The push for data centers in Michigan

By Mark H. Stowers

Every time you search the internet for information, from “how to make Detroit-style pizza” to “tell me about Michigan turtles,” or stream your favorite show or even send an email, those requests are routed to the nearest, fastest-available data center through a global network that prioritizes low latency (speed) and proximity to you, drawing from many locations, such as Ohio, Oregon, or even Ireland, rather than one single place. As the world continues to rely on the World Wide Web for information, commerce and more, data centers become increasingly essential, valuable, and relied upon to keep the world moving forward. 

But what exactly is a data center? It’s a dedicated, specialized facility that houses computer systems, servers, storage and networking equipment to process, store, and distribute large amounts of data, forming the backbone of digital services such as streaming, cloud computing and Artificial Intelligence (AI). The United States currently has more than 38 percent of the entire world’s data centers. DataCenterMap.com notes that the US has 3,779 facilities, with Virginia (561) Texas (383) and California (283) hosting the most. Michigan has 61, while Illinois has 195, and Ohio has 191.

The push for larger data centers is a race with China. Experts have stated that there is a need for at least one super data center to be built daily to keep up with the current demand. This “intelligence explosion” continues to multiply the need for more data centers. China ranks behind the United States, as datacentermap.com notes, with 364 data centers. The site lists 10,513 data centers across 174 countries. The U.S. has 3,779 of those. The site’s global database includes information from data center operators and service providers offering colocation, cloud and connectivity services. They cover everything from hyper-scale to edge data centers, in both smaller and tier one markets in popular metros.

Data centers come in different sizes depending on what they are intended to accomplish. Micro data centers require less than one megawatt of power and have less than 10 racks of servers. Small data centers require one to five megawatts and have anywhere from 500 to 2,000 servers and are less than 20,000 square feet. Medium data centers require 30-50 megawatts of power and are often 10,000 to 100,000 square feet. Large/hyper-scale data centers need 50 to 100-plus megawatts, have 3,000 to 10,000+ racks and are 100,000+ square feet to millions of square feet.

Megawatts (MW) is a primary measure, indicating total IT load, cooling and infrastructure power. Racks are measured in standard rack units (U); large centers have thousands of racks. Square footage ranges from small rooms to massive campuses, often tens of thousands or millions of square feet. Density (kW/rack) details how much power (kilowatts) is packed into each rack (low: <4kW, high: >16kW).

According to datacentermap.com, Michigan currently has 61 larger data centers, spanning from Alpena to Grand Rapids, Lansing and Detroit. Smaller data centers have existed in the state for more than two decades. The first “large data center” was built in 2017 by Switch in Caldonia, near Grand Rapids. The Pyramid is one of five Switch data centers geographically distributed across the country, serving each latency zone. The nearly two-million-square-foot property, formerly a Steelcase furniture building, was built because of the attractiveness of the Mitten State’s tax incentives, which had been voted in just two years earlier to attract the data center. State lawmakers rushed a data center tax break bill through the legislative process in 2015 to attract the project to Michigan.

The company said at the time it was weighing multiple location options. Following the state’s adoption of those new tax breaks, Switch’s founder and CEO Rob Roy said at the time, “Without the tax incentives, Switch couldn’t build in Michigan. None of the clients would ever come.”

At the time, former state Senator and Majority Leader Arlan Meekhof was quoted in a datacenterknowledge.com article, “In the legislature, we took very seriously our commitment to creating public policy that would enable and encourage new companies like Switch to make Michigan the most competitive state in the region for economic development.”

Last January, Governor Gretchen Whitmer signed House Bill 4906 into law as Public Act 207 of 2024, amending the Michigan General Sales Tax Act. The new law extended the current sales tax exemption for data center equipment through 2050, but only for qualified data centers. These include data center operators that invest a minimum of $250 million and create 30 jobs paying 150 percent of the local median wage. The law also established new exemptions for enterprise data centers (private, purpose-built facilities owned and operated by a single organization to house its critical IT infrastructure for running business applications and processing data), including additional benefits for facilities that locate on brownfield redevelopment sites or any former industrial power plant property. These exemptions would run through 2065. The law also includes stronger environmental standards, such as requiring at least one green building and sourcing 90 percent of electricity usage from renewable energy. Exemption certificates are to be issued by the Michigan Strategic Fund (MSF), and no new certificates will be issued after 2029.

