The rise of data centers: MSU experts can comment

The role Michigan should play in the development of data centers is only becoming a larger issue. As data centers are a national issue with sites being used across the country, over a dozen Michigan communities have been approached with data center proposals.

These centers can be key investments for communities, especially rural regions, with state tax breaks being introduced for companies. However, there are concerns about how data centers will resonate with municipalities, what they could mean for energy costs and the resulting environmental drawbacks.

Experts at Michigan State University can comment on the issues and implications surrounding the growth of data centers.

Data center function and technology

Erik Nordman is the director of the Institute of Public Utilities, and he is an associate professor in the Department of Agricultural, Food and Resource Economics at the College of Agriculture and Natural Resources. He can comment on many issues surrounding data centers.
Contact: nordman7@msu.edu

“Data centers are locations where computers (servers) process requests like routing emails, sharing social media posts or processing financial transactions. They can range from the size of a room up to large warehouses. The largest, or “hyperscale,” data centers may span multiple buildings across tens or hundreds of acres. More information is available through IBM.

“The largest cluster of data centers is in northern Virginia. This was the site of an early internet hub in the 1990s, and the industry grew around it. However, that region’s electric grid is becoming increasingly congested. The large, hyperscale data centers consume immense amounts of electricity. New facilities may need to wait years to connect to the electric grid. Therefore, hyperscale owners are looking for locations that have easy access to electricity and water for cooling the facilities.”

The hyperscale data centers are very large. For example, the proposed data center in Saline Township, Michigan, could occupy 250 acres. A facility that size can only be built where that much land is available — which is in rural communities.”

Dong Zhao is an associate professor in the School of Planning, Design and Construction at the College of Agriculture and Natural Resources and in the Department of Civil and Environmental Engineering at the College of Engineering. He can comment on how data centers work and their technological aspects.
Contact: dz@msu.edu

“Modern data centers are critical AI infrastructure and the backbone of our global digital economy. Energy consumption, especially for cooling, remains a technical change for engineering and research. As power densities increase, we reach a threshold where traditional air cooling becomes physically insufficient. At this stage, liquid cooling transitions from an option to an engineering necessity. This is where water’s role as a natural, highly efficient coolant becomes vital.

“However, engineering provides a diverse toolkit of solutions: It would be evaporative cooling, which uses a lot of water, or closed-loop liquid cooling, which virtually eliminates operational water consumption. In the ‘menu’ of cooling architectures, each choice has distinct trade-offs regarding resource consumption. Our engineering goal is to decouple computational growth from resource intensity; for example, by optimizing Water Usage Effectiveness, or WUE, metrics.”

Economic and environmental issues

Jean Hardy is an assistant professor of media and information in the College of Communication Arts and Sciences, where he is also associate director of the Quello Center for Media and Information Policy and the director of the Rural Computing Research Consortium. He studies the role of technology in rural economic development, including data centers. Hardy also convenes a statewide data center planning and development working group in Michigan.
Contact: jhardy@msu.edu

“Data centers have become a flashpoint in local economic development debates, but the actual outcomes of these facilities are heavily contested. My research on rural technology development and regional transformation shows that economic impacts depend enormously on local context (e.g., existing infrastructure, labor markets, tax structures and community capacity to negotiate with developers). What works in one place may produce very different results elsewhere. Adding to this uncertainty, the contemporary planning and policy landscape for data center development is still taking shape, with municipalities often scrambling to respond to proposals without established frameworks for evaluation. