center across the border in Minnesota. 

The company wouldn’t comment about the parallels between the options utilities suggested in the FERC complaint and ROFR laws. Instead, spokesman Kevin Coss pointed to permitting reforms in Minnesota — a 2024 law streamlining permitting for clean energy projects — as another example of the company’s efforts to “speed the buildout of critical infrastructure across our systems.” Xcel did not bid on any of the competitive projects in Wisconsin.

In a statement to Wisconsin Watch, ATC argued the options its coalition suggested to FERC “would not operate as a substitute” for an ROFR law, “even temporarily or on a case-by-case basis.”

Buildout costs fall to ratepayers

Regardless of who builds a transmission line, ratepayers cover the construction and maintenance costs through their electricity bills. We Energies estimates that transmission-related costs account for about 10% of customers’ bills. 

Customers across the Upper Midwest share the costs of MISO-designed projects across multiple states, spreading costs among a larger number of ratepayers.

But billing practices vary. In some cases, utilities can only bill ratepayers for the costs of building a transmission project after it comes online. When ATC builds a transmission line, FERC allows the developer to begin billing customers while the line is still under construction.

ATC says this approach saves customers money in the long term by reducing interest on construction costs.
Ratepayer advocates see it differently. “Consumers are paying for projects without receiving the benefits,” Cicio said. Transmission projects take years to complete, and short-term increases in monthly electricity bills don’t square well with concerns about affordability and the risk of stranded assets if the AI boom goes bust.

Adding to the frustration: a planned 9.2% electricity rate increase for We Energies customers in eastern Wisconsin over the next two years. That rate hike in part reflects the addition of generators, including new natural gas plants in Milwaukee and Kenosha counties, needed to meet data center demands.

Wisconsin’s Public Service Commission will soon decide how to divvy up costs of powering We Energies-served data centers — a decision that could set a statewide precedent.

This story was updated to clarify which transmission projects are subject to competitive bidding.

Utilities seek federal pause on grid bidding amid AI-driven power demand 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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Click here to read highlights from the story

• A big shift in Wisconsin’s power grid fight: The regional grid operator pulled a key project from a Blackstone-backed developer and gave it to ATC — the latest twist in who gets to build (and profit from) the data center boom.

• Surging power demand is fueling billions in grid upgrades and intensifying competition between utilities and investors. The data center boom has amped up demand and competition even further. Ratepayers will ultimately cover the costs through their utility bills.

• The decision isn’t final. Wisconsin’s Public Service Commission still has to weigh in.

The Midwest’s data center boom requires a vast electrical transmission buildout to keep servers online, and transmission developers are clamoring for a share of the action.

An example of that tug-of-war played out last week, when the regional grid operator for much of the Upper Midwest reversed its earlier decision to allow a developer backed by the investment firm Blackstone to build a series of substations in eastern Wisconsin.

Instead, the operator handed the substations to the American Transmission Company (ATC), which owns and operates most transmission lines in eastern and central Wisconsin. The company argues it’s better-positioned to complete the project before a new Port Washington data center comes online by early 2028, five years ahead of the transmission project’s original deadline.

The about-face is a win for Wisconsin’s largest transmission developer after a series of losses in Wisconsin’s Assembly, where lawmakers have repeatedly rejected a proposal to give regionally established developers like ATC a monopoly over portions of multistate transmission projects within Wisconsin, leaving the door open for competition. 

The new arrangement itself likely won’t drive up costs for Wisconsin ratepayers. But ATC will now fold the substations into a larger $1.3 billion buildout to serve the Port Washington campus — another phase in the ongoing fight over who will pay to supply power for new data centers.

How the Midwest’s grid is planned and paid for

The North American grid is an ever-evolving network of transmission lines and substations that carry electricity from generators to customers.

In much of the country, nonprofit “independent system operators” coordinate regional power grids, managing a wholesale electricity market and interstate transmission projects. Wisconsin is within the territory of the Midcontinent Independent System Operator (MISO), which spans from the Upper Midwest to Louisiana. 

MISO has approved roughly $32 billion in transmission upgrades for the Upper Midwest since 2022, including new “backbone” power lines capable of carrying a higher voltage than existing lines in the region.

Among the latest round of projects: a series of transmission lines and substations in eastern Wisconsin. 

Just months after MISO’s board approved the eastern Wisconsin buildout in 2024, Port Washington’s city council approved a $15 billion data center on the city’s northern edge. Three new substations outlined in MISO’s plans are within easy reach of the campus.

Blackstone-backed developer takes the lead

Four transmission developers bid on the eastern Wisconsin upgrades, including ATC, which submitted a joint bid with Dairyland Power Cooperative and the nonprofit WPPI Energy, owned by municipal utilities in Wisconsin, Iowa and Michigan’s Upper Peninsula.

MISO initially awarded the project to Viridon, owned by Blackstone Energy Transition Partners — a private equity fund under the umbrella of Blackstone, the world’s largest alternative asset management firm.

Viridon’s roughly $350 million bid was by far the lowest — just over half of MISO’s estimate and more than $100 million below the next-cheapest bid. In its January announcement, MISO acknowledged the budget “may not be achievable” but cited Viridon’s promises to limit cost overruns and profits as reasons to pick the company over its competitors. 

Who pays for transmission depends on who builds it

When MISO awards a long-range transmission project, the developer spreads costs across customers in multiple states, meaning each customer pays less.

When a developer plans a transmission project within its own territory, that developer’s customers bear the costs alone.

Transmission developers pass costs along to customers through electrical utility bills. We Energies, for instance, estimates that transmission-related costs account for about 10% of customers’ bills. 

Those fees include a “return on equity” for shareholders: profits generated for each dollar invested. As of 2025, ATC collects a 10.48% return.

Competitive bidding for multistate projects is relatively new. The Federal Energy Regulatory Commission (FERC), which oversees regional grid operators like MISO, began requiring competitive bidding for regional projects in 2011, following criticism that monopoly developers were driving up ratepayer costs. 

Competition for Midwestern projects escalated after MISO’s board approved billions of dollars in grid upgrades in 2022. MISO was “ahead of the game in terms of how much regional transmission it was planning” compared to other regional grid operators, said Ari Peskoe, director of the Electricity Law Initiative at Harvard Law School.

Grid expansion draws new competitors and investors

MISO’s transmission buildout plans offered utilities a golden opportunity to pick up new, dependable revenue streams. “I would have said generational,” Peskoe said, “but then we have the data center rush starting shortly thereafter.” 

Dozens of utilities, including some of the nation’s largest, have since lined up to bid for MISO transmission projects.

Also competing for a share of the buildout: newly formed developers financed by powerful investment firms.

Blackstone sponsored Viridon’s launch in 2023, and the new developer soon threw its hat into the ring for Midwestern transmission projects. Stonepeak, a smaller private equity firm, entered in 2025, backing startup developer Longview Infrastructure.

Well-established utilities have their own ties to multinational investment firms. 

