Michigan's Grid & Data Centers

Michigan uses 21 GW of power at its peak, and 17 GW on average. In 2015 Michigan was over-built with 31.6 GW of base load generating capacity.

Michigan at the time was the golden child on the MISO grid as it could easily support the other 15 states in the MISO network as well as parts of Canada. At the same time, the period from 2015 to 2025 was10 years of stable energy usage – in large part because we became much more efficient. Think LEDs.

Despite knowing that EVs, Heat Pumps, Factories, and Data Centers could easily double in the near future, the US and Michigan embarked on dismantling 10 GW of its base load power plants - about 1/3 of its 2015 capacity.  Today, Michigan has 23 GW of base load capacity.

Now the demand for electricity is spiking, and all of those base load plants will need to be rebuilt.

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The reality is that Michigan’s Grid can absorb only about 30% in intermittent power.  The most recent MISO report specifically mentions this issue - and Michigan’s grid is already pushing up against this limit in the summer.  By the end of 2026, Michigan will have reached its summer maximum with the build-out that is occurring. 

 

We now need to focus on our infrastructure and storage for renewable power.  It makes little sense to install more renewables after the end of the year without installing storage and additional base load power.

 

Let's leverage data centers to help address this issue with no cost to the electric consumer.  And let's get our rules in place before we are forced to do so under the Defense Production Act.

 

We need legislation that does the following:

• Water Use – this is actually easy

  • Simply ban data centers from withdrawing water from an aquifer or municipal supplies (other than for on site facilities and the initial charge of a closed loop system)

  • Let American ingenuity figure this out.  Bill Gates, Nvidia and the Chinese already have solutions for this.  There are others on the drawing board.

• Noise

  • This is also easy, but can be expensive.  Simply set a standard and let industry figure it out. The Chinese and Nvidia have already solved this.

• Power & Transmission

  • Use this demand to solve our base load power issue in Michigan – should we choose to build data centers.  Meet the grid operator’s 115% requirement plus another 10% for everything else we are building, like EVs, heat pumps, and new factories.  Require that the excess be fed into the grid at no charge.  This will dramatically lower costs for consumers.

• Rural Labor

  • All construction contracts must be open shop.  One of the bottle necks is that there is not enough labor available.  Union-only ideas make no sense.  We can’t be flying in out-of-state union labor while at the same time not allowing local labor to participate.

• Local Community Approval

  • This decision should be up to the local community.  Just be aware that the federal government can pre-empt these siting decisions in the future.

• AI Processing Revenue

  • A processing royalty would do 2 things:

    • Make Michigan less attractive for data centers.

    • But generate revenue if we either agree to build them or are forced to.

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This is what a data processing royalty might look like:

• ​Impose a 1/10th of a cent royalty on every petaflop of usage at data centers. 

• This would be distributed to the township, county, and state. 

• While year one for a 1 GW data center would be $30,000, that number would increase to $300 million by year 15 due to increases in data processing speed in chips.

• If we had 100 data centers, revenue to Michigan would be $30 billion.

• The Petaflop royalty will allow Michigan to enjoy the benefits of the AI Boom and lower property and other taxes.

 

Taxing the energy used by data centers is a fool’s errand.  Data centers will become more and more efficient, and that number will only go down.