The year of data centers? Debate, investment heated up in Minnesota in 2025

NINA MOINI: Minnesota may be known as the land of 10,000 lakes, but an explosion of proposals for data centers this past year has some wondering if Minnesota could soon become the land of 10,000 data centers. From Faribault to Hermantown, places across the state are facing the possibility of a data center coming to their community. And with our cool temperatures and favorable tax exemptions, Minnesota has become an attractive place for many tech companies searching for a place to build their data storage houses.

Our Kirsti Marohn has been following the data center beat for us, and she's here to tell me more about all that's happened just in 2025. Thanks for being with us, Kirsti.

KIRSTI MAROHN: Thanks for having me, Nina.

NINA MOINI: When you think back on the past year of covering this rise of data centers, what stands out to you?

KIRSTI MAROHN: I think probably just how quickly things are changing on this issue. I mean, a year ago, we were just sort of starting to talk about this. Most of the data centers at that time were concentrated in the Twin Cities metro. And they were smaller, much different than the proposals we're seeing now.

Since then, we've sort of seen this explosion and proposals happening all across the state, and we're seeing pushback in many of those communities. So that's led to even lawsuits, in some cases, trying to stop these data centers from getting built. There's been debate at the Minnesota State Capitol about whether there should be more extensive regulations on these facilities.

And you know, like I said, it's no longer just a Twin Cities metro issue. The proposals are coming up in communities all across Minnesota, including some pretty small ones, like Hermantown and Pine Island.

NINA MOINI: Right. And it seems like we are hearing about a lot of these proposals. Do you know how many are actually under construction?

KIRSTI MAROHN: Actually, we only of one that's under construction, and that is the Meta facility in Rosemont. That one is actually being built. The others are just proposals at this point. I think it's safe to say there's roughly a dozen that are active proposals right now. There were more than that, but some of them have been suspended. We saw projects in Becker, North Mankato, and Hampton, those companies putting those projects on hold for now.

The others are in various stages of approval. Some of them are undergoing environmental review, awaiting city action on these. In some cases, the developers have come forward with conceptual plans but not a lot of specific details yet. And we know, Nina, that this is a rapidly changing industry. So it's very likely that some of these never will come to fruition.

NINA MOINI: What do you think are some of the concerns that people are raising about these data centers? You mentioned it's sometimes in smaller communities. But wherever they go, they're kind of changing the ecosystem of that area.

KIRSTI MAROHN: They are. And we're seeing some kind of growing activism, some residents who maybe weren't involved in community politics or issues in the past stepping forward and organizing. Some of the issues that they're raising, some of them don't want to live next to such a huge facility. They're concerned about the size, the noise that these might make, the impact on their property values.

They're also raising environmental concerns. So these are, like I said, mammoth facilities that use a lot of water for cooling. There's concerns that that could strain groundwater aquifers. And then they use a lot of energy. And there's been a lot talk about whether utilities will be able to meet the demand for electricity that these facilities are going to bring forward, and could it lead to higher electric rates for everyone.

So the other issue I think we're hearing a lot about is the transparency of these proposals. In some cases, the companies, the project proposers are asking city officials to sign non-disclosure agreements. So that's making it kind of hard for residents of those communities to get information and details about these projects. So there's a lot of debate over whether those NDAs, as they're called, should be allowed and if they're really in the best interest of the residents.

NINA MOINI: Yeah. And it sounds like several lawsuits are popping up, too. Is that over this transparency stuff? Is it about environment, or of a combination of things?

KIRSTI MAROHN: Yeah, I would say all of the above. We've seen the Minnesota Center for Environmental Advocacy, that's a nonprofit advocacy group, they've sued over four data center proposals in the state, in Lakeville, North Mankato, Pine Island, and Faribault. They say that the environmental review that these projects are getting is not adequate. It doesn't address issues like the water and the energy use. There's just not enough detail in these reviews. And then in the case of Pine Island, they've asked a judge to slow down that process and stop the city from permitting and allowing construction on that project.

NINA MOINI: Well, let's talk about some of the potential benefits too, Kirsti. I mean, why are these cities considering greenlighting these proposals?

KIRSTI MAROHN: I think in some cases, they see these projects as potential property tax revenue generators. They're really big facilities. They would pay a lot in property taxes. In some cases, the developers are proposing offering to extend roads or utilities and pay for those costs. So cities might see that as a benefit.

They would create jobs, at least initially, a lot of construction jobs. Those might just last a few years. And then over the long term, the number of permanent jobs is much lower. But at least initially, we would see this kind of a jumpstart in construction jobs.

And then I think also, some people see these as a potential way to help pay for the clean energy transition. We know we're going to need a lot of infrastructure and transmission lines and all of these improvements to our energy grid, our electricity grid, and having some of these really big electricity users would help spread out the cost.

NINA MOINI: So where do you see things going from here, Kirsti? I mean, have lawmakers been putting anything forward as the legislative session begins next year? Has the governor weighed in on this? How do you see people coming together around the issue, or are they not?

KIRSTI MAROHN: I think it will be a big issue at the Capitol again at the next session. It was this past year. Some lawmakers want to see stricter regulations, and the legislature did pass some. They passed requirements that the data center proposers share more knowledge with the Department of Natural Resources about how much water they're going to use. They also passed a restriction that utilities can't pass on the cost of supplying electricity to data centers onto their other customers.

But there were a lot of other measures that didn't pass. That included a requirement for a stricter environmental impact statement. That's a review process that's more in depth. There's also no setback requirements that these be a certain distance away from homes or other properties. And then, of course, there was discussion, but nothing passed, on preventing city officials from signing non-disclosure agreements.

So I think some of these proposals probably will come back again. But lawmakers did extend a lucrative sales tax break for data centers, so I think Minnesota will continue to be seen as a welcoming place for these projects.

NINA MOINI: All right, Kirsti, thanks so much.

KIRSTI MAROHN: Thanks, Nina.

NINA MOINI: That's MPR news reporter Kirsti Marohn.