The subsidies have worked, attracting interest from data center developers looking to do business in Michigan. At least 35 other states have or are considering similar incentives.

But was this the opening of Pandora’s box? These data centers never sleep, running constantly, creating noise, generating heat that must be cooled by air conditioners or a liquid system some using millions of gallons of water daily, and requiring incredible amounts of electricity to operate. U.S. Department of Energy statistics show that in 2023, data centers consumed 4.4 percent of all electricity generated, and by 2028, that could triple. Just using ChatGPT to write an email uses about 10 times as much electricity as a regular Google search. 

In Oakland County, there are 29 data centers and counting. Michigan has 43 global data centers with 15 of those located in Oakland County including DT1 Detroit Data Center, Southfield Data Center, Detroit DTA Center (DC1), DTW02 – FNSI – Detroit Data Center, Southfield Data Center NW (DC2), Southfield Data Center W (DC3), Verizon Detroit 2, Detroit 1 Data Center, Internet 123 Data Center, Detroit 4 Data Center, Southfield SFJ1 Data Center – all located in Southfield.

There is also the Detroit North Data Center in Auburn Hills, Detroit Data Centers TYM1 and TYM2 and the DTW02 – FSNI – Detroit Data Center in Troy. There is one in Royal Oak, the Royal Oak MI Data Center. The complete list can be found at datacenters.com.

The Southfield City Council just approved a $1.5 billion data center just south of 696, near the Farmington Hills line. The site plan was approved in mid-December 2025, despite objections from two dozen-plus Southfield residents. The project will be the first data center built by California-based developer Metrobloks. Plans call for 217,030 square feet, 100 megawatts of electric power, and occupancy of 12.9 acres of a mostly vacant site along Inkster Road north of 11 Mile. DTE would first have to “deliver power” to the site before construction could begin, possibly in 2027 or 2028. The data center would employ a closed-loop water system, which would use significantly less water than larger "hyper-scale" data centers. The facility is expected to create 35 full-time jobs and 150 to 200 construction jobs.

In Lyon Township, Project Flex is underway. City officials did not return calls or emails regarding the project, but a press release on the township website details the data center project. The project site, South Hill Business Park West, is a 172-acre area zoned I-1 Light Industrial and I-2 General Industrial between Milford Road and South Hill Road. The proposed data center will include six buildings totaling approximately 1.8 million square feet of floor area and a utility substation. As of December 11, 2025, the site plan has not been completed because the applicant has not submitted hard copies of the updated plans and supporting information required by the conditions of approval. Once the township receives the information and reviews it for completeness in accordance with the conditions of approval, the plans will be approved and will be valid for two years, until September 8, 2027. Once the final site plans have been submitted for review, the applicant must apply for a detailed engineering review and obtain approvals from all applicable agencies prior to commencing construction. 

Data centers have been the target of protestors at the Michigan State Capitol. Organizers of the events describe their foundational beliefs as “Michigan needs to slow down and do this right. That means ending special tax breaks for Big Tech data centers, pausing new projects until their environmental, economic, and public health impacts are fully studied, and ending backroom deals by requiring full public hearings at the MPSC. It also means standing with local governments and townships that choose to say no.”

Michigan communities are also seeing a rush of data centers, but they understand they need time to make the best decisions and prepare. Springfield Township passed a six-month moratorium on data center proposals. The Springfield Township Board of Trustees approved a plan that prohibits any data center proposals from being accepted for review, considered, approved, or otherwise allowed during the 180-day time frame. They also reserved the right to extend the time frame if necessary. In a press release from the township, supervisor Ric Davis explained, “at the December 11, 2025, meeting of the Springfield Township Board, we passed a resolution establishing a temporary moratorium on data center applications. This action gives us the time we need to study the impact of these facilities, engage with public safety and utility partners, write enforceable, fair, and protective zoning ordinances and standards, and ensure community input is part of the process.