As of December 2025, investment giants BlackRock and the Vanguard Group both owned more than 10% of shares in Wisconsin’s four largest investor-owned utility companies: Wisconsin Electric Power Company, Xcel Energy, Alliant Energy and Madison Gas and Electric Company. 

State Street, another powerful investment firm, owns more than 5% of shares in each utility. 

The four major utilities collectively own a majority of ATC.

Duluth-based utility ALLETE, also an ATC investor, belongs to the Canada Pension Plan Investment Board. The board’s purchase of ALLETE last year gave more than 22 million Canadians a chance to shore up their retirement savings through the Midwest’s grid buildout. 

A fight over competition

ATC and its peers have criticized competitive bidding from the outset. As MISO set up the new bidding process, Peskoe said, utilities fought the change in federal court and urged state legislatures to pass right-of-first-refusal (ROFR) laws.

ROFR laws give local utilities first dibs on transmission projects within their territory, including those planned by regional grid operators. 

In the view of Wisconsin’s utilities, ROFR laws ensure that utilities with local experience lead transmission projects, avoiding delays and missteps newcomers might face. “Out-of-state single-project developers lack local connection,” an ATC spokesperson wrote in an email to Wisconsin Watch. “We maintain relationships with our regulators that go beyond a single project.” 

But a coalition of critics, including many Midwestern ratepayer advocacy groups, argue that ROFR laws drive up consumer costs by stifling competition and preserving local monopolies. “We firmly believe that competitive bidding makes sense,” said Tom Content, executive director of Wisconsin’s Citizens Utility Board.

MISO has favored lower-cost bids thus far, but ATC argues that celebrating the cost savings from competitive bidding is premature. “Evidence of a low bid is not evidence of cost savings,” the company spokesperson wrote, because bid prices often do not match final project cost. Substantial overruns are common, even in projects without competitive bidding.

The two sides have battled in state legislatures and courts across the Midwest for more than a decade. Utilities prevailed in Minnesota and Michigan; Iowa’s Supreme Court struck down a ROFR law in 2023 after a national developer challenged its constitutionality.

Despite extensive lobbying, ROFR bills have repeatedly failed in Wisconsin’s Assembly, including one introduced in 2025 by Assembly Speaker Robin Vos, R-Rochester.

That leaves ATC to compete for the MISO-planned transmission upgrades, including the plans for eastern Wisconsin.

Data center complicates planning

Shortly after MISO began soliciting bids for the project in February 2025, ATC alerted the grid operator to a complication. The Port Washington data center would need to connect to the grid by the end of 2027, and ATC would be responsible for making the plug-in possible with new substations designed to support the campus’ vast energy needs.

ATC jointly bid on MISO’s eastern Wisconsin grid upgrades in July 2025.

Two months later, the company filed an application with Wisconsin’s Public Service Commission (PSC) to build substations and transmission lines to serve the new data center campus. ATC projected a price tag of at least $1.3 billion for its broader project, which includes infrastructure not in MISO’s reliability-focused plan for eastern Wisconsin. Both proposals called for three substations — albeit at different scales, on different timelines and for different purposes — in roughly the same locations. 

From ATC’s perspective, at least one set of substations would need to be built in time for the Port Washington data center’s opening day. If MISO awarded its project to ATC, the company could address regional grid reliability concerns and serve the data center in one fell swoop, spreading some costs across the Upper Midwest to ease ratepayer burdens. Even if MISO didn’t award the project to ATC, the utility said it would still seek state approval to build the necessary substations. 

But others saw the overlap as an attempt to sidestep competition.

“We have concerns that attempts are being made to circumvent competitive bidding,” Content said.

MISO soon raised concerns of its own with the Wisconsin PSC. In early January, the grid operator argued that ATC was effectively applying to build the “same substations” as those outlined in its own eastern Wisconsin project. Because MISO had not yet selected a winning bidder for its transmission upgrades, it urged regulators to “consider this uncertainty” before allowing ATC to move forward.

After MISO selected its bid, Viridon also raised objections.

“Put simply, if ATC constructs the substations, Viridon cannot, and ATC will have circumvented MISO’s planning processes,” the developer’s attorneys wrote in a motion filed with the PSC. Allowing ATC to build the substations, they added, would prevent costs from being distributed across multiple states, “potentially requir(ing) Wisconsin customers to pay more.”

ATC pushed back, arguing the projects serve different purposes. The project MISO envisioned aims to improve regional grid reliability and did not require a rapid turnaround, ATC attorney Amy Miller wrote in filings with the PSC. The project under consideration by the PSC, on the other hand, was tied to a specific customer with a firm deadline.

ATC emphasized that Viridon is not yet certified as a public utility in Wisconsin — a process that could take a year or more. That timeline, ATC argued, makes it impossible for Viridon to complete the substations in time. “MISO cannot cause Wisconsin customers to go without timely access to power,” Miller wrote.

Vantage Data Centers echoed the urgency, telling regulators it had “a considerable amount to lose” if the substations aren’t ready by the time the Port Washington campus opens.

MISO changes course — benefiting ATC

Behind the scenes, the timeline began to shift.

Shortly before filing its PSC application last fall, ATC asked MISO to expedite a review of its eastern Wisconsin upgrades in light of the data center’s plans.

MISO adjusted its schedule in February, setting a new in-service date of Dec. 1, 2027. Viridon submitted a plan to meet that deadline, Jeff Dodd, president of Viridon’s Midwestern subsidiary, told Wisconsin Watch.

The grid operator wasn’t persuaded. 

In a revision released quietly on Thursday, MISO reassigned the substations to ATC, noting its “uncertainty” that Viridon could clear administrative hurdles in time. 

The reassignment is a first for MISO. The grid operator has previously worked with developers to update plans when problems arose, with the exception of a 2023 case in which MISO canceled a project because of Texas’ right of first refusal law. 

Viridon retains a fraction of MISO’s original project: a set of transmission lines and one substation scheduled for completion by 2033. 

Under the new arrangement, Midwestern customers will collectively cover the costs of Viridon’s project and about $40 million of ATC’s substation upgrades. 

The regional cost sharing of the substations is a small relief for ratepayer advocates. ATC now plans to fold the substations into the larger grid buildout it brought to the PSC last September, which includes transmission lines needed to serve the Port Washington data center. Wisconsin ratepayers alone are set to cover the remainder of the project’s more than $1 billion budget. 

“Now that the dispute over ownership of the substations is resolved,” Content wrote in an email to Wisconsin Watch, “our overriding concern is over the costs of the transmission line itself that ATC has proposed. Critical changes are needed to prevent utility customers across Wisconsin as well as customers in Michigan’s Upper Peninsula from footing the bill for this project and other data center-feeding power lines that should be paid for by the tech companies.”

The final outcome for the Wisconsin transmission projects still hinges on state regulators. Neither Viridon nor ATC can begin construction on their respective substations or transmission lines without approval from the PSC. The commission is reviewing ATC’s application and weighing where the infrastructure will be built.

