How Wisconsin Woos Big Tech

A Microsoft data center is built on land once slated for development by Foxconn in Mount Pleasant, Wis. Work on the 450-megawatt, $3.3 billion campus, seen here on May 8, 2024, has paused twice since workers broke ground in 2023. (Angela Major / WPR)

Wisconsin is no exception to national trends when it comes to courting Big Tech.

The state has seen a handful of new data center proposals, including projects in Beaver Dam, Wisconsin Rapids, Port Washington and Kenosha. Microsoft broke ground in 2023 on a 450-megawatt, $3.3 billion campus in Mount Pleasant at the former Foxconn site, although work on the data center has since paused twice.

Wisconsin lawmakers on the state’s finance committee included a sales tax exemption in the 2023-25 state budget based on a standalone bill that received bipartisan support.

The tax exemption, subject to approval by the Wisconsin Economic Development Corp., includes land, site improvements, IT and cooling equipment and electricity. The agency has approved three data centers to date.

Other states have enacted the model legislation at the urging of utilities and industry groups like NetChoice and the Data Center Coalition. NetChoice’s president noted at a legislative hearing that Wisconsin has long provided exemptions on agricultural and manufacturing equipment and asked lawmakers why they couldn’t do the same for America’s capital investment leaders.

Madison-headquartered Alliant Energy helped pay for a study that determined Wisconsin was at a competitive disadvantage to neighboring states.

The paper estimated that a hyperscale data center developed in the Milwaukee-Waukesha metro region could create 300 jobs, generate $3 million in annual state and local tax revenue and provide more than $87 million in annual economic output.

In a June 2023 hearing, the sales tax exemption bill’s co-sponsor, Rep. Shannon Zimmerman, R-River Falls, said attracting data centers would actually have a “positive effect” on ratepayers’ electric bills from the “consumption and contribution of companies that will build these.”

To qualify for the exemption, a developer must invest at least $50 million to $150 million within five years, depending on the county population.

The state estimated that a typical data center would decrease tax collections by $8.5 million during the initial construction phase, followed by an annual reduction of $735,000. Additionally, if equipment is replaced on a five-year schedule, the sales tax would decrease by an additional $1.6 million on an annualized basis.

Microsoft’s data center campus has inherited additional perks initially designated for Foxconn: discounted electricity rates for Microsoft buildings located within a designated information technology zone. In future phases of Microsoft’s project, the company may purchase Lake Michigan water via the city of Racine, a rare arrangement in light of the Great Lakes Compact, which regulates the use and withdrawal of lake water.

We Energies intends to construct more than $2 billion in natural gas infrastructure, including two new plants and a pipeline, to meet the power demands of Microsoft’s data center, which is its largest anticipated electric load. This prompted concerns that ratepayers will be saddled with the new, fossil-fuel plants if the data center project is scaled back or canceled.

The utility has objected to such concerns, noting that the infrastructure is necessary to increase “reliability, resiliency, and dispatchability” of natural gas for its current customers.

Additionally, it has proposed a new rate structure, known as a tariff, for “very large customers,” which the company developed to meet the Microsoft and Port Washington data centers’ electric needs.

The rate would assign costs that result from new or expanded power plants and transmission lines along with electricity proportional to data center use, thereby protecting We Energies’ “customers and shareholders from harm.”

Wisconsin’s utility regulator, the Public Service Commission, is reviewing the proposal. We Energies has requested approval by the year’s end.

This article first appeared on Wisconsin Watch and is republished here under a Creative Commons Attribution-NoDerivatives 4.0 International License.