The Facts on Data Centers: 8 Claims You’re Hearing About Hyperscale Data Center Proposals, and What We Know Right Now
As a science and law organization, it's our job to question the hype. Since hyperscale data center developers set their sight on Minnesota nearly two years ago, we've heard a lot of claims about why the state should hurry up and build them. But the facts are often more nuanced. Here are eight claims MCEA took a closer look at, along with what you should know about them.
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1. The claim: Hyperscale data centers will be powered by 100% clean energy in Minnesota because of our Carbon-Free Energy Law.
The facts: Minnesota law requires utilities to provide 100 percent carbon-free electricity by 2040; it does not require an individual hyperscale data center - or any other facility - to run on new, clean energy. That means utilities could still build fossil fuel plants between now and 2040 under the law, provided they offset those emissions by purchasing renewable energy credits produced elsewhere in the country by 2040.
Hyperscale data center development makes it more likely that utilities will resort to that option given their significant energy demand. Data centers draw hundreds of megawatts of power around the clock, and many states have already built new fossil fuel plants or delayed retiring old ones to meet exactly this kind of new demand.
MCEA and our partners will continue to work to avoid new fossil fuel plants in the state, but completing a clean energy transition by 2040 is a massive undertaking, and hyperscale data centers make the job harder. Minnesota’s clean energy law alone doesn't guarantee success.
2. The claim: Hyperscale data centers are helping to fund Minnesota's clean energy transition.
The facts: In order to meet Minnesota’s climate goals, new investments in wind, solar, and battery storage are essential. But hyperscale data centers are not required to fund new clean energy projects in order to build in Minnesota, and only a few of the many proposed across the state have made commitments to do so.
Even in those cases, it remains an open question whether the promised investments will be sufficient to meet the facility's energy use. Take, for example, the projects proposed in Pine Island and Hermantown. Google has announced plans to invest in new wind, solar, and battery storage to power those facilities, but early filings with the Minnesota Public Utilities Commission indicate that the clean energy investments won’t be enough to cover each facility’s new energy demand.
The only way to guarantee hyperscale data centers actually advance Minnesota's climate goals is to require that they are powered with 100 percent clean, Minnesota-sourced energy. We're not there yet.
3. The claim: Water concerns for hyperscale data centers are overblown.
The facts: Water impacts vary widely by project. And because environmental review documents are often quite vague, it is hard to discern the water impacts from any individual facility proposed in Minnesota right now. It matters where the water comes from, how much is consumed, and whether nearby groundwater, lakes, rivers, or other water users will be affected. Some existing hyperscale data centers consume 1 to 5 million gallons daily, the equivalent of 10,000 to 50,000 people. The hyperscale data center proposed in Farmington, Minn., for example, could double the suburb’s daily water use if operated at peak capacity, according to its own estimates.
In Minnesota, hyperscale data centers that propose to use water cooling are likely to use groundwater. But it’s important that the state understands the risks before allowing data centers to pump millions of gallons from our aquifers. Groundwater recharges slowly once it is pumped from underground, and there is no viable strategy for replenishing an aquifer in Minnesota.
Closed-loop and air-cooled systems use far less water on-site, and many facilities appear to be moving in this direction. But these systems are more energy-intensive. And, power plants use significant amounts of water as well. In fact, much of the water use from hyperscale data centers comes from indirect sources, specifically the off-site water use for electricity generation.
That's why careful scrutiny of total water consumption from these proposals is crucial to assess both direct and indirect water use.
4. The claim: Non-disclosure agreements are standard business practice.
The facts: NDAs are common in many legal contracts, but their widespread use in hyperscale data center development has highlighted the consequences that these secretive business practices can have for communities. In some cases, residents in Minnesota weren’t even told that a hyperscale data center was under consideration in their community until after the project’s environmental review was approved. Communities are understandably frustrated by this secrecy, and it robs them of the opportunity to participate in a meaningful public process. MCEA and other organizations have called for a ban on the use of NDAs for municipalities in the hyperscale data center development process because we believe transparency, not secrecy, should be the baseline for projects of this scale.
5. The claim: Hyperscale data centers benefit communities.
The facts: It’s true that hyperscale data center developments bring construction jobs and an expanded tax base. But they bring very few long-term jobs, and they can have significant environmental and quality-of-life impacts that must also be evaluated.
Across the state, residents in communities such as Pine Island, Hermantown, and Farmington have organized to oppose specific proposals, citing concerns about noise, water use, energy costs, and a lack of transparency in how the projects were brought forward. Community members in Hermantown and Farmington have filed lawsuits challenging the proposals.
More broadly, a recent Minnesota poll conducted by the Star Tribune, Kare 11, and the Hubbard School of Journalism and Mass Communication found that just 22 percent of respondents support an AI-driven hyperscale data center being built in their community.
The bottom line is that residents must be able to weigh the pros and cons of a hyperscale data center before proposals advance. That requires conducting a complete environmental review so that communities have the information needed to participate meaningfully and decide what is right for them. Too often, developers and project proposers in Minnesota aren’t meeting that legal bar.
6. The claim: Minnesota already has data centers. Hyperscale ones are no different.
The facts: They are leagues apart. Minnesota's existing data centers typically range from 30,000 to 100,000 square feet and support hospitals, businesses, government services, and everyday internet use. Hyperscale data centers often span millions of square feet and are most commonly used to support artificial intelligence. They have vastly different implications for our natural resources. A typical data center uses about 5 to 10 megawatts of power, whereas a hyperscale data center might use 100 times that, or roughly the equivalent of 100,000 households. Some also put significant strain on local water supplies, depending on how they’re cooled. The facilities also tend to generate a lot more noise and light pollution for nearby residents. Overall, as the facilities get larger, the impacts get larger, and it is reasonable for the state to take a harder look at larger facilities.
7. The claim: AI data centers are necessary for national security/economic competitiveness, and state-level regulation will slow the process down too much.
The facts: The premise that the U.S. is at risk of falling behind doesn't hold up. The US had an estimated 5,427 data centers in 2025, compared with 449 in China. If AI demand and the need for underlying hyperscale data centers are a durable shift in our economy, companies will still need these facilities well into the future, and it is reasonable for Minnesota to require companies that want to do business here to follow our laws, respect our natural resources, and engage in a transparent and democratic process.
8. The claim: Minnesota already has robust environmental protections for data centers
The facts: Prior to 2025, Minnesota didn’t have any laws designed to specifically address hyperscale data centers. Minnesota did pass a law on data centers in 2025, and it was a good start. In particular, it added some energy and ratepayer protections. It also included a process for managing water use, but it is voluntary. There is a lot left to do. Notably, there is no required operating permit for hyperscale data centers, and no state agency oversees their operation. Across Minnesota, cities and towns are being asked to review and manage the potential local, regional, and statewide impacts of hyperscale data centers, which is a very new industry backed by very powerful interests. That is an unfair burden to place on local governments with finite resources. And it doesn’t have to be this way. When other large projects are proposed in Minnesota, state law provides clear rules for how the project is studied and permitted, including oversight by state agencies equipped to assess the technical details of complex, billion-dollar projects and the risks they pose. It makes sense to expect the same for hyperscale data centers, and MCEA will continue to call on state lawmakers to create those guardrails until they deliver.
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