For now, construction crews are racing to bring the Port Washington data center online by the end of next year. The PSC will soon decide who pays for the power to run it.

Competition intensifies over who builds Wisconsin’s grid as data centers drive power demand 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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Microsoft data centers in Mount Pleasant in southeast Wisconsin are projected to use much more water annually than would fill four Olympic-size pools.

Water to operate the facilities, including for cooling, will be supplied by the city of Racine.

The first data center, described by Microsoft as “the world’s most powerful data center,” is expected to begin operation in 2026.

Racine projects that facility will use 2.81 million gallons of water (roughly four Olympic pools) in 2026.

But a second data center is also under construction and a 15-center expansion is planned.

Racine projects total water usage will be 8.44 million gallons annually (roughly 12 pools).

The projections don’t include water that will be needed to generate electricity to fuel the data centers.

The Lawrence Berkeley National Laboratory estimated in 2024 that 92.5% of the water U.S. data centers used was to generate electricity, 7.5% for cooling.

This fact brief is responsive to conversations such as this one.

Sources

• The Conversation: Data centers consume massive amounts of water – companies rarely tell the public exactly how much
• Microsoft: Made in Wisconsin: The world’s most powerful AI datacenter
• City of Racine Water Utility: Mount Pleasant data center water projections
• WPR: Mount Pleasant commission approves Microsoft’s plans for data center expansion
• Badger Institute: Claims of data center water use are laughably wrong
• WPR: Microsoft data centers will use up to 8.4M gallons of water each year, records show
• Midwest Environmental Advocates: Demanding Data Center Transparency – City of Racine
• Clean Wisconsin: Analysis: Offsite Water Use of Data Centers

Is a claim that a massive data center will use only 4 Olympic swimming pools of water per year accurate? 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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How much should data centers pay for the massive amounts of new power infrastructure they require? Wisconsin’s largest utility, We Energies, has offered its answer to that question in what is the first major proposal before state regulators on the issue.

Under the proposal, currently open for public comment, data centers would pay most or all of the price to construct new power plants or renewables needed to serve them, and the utility says the benefits that other customers receive would outweigh any costs they shoulder for building and running this new generation.

But environmental and consumer advocates fear the utility’s plan will actually saddle customers with payments for generation, including polluting natural gas plants, that wouldn’t otherwise be needed.

States nationwide face similar dilemmas around data centers’ energy use. But who pays for the new power plants and transmission is an especially controversial question in Wisconsin and other ​“vertically integrated” energy markets, where utilities charge their customers for the investments they make in such infrastructure — with a profit, called ​“rate of return,” baked in. In states with competitive energy markets, like Illinois, by contrast, utilities buy power on the open market and don’t make a rate of return on building generation.

Although six big data center projects are underway in Wisconsin, the state has no laws governing how the computing facilities get their power.

Lawmakers in the Republican-controlled state Legislature are debating two bills this session. The Assembly passed the GOP-backed proposal on Jan. 20, which, even if it makes it through the Senate, is unlikely to get Democratic Gov. Tony Evers’ signature. According to the Milwaukee Journal Sentinel, a spokesperson for Evers said on Jan. 14 that ​“the one thing environmentalists, labor, utilities, and data center companies can all agree on right now is how bad Republican lawmakers’ data center bill is.” Until a measure is passed, individual decisions by the state Public Service Commission will determine how utilities supply energy to data centers.

The We Energies case is high stakes because two data centers proposed in the utility’s southeast Wisconsin territory promise to double its total demand. One of those facilities is a Microsoft complex that the tech giant says will be ​“the world’s most powerful AI datacenter.”

The utility’s proposal could also be precedent-setting as other Wisconsin utilities plan for data centers, said Bryan Rogers, environmental justice director for the Milwaukee community organization Walnut Way Conservation Corp.

“As goes We Energies,” Rogers said, ​“so goes the rest of the state.”

Building new power

We Energies’ proposal — first filed last spring — would let data centers choose between two options for paying for new generation infrastructure to ensure the utility has enough capacity to meet grid operator requirements that the added electricity demand doesn’t interfere with reliability.

In both cases, the utility will acquire that capacity through ​“bespoke resources” built specifically for the data center. The computing facilities technically would not get their energy directly from these power plants or renewables but rather from We Energies at market prices.

Under the first option, called ​“full benefits,” data centers would pay the full price of constructing, maintaining and operating the new generation and would cover the profit guaranteed to We Energies. The data centers would also get revenue from the sale of the electricity on the market as well as from renewable energy credits for solar and wind arrays; renewable energy credits are basically certificates that can be sold to other entities looking to meet sustainability goals.

The second option, called ​“capacity only,” would have data centers paying 75% of the cost of building the generation. Other customers would pick up the tab for the remaining 25% of the construction and pay for fuel and other costs. In this case, both data centers and other customers would pay for the profit guaranteed to We Energies as part of the project, though the data centers would pay a different — and possibly lower — rate than other customers.

Developers of both data centers being built in We Energies’ territory support the utility’s proposal, saying in testimony that it will help them get online faster and sufficiently protect other customers from unfair costs.

Consumer and environmental advocacy groups, however, are pushing back on the capacity-only option, arguing that it is unfair to make regular customers pay a quarter of the price for building new generation that might not have been necessary without data centers in the picture.

“Nobody asked for this,” said Rogers of Walnut Way. The Sierra Club told regulators to scrap the capacity-only option. The advocacy group Clean Wisconsin similarly opposes that option, as noted in testimony to regulators.

But We Energies says everyone will benefit from building more power sources.

“These capacity-only plants will serve all of our customers, especially on the hottest and coldest days of the year,” We Energies spokesperson Brendan Conway wrote in an email. ​“We expect that customers will receive benefits from these plants that exceed the costs that are proposed to be allocated to them.”

We Energies has offered no proof of this promise, according to testimony filed by the Wisconsin Industrial Energy Group, which represents factories and other large operations. The trade association’s energy adviser, Jeffry Pollock, told regulators that the utility’s own modeling of the capacity-only approach showed scenarios in which the costs borne by customers outweigh the benefits to them.

Clean energy is another sticking point. Clean Wisconsin and the Environmental Law and Policy Center want the utility’s plan to more explicitly encourage data centers to meet capacity requirements in part through their own on-site renewables and to participate in demand-response programs. Customers enrolled in such programs agree to dial down energy use during moments of peak demand, reducing the need for as many new power plants.

“It’s really important to make sure that this tariff contemplates as much clean energy and avoids using as much energy as possible, so we can avoid that incremental fossil fuel build-out that would otherwise potentially be needed to meet this demand,” said Clean Wisconsin staff attorney Brett Korte.

And advocates want the utility to include smaller data centers in its proposal, which in its current form would apply only to data centers requiring 500 megawatts of power or more.

We Energies’ response to stakeholder testimony was due on Jan. 28, and the utility and regulators will also consider public comments that are being submitted. After that, the regulatory commission may hold hearings, and advocates can file additional briefs. Eventually, the utility will reach an agreement with commissioners on how to charge data centers.

