Google has proposed a deal with Xcel Energy to build a data center in Pine Island, Minnesota, while financing new wind, solar and battery capacity that exceeds the facility's own power needs. The agreement is pending approval by the Minnesota Public Utilities Commission.
The plan addresses widespread public concern over data centers. A Gallup survey from March found that 71% of Americans opposed such construction in their local areas, with energy usage cited as a primary worry. A separate Pew Research Center survey from July and August indicated that half of Americans believe data centers would be mostly bad for the environment and household energy costs.
Google aims to use the project to advance its goal of operating on carbon-free energy 24 hours a day, seven days a week by 2030. The company, whose cloud business generated nearly $25 billion in second-quarter revenue, an 82% increase year over year, says the model allows it to build infrastructure responsibly.
Under the terms, Google will help pay for adding 1,400 megawatts of wind, 200 megawatts of solar and 300 megawatts of battery storage to Xcel's grid. This total capacity is greater than the 780-megawatt data center because wind and solar do not generate energy continuously. Xcel Energy stated that the new power will serve all local customers, excluding Google's specific allocation, and will help advance the region's carbon-free supply.
The contract includes minimum demand charges and exit fees. Google must pay for at least 75% of its contracted capacity even if it uses less, and owes up to eight years of minimum demand charges if it terminates the agreement early. Amanda Rome, executive vice president and chief customer officer at Xcel Energy, said these protections ensure the infrastructure is paid for even if demand drops.
The North American Electric Reliability Corporation projects that new data centers will account for most of the increase in U.S. electricity demand over the next decade. The Department of Energy reported that more than 70% of U.S. transmission lines and power transformers are at least 25 years old, and that meeting future demand may require doubling the transmission system size by 2050.
Amanda Peterson Corio, Google's global head of energy and power, described the timing as ideal for fixing aging infrastructure. However, Jigar Shah, a partner at consulting firm Multiplier, suggested operators should build smaller facilities where unused grid capacity exists to lower costs for everyone. He argued that larger projects are often chosen for convenience rather than efficiency.
David Pomerantz, executive director at the Energy and Policy Institute, noted that utilities often prefer building new infrastructure because it allows them to earn high returns from investors, typically around 10%. He said data centers could lower bills by providing capital at cheaper rates than utilities can access.
Despite these critiques, Shah viewed the Google and Xcel project as a positive example of using data centers to drive greener technology and benefit ratepayers.