While Wisconsin’s data center boom is expected to drive up energy demand, the Wisconsin Policy Forum says it’s “difficult to assess” just how much these facilities will strain state energy and water infrastructure.
The group yesterday issued its latest report, which is focused on how planned data centers could change the state’s utility landscape as demand for AI drives widespread development.
WPF says the largest “hyperscale” data centers — like the ones being planned around Wisconsin — use up to 1 gigawatt-hours per year. Each facility would use about 1.5% of the state’s total energy production, according to the report.
But authors note these centers aren’t evenly distributed in Wisconsin, with several proposed facilities popping up in small communities where they would lead to an “enormous” increase in local energy use.
“In some cases, this requires a large investment in transmission lines,” they wrote. “In addition, while a single data center may not change the overall power needs of the entire state, given the number of new data centers planned in Wisconsin, they are projected to drive up demand for energy to a point where additional investments in power plants will be required.”
At the national level, data centers used more than 4% of all electricity consumed in 2023, the report shows. That’s expected to rise to between 6.7% and 12% by 2028, based on a federal Energy Information Administration study cited in the report. WPF says Wisconsin is expected to generally follow that trend.
Still, the group notes this rising demand comes amid falling energy sales in the state. Total energy sales by Wisconsin utilities have fallen by 9% since 2005 while peak electricity demand has fallen by 2.6% over the same period.
“Given that planned and potential data centers could require costly utility upgrades, it will be important to ensure those potential costs are fairly distributed,” authors wrote.
The report also explores potential impacts on water usage in the state, noting large data centers have previously used tens of millions of gallons each year. But authors say utilities in the state have billions of gallons of unused water sales capacity, driven by large industrial users either leaving the state or becoming more efficient at using water.
At the same time, data centers are also rolling out new closed loop cooling systems that aim to “dramatically” reduce water usage. Authors note future developments in this area may lead to fewer concerns over water consumption by data centers. But they say some new infrastructure, such as water mains, would need to be built for the new facilities.
They also say increasing water use “actually could benefit customers” of utilities in Wisconsin by spreading infrastructure costs over more gallons of water sold.
“However, to the extent that new water infrastructure is needed to supply these data centers, ratepayer costs could rise unless the data center developer pays for it,” authors wrote. “In some cases, developers appear willing to do so.”
See the report.