Risky business

Looming large over this debate is the mounting concern that the artificial intelligence boom is a bubble. If that bubble pops, it could mean far less power demand from data centers than utilities currently expect.

In November, We Energies announced plans to build almost 3 gigawatts of natural gas plants, renewables and battery storage. Conway said much of this new construction will be paid for by data centers as their bespoke resources.

But some worry that utility customers could be left paying too much for these investments if data centers don’t materialize or don’t use as much energy as predicted. Wisconsin consumers are already on the hook for almost $1 billion for ​“stranded assets,” mostly expensive coal plants that closed earlier than originally planned, as Wisconsin Watch recently tabulated.

“The reason we bring up the worst-case scenario is it’s not just theoretical,” said Tom Content, executive director of the Citizens Utility Board of Wisconsin, the state’s primary consumer advocacy organization. ​“There’s been so many headlines about the AI bubble. Will business plans change? Will new AI chips require data centers to use a lot less energy?”

We Energies’ proposal has data centers paying promised costs even if they go out of business or otherwise prematurely curtail their demand. But developers do not have to put up collateral for this purpose if they have a positive credit rating. That means if such data center companies went bankrupt or otherwise couldn’t meet their financial obligations, utility customers may end up paying the bill.

Steven Kihm, the Citizens Utility Board’s regulatory strategist and chief economist, gave examples of companies that had stellar credit until they didn’t, in testimony to regulators. The company that made BlackBerry handheld devices saw its stock skyrocket in the mid-2000s, only to lose most of its value with the rise of smartphones, he noted. Energy company Enron, meanwhile, had a top credit rating until a month before its 2001 collapse, Kihm warned. He advised regulators that data center developers should have to put up adequate collateral regardless of their credit rating.

The Wisconsin Industrial Energy Group echoed concerns about risk if data centers struggle financially.

“The unprecedented growth in capital spending will subject (We Energies) to elevated financial and credit risks,” Pollock told regulators. ​“Customers will ultimately provide the financial backstop if (the utility) is unable to fully enforce the terms” of its tariff.

Jeremy Fisher, Sierra Club’s principal adviser on climate and energy, equated the risk to co-signing ​“a loan on a mansion next door, with just the vague assurance that the neighbors will almost certainly be able to cover their loan.”

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

Wisconsin debates how to pay for the power-hungry AI boom 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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Anticipated spikes in demand for energy to supply Wisconsin’s data center building boom come on the heels of decades of declining power and water use, according to a new report.

A Wisconsin Policy Forum analysis shows there are more than 40 data centers operating in Wisconsin with another four planned. The sprawling facilities host computer servers, which store data and support a global surge in the use of artificial intelligence.

The data center building boom has been met by local opposition groups concerned about the facilities’ resource needs. But the Policy Forum report shows it’s all happening after years of declines in demand for electricity and water.

Using projections submitted to the Wisconsin Public Service Commission by utility companies, the Policy Forum estimates the state’s peak electrical demand is expected to increase to around 17 gigawatts by 2030, driven largely by data centers. In 2024, Wisconsin’s peak demand was rated at 14.6 gigawatts. Over the past 20 years, total electricity sales have fallen by 9% over the past 20 years.

Wisconsin Policy Forum Senior Research Associate Tyler Byrnes told WPR a big part of the decline since 2005 is due to fewer commercial customers paired with more energy efficiency measures. He said during that span, utilities have pulled aging, coal-fired power plants offline and shifted toward more renewable energy. 

“Into that landscape, now we’re seeing these really big data centers come online,” said Byrnes.

Some utilities in Wisconsin are expected to seek state permission to build new power plants or expand existing ones to meet the data center demand. Byrnes said that will bring a need for more transmission lines, though local impacts will vary depending on where the data centers are located.

The Policy Forum’s analysis shows most existing facilities are in south central and southeastern Wisconsin. With other large-scale data centers planned for more rural areas like Beaver Dam and DeForest, he said utility companies may need to build out more infrastructure.

Wisconsin water demand has fallen for decades. Will data centers impact rates? 

Another major concern raised during the data center debate is the facilities’ hefty water demands.

Opponents have complained that developers haven’t been transparent about how much water they’ll need to cool computer servers. In September, environmental advocates sued the city of Racine to force the release of projected water needs of a $3.3 billion data center campus located at the former Foxconn site in Mount Pleasant. The city released figures showing the project will need more than 8 million gallons of water per year. 

To put that into context, the Policy Forum looked at historical water sales reported by the Racine Water Works, which will supply the Mount Pleasant data center project. Between 1997 and 2022, the utility saw water sales decline by 2.1 billion gallons annually. Byrnes said that taken as a whole, the demand for water from data centers is “a drop in the bucket” in a lot of cases.

As with electrical demand, Byrnes said water demand has decreased due to fewer industrial customers and increased efficiency efforts. Because cities like Racine still need to maintain the same level of infrastructure, which is more expensive due to inflation, the revenue from each gallon of water sold has to be spread further. That means potential rate increases.

Byrnes said data centers have been turning to closed-loop cooling systems, which use less water, but cities like Racine would still be selling more water, which would help cover fixed infrastructure costs. 

“Potentially, it could maybe blunt some of the (water rate) increases,” Byrnes said. 

DeForest, other local governments grapple with data center proposals

With the rise in data center developments in Wisconsin, local governments and state lawmakers are working to figure out how to regulate them.

The DeForest Village Board recently took no action on a citizen petition calling for referendum votes before any data center project could be approved.

In Menomonie, the city council voted to restrict where and how data centers can be built months after the mayor halted a $1.6 billion proposal. A similar zoning ordinance is being considered in the city of Jefferson.
 
At the same time, Republican and Democratic state lawmakers have proposed different ways to regulate data centers. One GOP bill is aimed at ensuring data centers and not other customers would pay for any required improvements to the state’s power grid. The Democratic bill is aimed at requiring data centers to get the bulk of their power from renewable sources.

This story was originally published by WPR.

Data center boom follows decades of declining electricity and water use in Wisconsin 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.

Tribal utility, localities, and consumer and environmental groups argue tax guidance illegally hurts renewable energy. WASHINGTON, D.C. (Dec. 18, 2025) – A broad array of groups with strong interests in clean and affordable energy sued the IRS and Treasury Department over new rules for tax credits that unfairly and illegally discriminate against wind and solar …

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• Wisconsin utility ratepayers owe nearly $1 billion on coal power plants that have been or soon will be shut down. That includes debt taken on to build and upgrade the plants, plus a guaranteed rate of return of nearly 10% for the utility companies that own the plants.

• Other states have found ways to limit the effect on ratepayers, such as allowing debt to be securitized at a lower rate than the guaranteed investment return and having comprehensive planning processes that reduce the likelihood of overbuilding.

• Wisconsin utility groups have pushed back on bipartisan proposals, and Republicans have blocked efforts by Gov. Tony Evers to reduce costs for ratepayers.