“With this moratorium in place, we are in a far stronger position than many other communities that were forced to react to data center proposals without time to develop thoughtful, comprehensive ordinances. We are using this time wisely — to plan, to coordinate, and to prepare for development that serves the best interest of Springfield Township,” according to Davis.

The city of Pontiac in recent weeks joined the ranks of communities enacting moratorium.

Michigan is a target for data centers due to tax incentives, a northern climate that helps reduce cooling costs, access to water and rural areas for locations. The first large-scale, hyper-scale data center is the massive "Stargate" project in Saline Township in Washtenaw County, a $7 billion joint venture by OpenAI, Oracle,and Related Digital for AI development spanning 575 acres, with 250 acres to be developed. It is projected to be the largest investment in Michigan history, with construction starting in 2026 after recent regulatory approvals for power supply.

However, the township didn’t want the data center, and the rezoning was voted down twice, according to township attorney Fred Lucas. 

“The data center people came in and made a proposal for a conditional rezoning, which was denied by the planning commission and by the township board. They (along with the landowners) filed suit in Washtenaw County Circuit Court, and after some discussion with separate counsel, the board agreed to enter into a consent agreement back in October,” Lucas said.

Ground has been broken on the site off of US-12 for the industrial zoned site, but not before the parties involved hammered out a consent judgment that actually benefited the township.

“The township didn’t want it. The county board didn’t want it,” Lucas said. “One of three things could happen with the lawsuit. Number one, we could lose and we could end up with data center without a lot of the protections we built into the consent judgement. We could win but we could still have ended up with a data center. Zoning does not apply to schools and other governmental entities. The data center that the University of Michigan is proposing isn’t subject to local zoning. Even if we won, we could have ended up with a data center but end up with a data center that provided no revenue to the township or other protections that we built in. The developer indicated to us that even if their client went away, they would look for another one for this site, even a school. The township made the decision to settle the lawsuit.”

The consent judgment, found on the township’s website, salinetownship.org, provides significant protection for the township. The site can be used only as a data center, with no expansion or solar farms on the property. Two hundred acres of wetland, open space and agricultural land will be preserved for agricultural use, and nearly 48 acres of wetlands and woods are protected by a conservation easement. The center cannot use an evaporative cooling system and will limit water use to restrooms, humidity, landscaping, fire protection and general maintenance. If any nearby wells or ponds go dry as a result of water usage by the data center, the tenant will pay all costs to restore the ponds and wells. A Farmland Preservation Trust Fund to assist farmers was created with an initial $2 million, with another $2 million to be added within a year. A Community Investment Fund of $2 million will be established for use by the township for community investment projects such as playgrounds and other amenities for children. Local fire departments will receive funding from the data center, including $7 million for Saline, $500,000 for Clinton Township, and $500,000 for the Manchester Fire Department, to be used at their discretion.

The developer cannot sell or lease the project to a non-profit, charitable, or other tax-exempt entity. If the data center is decommissioned, the developer will demolish it at its expense and will grade and restore the land. A surety bond of at least $5 million and no more than $10 million will be posted by the developer, and the amount will be reviewed by the township engineer every two years. One of the key requirements is that sound emitted from the operation of the data center will not exceed 55 decibels at all property lines. This would be equal to the sound of a running refrigerator.

“We listened to the concerns of the residents and we incorporated all of that and made it more restrictive than they actually first proposed,” Lucas said. “We figured if we’re going to have to deal with this, we might as well get some money out of these guys. The board decided to deal with the devil they know rather than one they do not know.”

Lucas noted that the landowners were not going back to farming and were even looking at making it a housing development.

“This is a $7 billion-dollar investment when all is said and done. This is the best of a bad situation for the township. It was the least offensive and provided the greatest amount of protection we could give to the residents,” Lucas said.

He also explained that the center will “generate an enormous amount of taxes just from the real estate tax basis, it’s going to provide a tremendous amount of money for both the county and the township and other entities that rely upon local tax and that’s with an industrial development tax break.”

