TRAVERSE CITY — Michigan analysts are giving more context on what data center developments could mean for individual communities.
The Citizens Research Council nonprofit released a report last month looking into public concerns over data centers, including water use and impact on electricity rates.
“Laws and regulations are in place to prevent adverse impacts, so long as regulatory agencies have sufficient resources to enforce those laws,” said Eric Paul Dennis, a researcher with Citizens Research Council.
The report draws a distinction between data centers of different sizes.
Hyperscale data centers like those supported by Google and OpenAI have only been proposed so far in the southern half of Michigan and can consume the power equivalent of more than a hundred thousand homes.
Dennis says that states like Virginia and Ohio have seen higher electricity rates in recent years partly due to data center demand.
But he says that states like Michigan are further from reaching their energy capacity restraints, and could actually see improvements to rates due to increased use.
“If a utility has a large customer consuming a lot of product and contributing a lot of revenue, it allows the utility to apply that revenue to fixed costs of production, which reduces the cost burden on other ratepayers,” he said.
Dennis also says that public opinion on data centers will likely put pressure on developers to make assurances that their projects wouldn’t increase costs for others.
Dennis discussed different types of water usage plans and says that he has less concern about consumption in Michigan.
Businesses and households across the state of Michigan consumed around 450 million gallons of water per day in 2024, and hyper-scale data centers could use up to 5 million gallons per day.
The state must approve any requests to draw more than 100,000 gallons per day in a process involving public input.
“We have regulatory frameworks in place to protect our waters, and data centers are receiving extra scrutiny, so I don’t see much risk with water consumption,” Dennis said.
Smaller data centers are more likely to use closed loop cooling, which keeps the same water in the system for longer.
Dennis says that his largest concerns around data centers are noise pollution and potential temperature increases in surrounding areas.
He says that local governments should consider those factors when evaluating proposals and have plans in place for monitoring if a project moves forward.