By some measures, the Pleasant Prairie Power Plant, once regarded locally as an “iconic industrial landmark,” had a good run.

Opened in 1980 near Lake Michigan in Kenosha County, it became Wisconsin’s largest generating plant, burning enough Wyoming coal, some 13,000 tons a day, to provide electricity for up to 1 million homes. 

But over time, the plant became too expensive to operate. The owner, We Energies, shut it down after 38 years, in 2018.

We Energies customers, however, are still on the hook.

A portion of their monthly bills will continue to pay for Pleasant Prairie until 2039 — 21 years after the plant stopped producing electricity. 

In fact, residential and business utility customers throughout Wisconsin owe nearly $1 billion on “stranded assets” — power plants like Pleasant Prairie that have been or will soon be shut down, a Wisconsin Watch investigation found.

That total will likely grow over the next five years with additional coal plants scheduled to cease operations. 

Customers must pay not only for the debt taken on to build and upgrade the plants themselves, but also an essentially guaranteed rate of return for their utility company owners, long after the plants stop generating revenue themselves.

“We really have a hard time with utilities profiting off of dead power plants for decades,” said Todd Stuart, executive director of the Wisconsin Industrial Energy Group. 

The $1 billion tab looms as Wisconsin utility companies aim to generate unprecedented amounts of electricity for at least seven major high-tech data centers that are proposed, approved or under construction. By one estimate, just two of the data centers, which are being built to support the growth of artificial intelligence, would use more electricity than all Wisconsin homes combined.

All of which raises an important question in Wisconsin, where electricity rates have exceeded the Midwest average for 20 years. 

What happens to residents and other ratepayers if AI and data centers don’t pan out as planned, creating a new generation of stranded assets?

How much do Wisconsin ratepayers owe on stranded assets?

Of the five major investor-owned utilities operating in Wisconsin, two — We Energies and Wisconsin Public Service Corp. — have stranded assets on the books. Both companies are subsidiaries of Milwaukee-based WEC Energy Group.

As of December 2024, when the company released its most recent annual report, We Energies estimated a remaining value of more than $700 million across three power plants with recently retired units: Pleasant Prairie, Oak Creek and Presque Isle, a plant on Michigan’s Upper Peninsula.

Wisconsin Public Service Corp.’s December 2024 report listed roughly $30 million in remaining value on recently retired units at two power plants.

In total, utilities owned by WEC Energy Group will likely have over $1 billion in recently retired assets by the end of 2026. 

The company also noted a remaining value of just under $250 million for its share of units at Columbia Generating Station slated to retire in 2029, alongside a remaining value of roughly $650 million for units at Oak Creek scheduled to retire next year.

Its customers will pay off that total, plus a rate of return, for years to come.

The company estimates that closing the Pleasant Prairie plant alone saved $2.5 billion, largely by avoiding future operating and maintenance costs and additional capital investments.

Both Wisconsin Power and Light and Madison Gas and Electric also own portions of the Columbia Energy Center, and Wisconsin Power and Light also operates a unit at the Edgewater Generating Station scheduled for retirement before the end of the decade. Neither company provided estimates of the values of those facilities at time of retirement. Andrew Stoddard, a spokesman for Alliant Energy, Wisconsin Power and Light’s parent company, argued against treating plants scheduled for retirement with value on the books as future stranded assets.

How stranded assets occurred: overcommitting to coal

In 1907, Wisconsin became one of the first states to regulate public utilities. The idea was that having competing companies installing separate gas or electric lines was inefficient, but giving companies regional monopolies would require regulation.

Utility companies get permission to build or expand power plants and to raise rates from the three-member state Public Service Commission. The commissioners, appointed by the governor, are charged with protecting ratepayers as well as utility company investors.

Stranded assets have occurred across the nation, partly because of the cost of complying with pollution control regulations. But another factor is that, while other utilities around the country moved to alternative sources of energy, Wisconsin utilities and, in turn, the PSC overbet on how long coal-fired plants would operate efficiently:

• In the years before We Energies pulled the plug on Pleasant Prairie, the plant had mostly gone dark in spring and fall. Not only had coal become more expensive than natural gas and renewables, but energy consumption stayed flat. By 2016, two years before Pleasant Prairie’s closure, natural gas eclipsed coal for electricity generation nationally.

• In 2011, We Energies invested nearly $1 billion into its coal-fired Oak Creek plant south of Milwaukee to keep it running for 30 more years. The plant, which began operating in 1965 and later became one of the largest in the country, is now scheduled to completely retire in 2026 — with $650 million on the books still owed. That will cost individual ratepayers nearly $30 per year for the next 17 years, according to RMI, a think tank specializing in clean energy policy. The majority of the debt tied to those units stems from “environmental controls we were required to install to meet federal and state rules,” WEC Energy Group spokesperson Brendan Conway said.

• In 2013, to settle pollution violations, Alliant Energy announced an investment of more than $800 million in the Columbia Energy Center plant in Portage, north of Madison. But by 2021, Alliant announced plans to begin closing the plant, though now it is expected to operate until at least 2029. 

Various factors encourage construction and upgrades of power plants.

Building a plant can create upwards of 1,000 construction jobs, popular with politicians. Moreover, the Public Service Commission, being a quasi-judicial body, is governed by precedent. For example, if the PSC determined it was prudent to allow construction of a utility plant, that finding would argue in favor of approving a later expansion of that plant.

The PSC allowed utility companies “to overbuild the system,” said Tom Content, executive director of the Wisconsin Citizens Utility Board, a nonprofit advocate for utility customers. “I think the mistake was that we allowed so much investment, and continuing to double down on coal when it was becoming less economic.”

Utilities “profit off of everything they build or acquire,” Stuart said, “and so there is a strong motivation to put steel in the ground and perhaps to even overbuild.”

Conway, the WEC Energy Group spokesperson, argued that the utilities’ plans to retire plants amount to a net positive for customers. 

“We began our power generation reshaping plan about a decade ago,” he wrote in an email. “That includes closing older, less-efficient power plants and building new renewable energy facilities and clean, efficient natural gas plants. This plan reduces emissions and is expected to provide customers significant savings — hundreds of millions of dollars — over the life of the plan.”

Guaranteed profits add to ratepayer burden

The built-in profits that utility companies enjoy, typically 9.8%, add to the stranded assets tab. 

When the Public Service Commission approves construction of a new power plant, it allows the utility company to levy electricity rates high enough to recover its investment plus the specified rate of return — even after a plant becomes a stranded asset.

“We give them this license to have a monopoly, but the challenge is there’s no incentive for them to do the least-cost option,” Content said. “So, in terms of building new plants, there’s an incentive to build more … and there’s incentive to build too much.”

When the Pleasant Prairie plant was shut down in 2018, the PSC ruled that ratepayers would continue to pay We Energies to cover the cost of the plant itself, plus the nearly 10% profit. The plant’s remaining value, initially pegged at nearly $1 billion, remained at roughly $500 million as of December 2024.

