Data center siting and construction have been frontiers of a new Wild West in recent years, but best practices are emerging from the occasionally messy intersection of policy and demand.
On Tuesday, Minnesota utility Xcel Energy announced that it will power a new Google data center. That, in itself, is hardly newsworthy. However, the details of the deal showcase how such massive undertakings can serve not just hyperscalers’ aspirations but also the greater good, helping a state reach its renewable energy goals, financing a utility’s grid upgrades, supporting promising new technologies, and ultimately keeping down the cost of electricity for ratepayers. Minnesotans can thank their legislature for setting up one of the first sets of guardrails for tech companies with data center development aspirations.
The PushBack
The data center will be located in Pine Island, Minnesota, a small city of less than 4,000 folks about an hour south of the Twin Cities. It will support the search engine-turned-compute-conquistador’s core services, including Workspace, YouTube, and Maps.
Google setting up shop in a woodland spot better known for its prize-winning, world-record 6,000-pound cheese on a railroad flatcar was, predictably, met with resistance. A Facebook group called “Stop the Pine Island Data Center” attracted more than 600 members and has been a haven for data center discourse, both constructive and otherwise. A recent post shared an Ohio local news report about data centers’ air pollution and its association with lung issues.
“A lot of this information was provided to the city council back at the September and October meetings,” lamented a group administrator.
Despite their efforts, it appears Google’s project will move forward, pending approval from the Minnesota Public Utilities Commission (MPUC) on its Electric Service Agreement (EAS), the agreement with Xcel Energy to supply power to the site. That’s likely, considering the data center and associated EAS will provide a significant contribution to the state’s economy, including a large buildout of new clean energy projects and an assurance of Xcel customer benefit.
Project Specifics
Under the agreement, Google will pay all costs for its new service in line with its now-typical practices and Minnesota’s regulatory and legislative requirements for large loads (see below). Xcel and Google will partner to bring 1,900 megawatts (MW) of new clean energy online, and Google will cover any new grid infrastructure costs associated with the project. The hyperscaler says it has planned carefully with Xcel to ensure electricity in the area remains reliable and affordable for all of the utility’s customers.
“Data centers are the backbone of the 21st-century economy, and we’re excited to work with Google to advance the prosperity of our region and ensure our current customers benefit,” said Bria Shea, president of Xcel Energy–Minnesota, North Dakota, and South Dakota. “This unique agreement is a model for data center partnerships in that it fulfills and protects Minnesota’s goals for a carbon-free future and drives investment deep into our communities — all while ensuring our current customers are not paying more for this growing demand.”
A Clean Energy Accelerator Charge (CEAC) will provide for 1,400 MW of wind, 200 MW of solar, and 300 MW of long-duration energy storage, along with a $50 million investment in Xcel Energy’s Capacity*Connect Program, which will help drive grid reliability. The additional generation enabled by Google will help advance Xcel Energy beyond its current energy mix of 70% carbon-free electricity and help Minnesota meet its ambitious 2040 100% carbon-free electricity goal.
“Our commitment to Minnesota goes beyond building infrastructure; it’s about being a responsible partner, neighbor, and a good citizen of the grid,” stated Amanda Peterson Corio, head of Data Center Energy at Google. “This agreement supports our goal of expanding AI and cloud capabilities in a way that provides long-term value to the places we operate. By integrating new carbon-free energy and pioneering long-duration storage with Xcel Energy, we are helping to build a more resilient system that benefits the entire community.”
The energy storage portion of the deal comes in an innovative flavor: a 300 MW/30 gigawatt-hour (GWh) Form Energy iron-air battery system installation. It will be the largest battery project by gigawatt-hour energy capacity announced to date in the world.
The 100-hour battery system will store energy during periods of high production and low demand and dispatch it to the grid during times of high demand, providing firm capacity and strengthening grid reliability when it is needed most, even over multiple days.
