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Google Touts Clean-Energy Deal for Minnesota AI Data Center as Skeptics Question Grid Costs

Google says a 780 MW Minnesota AI data center can finance more clean power than it uses; critics question grid costs.

AI News Feed · 2026-10-19 22:52

CNBC reported that local opposition to data centers is broad. A Gallup survey conducted in March found that 71% of Americans opposed construction of a data center in their local area, with energy usage a leading concern. In a Pew Research Center survey in July and August, half of Americans said data centers would be mostly bad for the environment and for household energy costs.

Pine Island is a town of about 4,000 residents an hour southeast of Minneapolis. Google hopes the 780-megawatt project will build goodwill in the community and keep it on track to meet its goal of operating on carbon-free energy 24 hours a day, seven days a week by 2030. Google’s cloud business, which powers its Gemini AI, brought in nearly $25 billion in second-quarter revenue, an 82% increase from a year earlier, according to CNBC.

Under the proposed agreement, Google would help finance 1,400 megawatts of wind, 200 megawatts of solar and 300 megawatts of battery storage on Xcel’s grid. Those additions exceed the capacity of the data center itself because wind and solar do not generate power at all times, Google said. Xcel Energy said the new power will serve all customers in the local area, not just Google, and that the upgrades will help advance the local grid’s carbon-free energy supply.

The agreement includes minimum demand charges and exit fees. Google said it will pay for at least 75% of its contracted capacity even if it uses less, and would owe up to eight years’ worth of minimum demand charges if it terminates the agreement early. “Nobody wants to have a big buildout and then have nowhere for that power to go and nobody to pay for that power,” Amanda Rome, executive vice president and chief customer officer at Xcel Energy, said in the CNBC report. “That’s where these protections come in.”

Google’s global head of energy and power, Amanda Peterson Corio, said the moment offers a chance to use private capital for aging U.S. infrastructure. “The timing of this industrial revolution couldn’t be more perfect,” she said. “It’s right at the time when we needed capital to fix aging infrastructure in the United States.”

New data centers will account for “most” of the projected increase in electricity demand over the next decade, according to the North American Electric Reliability Corporation, a nonprofit regulator. The Department of Energy under President Joe Biden reported that more than 70% of U.S. transmission lines and power transformers were at least 25 years old and found that the cheapest ways of meeting future demand would require the nation’s transmission system to more than double in size by 2050.

Jigar Shah, a partner at Multiplier, a consulting firm that helps clean energy startups go public, said data center operators could build smaller facilities in places where the grid already has unused capacity. Fitting the load growth into the existing grid would lower rates for everyone, he said, because the system already carries enormous fixed costs for power plants, transmission lines and substations. Shah said operators often choose 1,000-megawatt data centers over 25-megawatt ones because “people are just lazy” and it is easier to contract one large center than about 40 smaller ones.

David Pomerantz, executive director at the Energy and Policy Institute, a utility watchdog, said utilities often prefer building new infrastructure rather than making more use of the existing grid. He said utilities fund part of new investment with dollars from Wall Street investors and earn returns typically around 10%.

Editor's Summary

Google is seeking approval for a 780-megawatt AI data center in Pine Island, Minnesota, tied to an Xcel Energy plan to add 1,900 megawatts of wind, solar and battery capacity, with minimum-payment and exit-fee protections. Xcel says the new power will serve all local customers, while critics say smaller projects on existing grid capacity could avoid costly buildouts. The Minnesota Public Utilities Commission must approve the agreement.