Eliminating profits on closed plants would save ratepayers $300 million on debt payments due to be made into the early 2040s, according to Content’s group.

New ‘stranded assets’ threat: data centers

As artificial intelligence pervades society, it’s hard to fathom how much more electricity will have to be generated to power all of the data centers under construction or being proposed in Wisconsin. 

We Energies alone wants to add enough energy to power more than 2 million homes. That effort is largely to serve one Microsoft data center under construction in Mount Pleasant, between Milwaukee and Racine, and a data center approved north of Milwaukee in Port Washington to serve OpenAI and Oracle AI programs. Microsoft calls the Mount Pleasant facility “the world’s most powerful data center.” 

Data centers are also proposed for Beaver Dam, Dane County, Janesville, Kenosha and Menomonie. 

The energy demand raises the risk of more stranded assets, should the data centers turn out to be a bubble rather than boom.

“The great fear is, you build all these power plants and transmission lines and then one of these data centers only is there for a couple years, or isn’t as big as promised, and then everybody’s left holding the bag,” Stuart said. 

In an October Marquette Law School poll, 55% of those surveyed said the costs of data centers outweigh the benefits. Environmental groups have called for a pause on all data center approvals. Democratic and Republican leaders are calling for data centers to pay their own way and not rely on utility ratepayers or taxpayers to pay for their electricity needs.

Opposition in one community led nearly 10,000 people to become members of the Stop the Menomonie Data Center group on Facebook. In Janesville, voters are trying to require referendums for data centers. In Port Washington, opposition to the data center there led to three arrests during a city council meeting.

Utilities are scheduled in early 2026 to request permission from the Public Service Commission to build new power plants or expand existing plants to accommodate data centers.

Some states, such as Minnesota, have adopted laws prohibiting the costs of stranded assets from data centers being passed onto ratepayers.

Wisconsin has no such laws.

Shifting cost burden to utility companies

Currently, ratepayers are on the hook for paying off the full debt of stranded assets — unless a financial tool called securitization reduces the burden on ratepayers.

Securitization is similar to refinancing a mortgage. With the state’s permission, utilities can convert a stranded asset — which isn’t typically a tradeable financial product — into a specialized bond. 

Utility customers must still pay back the bond. But the interest rate on the bond is lower than the utility’s standard profit margin, meaning customers save money. 

A 2024 National Association of Regulatory Utility Commissioners report noted that utilities’ shareholders may prefer a “status quo” scenario in which customers pay stranded asset debts and the standard rate of return. Persuading utilities to agree to securitization can require incentives from regulators or lawmakers, the report added.

In some states, utilities can securitize the remaining value of an entire power plant. Michigan utility Consumers Energy, for instance, securitized two coal generating units retired in 2023, saving its customers more than $120 million. 

In Wisconsin, however, utilities can securitize only the cost of pollution control equipment on power plants — added to older coal plants during the Obama administration, when utilities opted to retrofit existing plants rather than switching to new power sources.

In 2023, two Republican state senators, Robert Cowles of Green Bay and Duey Stroebel of Saukville, introduced legislation to allow the Public Service Commission to order securitization and allow securitization to be used to refinance all debt on stranded assets. The bill attracted some Democratic cosponsors, but was opposed by the Wisconsin Utilities Association and did not get a hearing.

Democratic Gov. Tony Evers proposed additional securitization in his 2025-27 budget, but the Legislature’s Republican-controlled Joint Finance Committee later scrapped the provision.

Even Wisconsin’s narrow approach to securitization is optional, however, and most utilities have chosen not to use it. 

We Energies was the first Wisconsin utility to do so, opting in 2020 to securitize the costs of pollution control equipment at the Pleasant Prairie plant. Wisconsin’s Public Service Commission approved the request, saving an estimated $40 million. “We will continue to explore that option in the future,” Conway said.

But the PSC expressed “disappointment” in 2024 when We Energies “was not willing to pursue securitization” to save customers $117.5 million on its soon-to-retire Oak Creek coal plant. The utility noted state law doesn’t require securitization.

Stuart said that if utilities won’t agree to more securitization, they should accept a lower profit rate once an asset becomes stranded. 

“It would be nice to ease that burden,” he said. “Just to say, hey, consumers got to suck it up and deal with it, that doesn’t sound right. The issue of stranded assets, like cost overruns, is certainly ripe for investigation.”

Comprehensive planning required elsewhere — but not Wisconsin 

Avoiding future stranded assets could require a level of planning impossible under Wisconsin’s current regulatory structure.

When the state’s utilities propose new power plants, PSC rules require the commission to consider each new plant alone, rather than in the context of other proposed new plants and the state’s future energy needs. Operating without what is known as an integrated resource plan, or IRP, opened the PSC to overbuilding and creating more stranded assets. IRPs are touted as an orderly way to plan for future energy needs. 

“There’s no real comprehensive look in Wisconsin,” Stuart said. “We’re one of the few regulated states that really doesn’t have a comprehensive plan for our utilities. 

”We’ve been doing some of these projects kind of piecemeal, without looking at the bigger picture.”

Structured planning tools like IRPs date back to the 1980s, when concerns about cost overruns, fuel price volatility and overbuilding prompted regulators to step in. Minnesota and Michigan require utilities to file IRPs, as do a majority of states nationwide.

Evers proposed IRPs in his 2025-27 state budget, but Republican lawmakers removed that provision because it was a nonfiscal policy issue.

Northern States Power Company, which operates in Wisconsin and four other Midwestern states, is required by both Michigan and Minnesota to develop IRPs. “Because of these rules, we create a multi-state IRP every few years,” said Chris Ouellette, a spokesperson for Xcel Energy, the utility’s parent company.

Madison Gas and Electric, which only operates in Wisconsin, argued that its current planning process is superior to the IRP requirements in neighboring states. “A formal IRP mandate would add process without improving outcomes,” spokesperson Steve Schultz said. “Wisconsin’s current framework allows us to move quickly, maintain industry-leading reliability and protect customer costs during a period of rapid change.”

How to influence decisions relating to stranded assets

The devil will be in the details on whether the Public Service Commission adopts strong policies to prevent the expected wave of new power plant capacity from becoming stranded assets, consumer advocates say.

The current members, all appointed by Evers, are: chairperson Summer Strand, Kristy Nieto and Marcus Hawkins.

The public can comment on pending cases before the PSC via its website, by mail or at a public hearing. The commission posts notices of its public hearings, which can be streamed via YouTube. 

Among the upcoming hearings on requests by utilities to generate more electricity for data centers:

Feb. 12: We Energies’ request to service data centers in Mount Pleasant and Port Washington. We Energies says the fees it proposes, known as tariffs, will prevent costs from being shifted from the data centers to other customers. The “party” hearing is not for public comment, but for interaction between PSC staff and parties in the case, such as We Energies and public interest groups.

Feb. 26: Another party hearing for a case in which Alliant Energy also said its proposed tariffs won’t benefit the data center in Beaver Dam at the expense of other customers.

