The Star Tribune reported this weekend about several data center projects that have pulled out of Minnesota thanks to “the state’s lengthy permitting process.”
From the article:
A company has halted two large-scale data center projects in Minnesota, saying the state would take too long to permit backup generators.
Excelsior-based Oppidan has paused work on data centers in North Mankato and the small city of Hampton in Dakota County. While the company is moving ahead with a data center in Apple Valley, the announcement signals that concerns over Minnesota’s regulatory climate will slow an industry that had been poised for explosive growth in Minnesota.
The senior vice president of development for Oppidan, Drew Johnson, told the Strib that “For context, data center permitting in California is shorter than Minnesota. We know because we’ve delivered hyperscale projects in California.”
Minnesota lawmakers passed a law to regulate data centers in June, which will impose high annual taxes of between $2 and $5 million, cut back traditional tax exemptions, and impose aggressive environmental and energy requirements. The law also, “requires companies to meet prevailing wage and green building certification requirements, which adds to construction and operating costs.”
Oppidan’s pause of two data centers follows Amazon’s abandonment of a planned data center near Becker. The Minnesota Public Utilities Commission had ruled against the company as it sought to install diesel generation backup for the data centers. This is despite the proposal calling for off-grid generation, which would not affect ratepayers, and being anticipated to operate less than 15 hours per year.
On this point, from the Strib:
But Johnson has also for months said the time to get a permit for backup generation would discourage development in Minnesota. Tech companies with huge demand for AI are looking to build fast.
Christina Brusven, an attorney for Fredrikson & Byron, said she would advise companies that it takes between 12 to 18 months for a developer to get the Minnesota permit data centers need for backup power…
However, no data center company has tried to get that permit yet for backup generators. It might take as long as two years for the first applicants, because the commission likely will need to hash out new issues in what might be a controversial case, Brusven said.
“It’s certainly causing some folks to pause and it’s taking some others to figure out how to navigate the process,” Brusven said. “You’re not seeing investment right now, you’re not seeing people going to construction or actually putting applications in. There might be a little ‘wait to see who goes first.’”
A recent Fox9 article points out that “there are no hyperscale data centers currently operational in the state,” and only one under construction in Rosemount. More than a dozen data centers have been proposed in Minnesota. At a celebration of a “relatively small data center in Eagan,” Mr. Johnson said that Minnesota is “a very distant last place in our region.”
Unfortunately, that will continue to be the case so long as the PUC flexes its ability to delay permitting and outright deny backup power permits.