One of the main problems will be the energy needed to run the Stargate facility that is expected to open in 2027. The power needed to run the facility which Consumers Energy officials forecast to be 2.65 gigawatts in new demand in the entire area while DTE officials are negotiating for a three gigawatts’ worth of data center capacity on top of the Saline Township proposal. The entire state of Michigan’s peak electrical demand is near 18 gigawatts. That energy demand could surge by 39 percent. The Stargate Project’s need will be at least 1.4 gigawatts of the 2.65. The 1.4 gigawatt number is equivalent to more than one million homes.

DTE has stated it can ramp up production at existing power plants, buy power on the open market, and build battery storage facilities that can be recharged during off-peak hours to meet the need. But in the long-term, both DTE and Consumers officials have said that they’ll likely build new fossil-fuel plants as they absorb new demand. The utilities insist they can do so while meeting Michigan’s 2040 deadline to achieve 100 percent clean energy but no specifics have been offered.

Spokespeople for both utilities said they will reveal further details next year, when they file what’s known as integrated resource plans with the Michigan Public Service Commission.

“We look forward to working with stakeholders and the commission to chart the best path forward for our customers and the state,” DTE spokesperson Jill Wilmot said in a press release.

Ryan Lowry, DTE Corporate Communications, said, “DTE will serve the proposed Saline data center project with our existing power plants and renewable energy resources, combined with the additional battery storage that the data center customer will pay for. Depending on the number of additional data centers that decide to come to Michigan, and the size of their operations, the construction of new generation plants, both renewable and baseload, may be needed. Generation plans are addressed under the state’s integrated resource planning (IRP) framework, which we look forward to continuing to partner on with the Michigan Public Service Commission and other interested parties.”

Lowry also noted the broader customer base will be protected from data center cost to the grid.

“We appreciate the Michigan Public Service Commission's review and approval of our special contracts for Oracle’s data center project. These contracts protect our customers — including ensuring that there will be no stranded assets — while enabling Michigan's growth. DTE Energy has an obligation to serve any customer, including data centers, that come into our electric service territory in southeast Michigan. That’s why we’ve been so focused on making sure our broader customer base is protected with these contracts to ensure they will not subsidize data center rates. We acknowledge there’s a range of viewpoints and emotions about this decision. We remain deeply committed to supporting our customers and the communities we serve by delivering the safe, reliable energy they depend on each day.”

Matt Helms, Public Information Officer for the Michigan Public Service Commission, declined an interview for this article but did offer a statement.

“The MPSC’s role in data centers is limited to the consideration of utility power supply contracts to serve data centers. We will continue to monitor these contracts in our role as a knowledgeable, impartial regulator committed to consumer protection, fairness and transparency, to ensure that the costs of serving data centers are borne by the data centers and not other ratepayers.”

The MPSC decided that both DTE and Consumers Energy may create a new rate class for data centers in the future, and the changes apply to new customers with a load of 100 megawatts or more, including both data centers and other very large industrial customers. Those contracts will be a minimum of 15 years and stipulate that even if the facility does not use the amount of energy expected, they will pay at least 80 percent of the contracted capacity. Consumers is looking for a data center rate increase while DTE is looking to negotiate individual contracts with data centers.

In regard to the Saline Starship Data Center, DTE asked for the MPSC to approve special contracts that when approved “will not increase rates, rate schedules or the cost of services to customers.”

The MPSC also stated, “In short, the Commission conditioned its ex parte approval of the special contract on commitments from DTE Electric that no costs of serving the data center customer will be borne by other DTE customers.”

Michigan’s data center tax break law requires the facilities to get 90 percent of their electricity from clean energy within six years after being built. Environmentalists say they’ll be closely reviewing data center electricity contracts to make sure they comply.

But on January 9, Michigan Attorney General Dana Nessel filed a Petition for Rehearing with the MPSC concerning DTE’s ex parte approval of two special contracts to service the new Saline Township data center. She wants transparency and not heavily redacted contracts that offer little insight to the DTE and MPSC agreements.

“I remain extremely disappointed with the Commission’s decision to fast-track DTE’s secret data center contracts without holding a contested case hearing,” said Nessel. “This was an irresponsible approach that cut corners and shut out the public and their advocates. Granting approval of these contracts ex parte serves only the interests of DTE and the billion-dollar businesses involved, like Oracle, OpenAI, and Related Companies, not the Michigan public the Commission is meant to protect,” Nessel said.