To keep abreast of case developments, the PSC offers email notifications for document filings and meetings of the commission.

The PSC would not provide an official to be interviewed for this article. It issued a statement noting that utilities can opt to do securitization to ease the financial burden on ratepayers, adding: 

“Beyond that, the commission has a limited set of tools provided under state law to protect customers from costs that arise from early power plant retirements. It would be up to the state Legislature to make changes to state law that would provide the commission with additional tools.”

On Nov. 6, state Sen. Jodi Habush Sinykin, D-Whitefish Bay, and Rep. Angela Stroud, D-Ashland, announced wide-ranging data center legislation. One provision of their proposal aims to ensure that data centers don’t push electricity costs onto other ratepayers. 

But there is no provision on stranded assets.

As energy-hungry data centers loom, Wisconsin ratepayers owe $1 billion on shuttered power plants 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.

Hydroelectric energy is the “backbone of clean power,” but an urgent need to improve efficiencies is driving engineers to explore a whirlwind of options Among alternative energy solutions, wind, solar, and hydrogen capture the majority of attention. Yet the combined output from these sources pales in comparison to that of hydroelectric power. Producing more than …

The post Redefining Renewable Energy: A Critical Push to Optimize Hydroelectric Power Efficiency appeared first on Alternative Energy HQ.

After the reelection of former President Donald Trump, clean energy advocates across the country are preparing for a White House that will no doubt pursue aggressive rollbacks of climate policies and further expand fossil-fuel production.

Now more than ever, states will need to step up and pursue climate efforts on their own to ​“ensure continued progress toward clean energy,” said Caroline Spears, executive director of the advocacy group Climate Cabinet.

Few states are as important as New York, which is large, Democrat-controlled — and already committed to ambitious clean energy goals. In 2019, the state passed the Climate Leadership and Community Protection Act (CLCPA), which pledged to reach 70 percent renewable energy by 2030 and net-zero emissions by 2050.

“New York State can continue to lead without federal support or federal oversight,” said Mandy DeRoche, deputy managing attorney at the advocacy group Earthjustice. ​“We’ll continue our progress regardless, and that will happen in every state no matter what.”

But so far, the Empire State is falling behind on its climate goals. Across a slew of initiatives under New York’s 2019 climate law, regulators are missing key rulemaking deadlines. According to a July report from the state, New York will likely miss its landmark clean energy target for 2030. Right now, it’s on track to get just 53 percent of its electricity from renewable sources by that date, far short of 70 percent.

The report mostly blamed external economic factors, including supply-chain disruptions and high interest rates that led to a spate of major renewable project cancellations. Another issue is skyrocketing energy demand, largely driven by new data centers for crypto mining and AI, as well as microchip manufacturing facilities and the rise in electric vehicles and appliances.

Environmental advocates argue that faltering political will contributes just as much, if not more, to the state’s lackluster progress. Governor Kathy Hochul, a Democrat, has expressed ambivalence over meeting looming clean energy targets.

“The costs have gone up so much I now have to say, ​‘What is the cost on the typical New York family?’” Hochul said in a recent TV interview. ​“The goals are still worthy. But we have to think about the collateral damage of these decisions.”

Missing the 2030 deadline would jeopardize many of the state’s other climate goals, including achieving 100 percent zero-emissions energy by 2040 and shuttering ​“peaker” fossil-gas plants that disproportionately spew toxic pollutants into low-income communities and communities of color, in addition to emitting large amounts of planet-warming carbon dioxide.

But missing these goals is far from inevitable. From raising energy procurement targets to leaning on public power agencies, climate and legal experts say that there’s still plenty of ways New York can make good on its clean energy pledge.

“We’re not ready to say we can’t meet the 2030 goal,” said DeRoche. ​“Of course, there are obstacles, but the messaging and the approach from the state should be, ​‘This is a statutory obligation, and we will do everything in our power to meet it.’”

How New York could get back on track

On some level, New York’s struggles come down to a straightforward problem: The state doesn’t have enough existing or upcoming renewable energy projects to meet its goals. 

About 30 percent of the state’s electricity currently comes from renewable sources, mostly from upstate hydropower plants built many decades ago.

One bright spot is that New York has already outpaced its 6-gigawatt goal for rooftop and community solar — but its targets for utility-scale solar, wind, and battery storage projects, which make up the bulk of its clean energy plan, remain well off-track.

To help solve this, DeRoche and her team at Earthjustice argue in public comments to state energy regulators that New York should vastly increase its renewable energy procurement targets, which set guidelines for how much clean power the state should purchase from private developers. State agencies have determined that they would need to purchase about 14,000 gigawatt hours each year for the next three years to meet the 2030 deadline, yet have recommended procuring only 5,600 gigawatt hours per year.

“The Draft Review provides no basis for setting the target so low,” her team wrote, arguing that state agencies should reevaluate how feasible it would be to procure a higher volume.

New clean energy construction should be prioritized in downstate New York, DeRoche adds, a region that houses most of the state’s population yet relies heavily on fossil fuels compared with the largely hydro- and nuclear-powered upstate areas. The state will also need to address transmission and interconnection backlogs that make it harder to connect new power generation to the grid. Earlier this year, lawmakers passed the RAPID Act to expedite that process for clean energy projects and transmission lines.

Some activists argue that the state itself should take a leading role to develop more clean energy.

Last year, an amendment to the state budget granted the New York Power Authority the ability to build, own, and operate renewable energy projects for the first time. Organizers at the grassroots coalition Public Power New York say that government leaders have yet to capitalize on the change, commonly referred to as the Build Public Renewables Act. In October, NYPA released its first strategic plan for developing renewable energy projects, proposing the installation of 3.5 gigawatts of new clean energy in the next several years.

“This is only the first tranche of NYPA renewables projects,” the report said, with potentially ​“further projects for consideration.”

Andrea Johnson, an organizer with the New York City chapter of Democratic Socialists of America, a member group of Public Power New York, called that number ​“measly.” Public Power New York is rallying for the authority to commit to 15 gigawatts of new clean power by 2030, an amount based on research commissioned by the group.

Expanding clean power at a faster rate would fulfill NYPA’s responsibilities under last year’s expanded authority, which calls on it to build projects when the state falls short on its climate mandates, Johnson said. ​“When the private sector fails — and the private sector is failing — the state needs to step in and actually fill the gap.”

Leveraging NYPA can also allow New York to meet its climate goals at a lower cost, Johnson said. As a nonprofit, public institution, NYPA can access more favorable financing. It also owns and builds transmission lines, allowing it to plan for both energy generation and distribution at the same time, she said. NYPA is also required to provide utility bill credits to low- and moderate-income households for any clean energy produced from its projects.

Beyond building more clean energy, the state should also take steps to ease growing power demand, including strengthening building efficiency standards and accelerating the installation of heat pumps, said Michael Gerrard, faculty director of the Sabin Center for Climate Change Law at Columbia Law School.

