Amazon is facing scrutiny and significant pushbacks over its plan to install 250 diesel backup generators for a proposed data center in Becker, Minnesota.
Much of the concern had been due to the fact that the hyperscaler was seeking an exemption from the state’s standard permitting process, a move that has sparked opposition from environmental groups and state officials.
Aggregate Power that Matches Nuclear Power Generation
Amazon’s proposed fleet of diesel generators would have a maximum power output almost equivalent to the 647 MW that is produced by Xcel Energy’s nuclear plant in Monticello, one of the two existing nuclear generation stations in the state.
Meanwhile, as reported by Datacenter Dynamics, according to a real estate filing published with the Minnesota Department of Revenue, the land parcel assigned for the Amazon data center in Becker was previously part of Minneapolis-based utility Xcel’s coal-powered Sherco Site.
Amazon argues that the diesel generators in question are essential to ensuring reliable and secure access to critical data and applications for its customers, including hospitals and first responders.
However, opponents worry about the environmental impact and the precedent it may set for future large-scale data center developments in the state.
The Law and Its Exception
Under Minnesota state law, any power plant capable of generating 50 megawatts or more that connects to the grid via transmission lines must obtain a Certificate of Need from the Public Utilities Commission (PUC).
This certification ensures that the infrastructure is necessary and that no cheaper, cleaner alternatives exist.
Amazon, however, contends that its generators do not fall under this requirement because they are not connected to the larger electric grid; power generated would be strictly used by the data center suffering an outage from its primary power source.
That power would be generated locally, and not transmitted over the public grid, as defined by the regulations.
Despite the potential to produce up to 600 megawatts collectively, Amazon maintains that their usage would be limited to fewer than 15 hours per year for testing and maintenance, plus any power outages.
The state’s contention that the backup power meets the threshold for the Certificate of Need applies to the aggregate generation capability, and not the individual generators, which themselves fall well below the 50 MW bar.
History Rhymes
If you feel like you’ve heard this story before, you have.
In October 2023, Aligned Data Centers pulled out of the Quantum Loophole data center project in Maryland, after the state public utility commission told them that under the current rules, at the time similar to Minnesota’s, they would require individual permits for the 168 backup generators they planned to install to support their planned 264 MW hyperscale data center campus.
Responding to the challenges faced by Aligned and aiming to bolster the state’s appeal to data center operators, Maryland enacted the Critical Infrastructure Streamlining Act of 2024. Signed into law by Governor Wes Moore in May 2024, this legislation redefined “generating stations” to exclude backup power generators used by data centers, thereby exempting them from the previously required Certificate of Public Convenience and Necessity (CPCN).
This regulatory shift was designed to streamline the approval process for backup generators, addressing a significant barrier that had previously deterred large-scale data center projects in the state.
The passage of this act underscored Maryland’s commitment to adapting its regulatory framework to accommodate the evolving needs of the data center industry, reflecting a broader trend of certain states reassessing policies to attract and retain such critical infrastructure investments.
Environmental Concerns and State Opposition
Amazon’s request for an exemption for data center diesel generators in Minnesota has drawn significant pushback from environmental organizations and state officials, including Minnesota Attorney General Keith Ellison.
Assistant Attorney General Katherine Hinderlie emphasized in a January 31 regulatory filing that diesel generators contribute to greenhouse gas emissions and air pollution.
She further argued that granting the exemption could stifle the exploration of cleaner, more cost-effective alternatives as energy technology evolves.
As yet, the Attorney General’s office hasn’t offered alternative proposals, taking the stand that not permitting the backup generators will encourage development of cleaner solutions.
Implications
Critics worry that allowing Amazon to bypass the Certificate of Need process could lead to unchecked expansion of diesel backup power in the state.
Minnesota lacks a significant hyperscale data center presence, with the site Data Center Map indicating that the state currently has 61 data centers, clustered primarily around Minneapolis.
But industry experts anticipate an influx of power-intensive facilities in the coming years, especially as data center operators look for previously untapped land and power resources.
The fear appears to be that approving Amazon’s exemption could pave the way for similar requests from other companies, potentially increasing reliance on diesel power despite the state’s clean energy goals.
Where Do They Go From Here?
Minnesota’s PUC had to determine whether Amazon’s exemption request is justified or if the company must undergo the full regulatory review. The decision was expected by the end of February.
Sure enough, as reported by The Washington Post on March 1, Minnesota regulators denied Amazon’s request to exempt 250 backup diesel generators from the state’s permitting process.
The Minnesota PUC has ruled that Amazon must obtain a “Certificate of Need” for the backup generators at its planned data center campus in Becker.
The decision places the burden on Amazon to demonstrate that the generators are necessary and to evaluate whether more cost-effective or sustainable alternatives exist, in line with state regulatory requirements.
The ruling was welcomed by environmental advocates. “Even if an energy source isn’t directly connected to the grid, it still has huge impacts that need to be examined and questioned, especially at the scale we’re talking about with hyperscale data centers,” said Sarah Mooradian, policy director for CURE MN, in a statement to The Washington Post.
Amazon, for its part, framed the decision as providing regulatory clarity. In a statement, the company said it remains committed to working with state officials to determine “the best path forward for any future projects,” according to The Post.
With increasing pressure from environmental advocates and state officials, the decision could set a precedent for future data center developments in Minnesota and beyond.
Changing the Law
What happens next remains uncertain. What the PUC’s decision means for Amazon’s data center plans in Becker is unclear. However, as The Star Tribune locally reports, Minnesota House Republicans have introduced legislation that would exempt data centers from Certificate of Need requirements—potentially reshaping the regulatory landscape for future projects in the state.
Local media had previously reported that the state’s Republican lawmakers put forward a bill that would exempt data centers from the permitting requirements, which would mean the utility commission would not longer be part of the development process.
This is effectively what happened in Maryland in the aftermath of the high-profile decision by Aligned Data Centers to pull out of the Quantum Loophole project. As referred to above, less than four months later, the Governor of Maryland signed the Critical Infrastructure Streamlining Act of 2024, which took the responsibility for the permitting of backup generators for data centers away from the governing authority that had denied Aligned’s request.
While media coverage in Minnesota seems to be presenting the legislative attempt to address this issue strictly as a down the line political battle, it should be noted that the government of Maryland is completely controlled by Democratic Party lawmakers.
In Maryland, the legislative change had its desired effect, with Aligned Data Centers almost immediately relaunching their data center development plans in Frederick, MD. At the time a spokesperson for aligned described the change to the permitting process as paving the way for billions (of dollars) in potential investments in the state and significant job growth.
Conclusion
As the debate in Minnesota unfolds, stakeholders on both sides now must factor in the PUC’s decision, which could shape the trajectory of Minnesota’s energy infrastructure and data center development in this digital driven climate. With the model of the Maryland legislation to refer to, it will be hard to deny the benefits of data center development to the tax base of impacted communities.
Meanwhile, on March 4, Reuters reported that renewable energy company GE Vernova, who deals significantly in natural gas turbine generation, has signed an agreement with Amazon’s cloud services business to support the e-commerce giant’s data center expansion plans. GE Vernova said the agreement with Amazon Web Services (AWS) would address rising global energy demand, enhance grid security and reliability and reduce carbon emissions from electric power systems.