Nessel further explained, “The Commission imposed some conditions on DTE to supposedly hold ratepayers harmless, but these conditions and how they’ll be enforced remain unclear. As Michigan’s chief consumer advocate, it is my responsibility to ensure utility customers in this state are adequately protected, especially on a project so massive, so expensive, and so unprecedented. As my office continues to review all potential options to defend energy customers in our state, we must demand further clarity on what protections the Commission has put in place and continue to demand a full contested case concerning these still-secret contracts.”

Aside from protecting current customers from underwriting the costs of powering these data centers, another critical issue with data centers is the practice of keeping them cooled.

Most rely on water, using either a closed-loop system or evaporative cooling. One of Michigan’s most precious resources is water, and data centers – depending on how they are cooled – can use an expansive amount of it.

There is also a major concern about the environmental impact on water once it is used to cool these data centers.

Evaporative cooling, a water-intensive process that uses water vapor to cool equipment, can release contaminants into sewer systems or into rural processes that include holding ponds, potentially endangering the environment by releasing harmful, concentrated nitrates that could possibly work their way into aquifers. Although some say that used cooling water can just be sent to local wastewater treatment facilities but not all systems are capable of filtering out the nitrates.

The Saline Township data center will use closed-loop technology, in which cooling water is recycled through the system, reducing the facility’s water use to that of a typical office building. However, this requires more electricity to repeatedly cool the water.

Douglas Jester is Managing Partner at 5 Lakes Energy, where he specializes in economic analysis and modeling for energy policy, and in expert witness testimony before utility regulatory commissions. He’s been an expert witness in cases involving data centers and has also managed data centers.

“Those tax exemptions are very valuable and I think all of these big data centers are going to comply with the requirements to be eligible,” Jester explained. “Basically, if you go back a couple of decades, data centers were air-cooled – essentially giant air conditioners that pulled the heat out and discharged it into the air but now the energy density of the computers is so high that they cannot be air-cooled. They must be liquid-cooled. It can be water, it can be something else.”

Jester also explained there are other alternatives to liquid cooling.

“With dry cooling, they’re not using water at all on the side of discharging the heat. That’s all being done into the air through heat exchangers. And alternatively, it could be used as heat for somebody else if, say, hypothetically somebody wants to put a greenhouse next to a data center or something, the heat can be discharged in a way that it’s usable. Data centers of this size produce an enormous amount of heat, so I’m not suggesting that I think they’re going to use up this heat in productive uses. I’m just telling you that it’s technically feasible. There’s a data center proposed in Lansing from a company called Deep Green. It’s a United Kingdom company. And what they’re proposing is that the heat from the data center go into the downtown Lansing district heating system.”

Oakland County state Senator Rosemary Bayer (D-West Bloomfield) has been involved in legislation protecting residents when it comes to rates for these data centers. But she is also a member of the Great Lakes Legislative Caucus which includes all of the states and provinces that touch the Great Lakes. She specifically deals with water and data centers as chairman of the Water Use Committee.

“I introduced the first three bills associated with data center regulation we are starting to work on it here in Michigan, and other states are doing things. I mean, it’s a very fast-moving industry, and law is not a fast-moving industry. Our challenge is trying to stay in front of it as best we can as there are multiple issues for us here in Michigan,” Bayer said. “When they first came, it was odd, because about three months before the first one showed up to talk to us about it, I had been reading articles about things that were happening on the eastern coast of the United States. Virginia is having a lot of problems. They’ve got way too many. They’ve had aquifers drop. And then you start reading about what’s happening on the west side. It’s worse. I said, ‘You know what, guys, we’re going to need to learn about this.’ And everybody just said, you put it on the list kind of thing. Nobody got to it until there’s one at the door – big data companies, and they wanted a data center. We got in some pretty strong fights about it here in the legislature because people didn’t know enough. Your position was based on a very small amount of information, and so we’ve been struggling with that. But I think we’re starting to get our heads around it, and partly because of my work, to be honest. I’m working in understanding what are the issues and what can be done. And what should be done.”