That includes addressing the rapid growth of crypto mining and AI electricity use and its effects on residents, said DeRoche. State officials noted that those rising energy demands have made it far more difficult to reach clean energy targets. But agencies have policy tools available to understand and reduce unabated growth — and they should start with making sure that discounted electricity rates for cryptocurrency and AI companies aren’t being subsidized by residents, DeRoche said.

Offshore wind’s uncertain future

Any effort to accelerate New York’s adoption of clean energy will need to grapple with challenges in the offshore wind sector, a cornerstone of the state’s strategy that is likely to face even more setbacks under the incoming Trump administration.

New York aims to install 9 gigawatts of offshore wind power by 2035, but in the past four years, inflation, high interest rates, and supply-chain issues led developers to pull out of contracts in the state.

That challenging economic environment is now improving, however, according to Atin Jain, an offshore wind analyst at the energy consulting firm BloombergNEF. As inflation has started to ease and interest rates have begun to come down, ​“We have probably passed the worst of it,” Jain said. State officials have been quick to respond to the industry’s economic pressures, he added, expediting auctions to renegotiate previous agreements and adding language in contracts to allow for inflation adjustments.

Two new projects, Sunrise Wind and Empire Wind 1, with 924 and 810 megawatts of capacity, respectively, are currently moving forward in New York. The 132-megawatt South Fork Wind farm went live in March off the coast of Long Island.

But Trump’s reelection casts a new uncertainty over the industry. Trump has vowed to stop offshore wind development ​“on day one” and to ​“terminate” the Inflation Reduction Act. If those declarations end up translating to real policy, then offshore wind, which relies heavily on federal tax credits and requires federal approval and permits to build and operate, could suffer — in New York and beyond.

Still, New York has enshrined a legal mandate to decarbonize its economy — meaning no matter the headwinds, the state has an obligation to follow through, DeRoche said. 

“We hear from the governor that the CLCPA is the nation’s leading climate law,” said DeRoche. ​“Well, it’s only the nation’s leading climate law if we’re implementing it.”

How New York can get on track to meet its big clean energy goals is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.

Charging stations for electric vehicles are essential for cleaning up the transportation sector. A new study by MIT researchers suggests they’re good for business, too.

The study found that, in California, opening a charging station boosted annual spending at each nearby business by an average of about $1,500 in 2019 and about $400 between January 2021 and June 2023. The spending bump amounts to thousands of extra dollars annually for nearby businesses, with the increase particularly pronounced for businesses in underresourced areas.

The study’s authors hope the research paints a more holistic picture of the benefits of EV charging stations, beyond environmental factors.

“These increases are equal to a significant chunk of the cost of installing an EV charger, and I hope this study sheds light on these economic benefits,” says lead author Yunhan Zheng MCP ’21, SM ’21, PhD ’24, a postdoc at the Singapore-MIT Alliance for Research and Technology (SMART). “The findings could also diversify the income stream for charger providers and site hosts, and lead to more informed business models for EV charging stations.”

Zheng’s co-authors on the paper, which was published today in Nature Communications, are David Keith, a senior lecturer at the MIT Sloan School of Management; Jinhua Zhao, an MIT professor of cities and transportation; and alumni Shenhao Wang MCP ’17, SM ’17, PhD ’20 and Mi Diao MCP ’06, PhD ’10.

Understanding the EV effect

Increasing the number of electric vehicle charging stations is seen as a key prerequisite for the transition to a cleaner, electrified transportation sector. As such, the 2021 U.S. Infrastructure Investment and Jobs Act committed $7.5 billion to build a national network of public electric vehicle chargers across the U.S.

But a large amount of private investment will also be needed to make charging stations ubiquitous.

“The U.S. is investing a lot in EV chargers and really encouraging EV adoption, but many EV charging providers can’t make enough money at this stage, and getting to profitability is a major challenge,” Zheng says.

EV advocates have long argued that the presence of charging stations brings economic benefits to surrounding communities, but Zheng says previous studies on their impact relied on surveys or were small-scale. Her team of collaborators wanted to make advocates’ claims more empirical.

For their study, the researchers collected data from over 4,000 charging stations in California and 140,000 businesses, relying on anonymized credit and debit card transactions to measure changes in consumer spending. The researchers used data from 2019 through June of 2023, skipping the year 2020 to minimize the impact of the pandemic.

To judge whether charging stations caused customer spending increases, the researchers compared data from businesses within 500 meters of new charging stations before and after their installation. They also analyzed transactions from similar businesses in the same time frame that weren’t near charging stations.

Supercharging nearby businesses

The researchers found that installing a charging station boosted annual spending at nearby establishments by an average of 1.4 percent in 2019 and 0.8 percent from January 2021 to June 2023.

While that might sound like a small amount per business, it amounts to thousands of dollars in overall consumer spending increases. Specifically, those percentages translate to almost $23,000 in cumulative spending increases in 2019 and about $3,400 per year from 2021 through June 2023.

Zheng says the decline in spending increases over the two time periods might be due to a saturation of EV chargers, leading to lower utilization, as well as an overall decrease in spending per business after the Covid-19 pandemic and a reduced number of businesses served by each EV charging station in the second period. Despite this decline, the annual impact of a charging station on all its surrounding businesses would still cover approximately 11.2 percent of the average infrastructure and installation cost of a standard charging station.

Through both time frames, the spending increases were highest for businesses within about a football field’s distance from the new stations. They were also significant for businesses in disadvantaged and low-income areas, as designated by California and the Justice40 Initiative.

“The positive impacts of EV charging stations on businesses are not constrained solely to some high-income neighborhoods,” Wang says. “It highlights the importance for policymakers to develop EV charging stations in marginalized areas, because they not only foster a cleaner environment, but also serve as a catalyst for enhancing economic vitality.”

Zheng believes the findings hold a lesson for charging station developers seeking to improve the profitability of their projects.

“The joint gas station and convenience store business model could also be adopted to EV charging stations,” Zheng says. “Traditionally, many gas stations are affiliated with retail store chains, which enables owners to both sell fuel and attract customers to diversify their revenue stream. EV charging providers could consider a similar approach to internalize the positive impact of EV charging stations.”

Zheng also says the findings could support the creation of new funding models for charging stations, such as multiple businesses sharing the costs of construction so they can all benefit from the added spending.

Those changes could accelerate the creation of charging networks, but Zheng cautions that further research is needed to understand how much the study’s findings can be extrapolated to other areas. She encourages other researchers to study the economic effects of charging stations and hopes future research includes states beyond California and even other countries.

“A huge number of studies have focused on retail sales effects from traditional transportation infrastructure, such as rail and subway stations, bus stops, and street configurations,” Zhao says. “This research provides evidence for an important, emerging piece of transportation infrastructure and shows a consistently positive effect on local businesses, paving the way for future research in this area.”

The research was supported, in part, by the Singapore-MIT Alliance for Research and Technology (SMART) and the Singapore National Research Foundation. Diao was partially supported by the Natural Science Foundation of Shanghai and the Fundamental Research Funds for the Central Universities of China.

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