Form Energy, which has attracted billions of dollars from investors, makes iron, water, and air batteries optimized to store energy much longer than the modern lithium-ion standard, typically a four-hour duration. The active components of its iron-air battery system are safe, cheap, and abundant, offering what the company deems the best solution to balance the multi-day variability of renewable energy. Form Energy’s iron-air solution portends to store energy at less than one-tenth the cost of lithium-ion tech and has no risk of thermal runaway, attractive propositions that address common concerns over energy storage construction.
A Legislative Foundation
Last June, in one of its final acts of the 2025 special session, the Minnesota House passed a bill that sets environmental and energy regulatory requirements for data centers and modifies their sales and use tax exemptions. Sponsored by Representative Greg Davids (R-Preston), SSHF16 passed 85-43 and was sent to the Senate, where it passed 40-26. It was signed into law by Governor Tim Walz days later.
“It represents just the start to actually effectively addressing the risk that data centers pose to Minnesotans,” Aaron Klemz, chief strategy officer for the Minnesota Center for Environmental Advocacy, told the League of Women Voters.
According to Minnesota Legislature reporter Rob Hubbard, the law includes provisions:
- Establishing $2-5 million annual fees for large-scale data centers’ peak electricity demand
- Requiring pre-application evaluation of projects using more than 100 million gallons of water per year
- Allowing the PUC to approve, modify, or reject a tariff or EAS with a data center
- Requiring public utilities to offer a clean energy and capacity tariff for commercial and industrial (C&I) customers
- Including large-scale data centers in the state’s solar energy standard
- Exempting large-scale data centers from requirements under an energy conservation optimization plan
- Establishing that large-scale data centers must attain certification under one or more sustainable design or green building standards
“My concern was that, if we were going to have these large-scale data centers, we darn well needed to have some guardrails on them,” said Rep. Patty Acomb (DFL-Minnetonka). “Some data centers will use over 100 million gallons of water. Some of them will use more energy than the city of Minneapolis. And many of them can have hundreds of backup diesel generators… So Minnesota deserves to have strong environmental protections, strong ratepayer protections, and [to protect] our priorities of reaching 100% clean energy.”
High Praise
Minnesota’s data center legislation established a framework that positions the state for success, argued Former U.S. Secretary of Energy Jennifer Granholm, who praised the Pine Island project’s siting in a LinkedIn post.
“Big announcement this morning! States, take note— this is how data center siting should be done,” she wrote.
“1) MN passes strong legislation with clear rules around protecting utility ratepayers from footing the bill for new data centers; 2) Google signs a deal with Xcel Energy for 1,600 MW of wind and solar, consistent with MN’s carbon-free power goals; 3) Google pays 100% of costs for new electricity and all grid upgrades; 4) they are bringing another 300 GW of long duration (100-hour!) battery storage from Form Energy; 5) Google provides another $50 m for distributed batteries across Xcel’s system; 5) Pine Island gets jobs and economic development and $130 million in new tax revenue.”
“This is a model for other states — bravo to MN and Google and Xcel and Form Energy for showing how this can be done with benefit to all,” Granholm concluded.
Over the past five years, Xcel Energy reports that the average Minnesota residential customer’s electric bills were 27% below the national average. Since 2013, residential electric bills have increased by 1.55% per year, below the rate of inflation.
True To Form?
Massachusetts-based Form Energy recently expanded its manufacturing facility, Form Factory 1, in Weirton, West Virginia. Form Energy broke ground on the site in May 2023 and completed construction of its first high-volume manufacturing facility about a year later. By 2028, Form intends to have more than 1 million square feet of manufacturing space, employ at least 750 people there, and expand its capacity to at least 500 MW.
This isn’t the first deal Xcel Energy has done with Form, either. In early 2023, Xcel Energy entered into an agreement with Form Energy to deploy the latter’s iron-air battery systems at two of the utility’s retiring coal plants.