She noted, “It’s our job to protect the resources that we have, whether they’re people resources or water or fresh air or whatever. We have to do all those things at once and not knowing very much about the industry. We didn’t do a great job. We ended up with one bill that I strongly opposed. It was a tax break bill for them. And that was a big problem for me. I said, “It was one of the world’s richest companies, the most profitable companies, the highest revenue companies in the world knocking on our door and asking for all the electricity they want and all the water they want and giving us basically nothing back. I didn’t like that. I strongly opposed that. And it went through.”

In looking at water usage by data centers if they use it for cooling, Bayer is a staunch protector of Michigan’s water.

“If you evaporate water, it’s gone, and we don’t know how to make more water. We live in a water state and we have aquifers that have dried up because people are not paying attention to the water that’s underground and the realization that most of us get our water from underground,” she said. “In southeast Michigan, most of us get our water from the Great Lakes Water Authority, and that water comes from the lakes and the connectors to the lakes, but the rest of the state is mostly groundwater, so the stakes are the Great Lakes themselves. And forty percent of the water renewal that goes into the Great Lakes every year comes from our groundwater so you know all the water is tied together and we have to be careful. That’s the first issue: if you have choices of how to cool these hundreds of thousands of computers that generate so much heat, you don’t have to do it using evaporation of water. There are other alternatives. It just happens that the least expensive option is to cool them with evaporation. And the reason they want to come to Michigan is we have lots of water.”

Bayer is pushing for regulations to be put in place.

“One of the bills that I introduced this week puts a hard limit on how much water anybody can use in a day. One of the data center companies told us that their expectation is up to five million gallons of water a day evaporated in one data center,” she said.

She explained that potato growers use no more than two million gallons for daily irrigation during the growing season.

“We have to have some kind of prescription on how much water you can use or consumptive use at all, in any case, because in Michigan, because of the way our systems are set up in the Constitution that we have, I can’t say that potato growers can use three million gallons, but other people who do other things, can’t. Right now, we just wrote a bill that caps it at two million because that’s a safe place. None of our current users are going to have a problem with that. We’ll see what becomes law. But in the end, we don’t want anyone to burn away millions of gallons of water a day. In a data center, you can use what’s called a closed-loop system, and this is what the Capitol runs on and what my house runs on, a system called groundwater heat pumps.”

The water used to cool data centers becomes heated, which increases the concentration of nitrates in the water. Higher levels of nitrates are a proven threat to human health.

In Oregon, Amazon data centers filtered the used water and sent it to farms, but the process backfired. Too much of the nitrate-laden water was used for irrigation, and the nitrates filtered back into the aquifer, essentially poisoning drinking water. When that aquifer water was reused in the data center, the nitrate concentration increased even more.

In Saline, environmental groups have flagged major problems in the developer’s wetlands permit application to the Michigan Department of Environment, Great Lakes, and Energy (EGLE). They claim the filings, which cover culvert installations, stormwater outfalls and the destruction of more than 10 acres of wetlands, contain incorrect information, vague mitigation plans, and incomplete site details. The permit also “temporarily impacts” a stretch of a tributary of the Saline River. Discharges from the cooling systems could contain glycol and contaminate local waterways and cause habitat loss for threatened species such as the Eastern Massasauga rattlesnake, Indiana bat, and Mitchell’s Satyr butterfly, according to the Economic Development Responsibility Alliance of Michigan, a nonpartisan group focused on protecting land, water, and taxpayer rights.

Warmer water temperatures often boost microbial activity and nitrogen cycling. Add in evaporation and nitrates become highly concentrated, creating a biohazard when released. The Michigan Department of Environment, Great Lakes and Energy is keeping a close eye on data centers’ water usage and dispersal.

Jeff Johnston, EGLE Public Information Officer, explained, “Data centers in Michigan are subject to the same environmental laws and permitting requirements as other industrial or commercial facilities: Depending on location and operations, they may need permits for air emissions, water use, wastewater discharge, or impacts to wetlands and streams. These permits are designed to protect public health and the environment. Like any other facility permitted by EGLE, data centers would be subject to inspections and routine oversight to ensure compliance with environmental laws.”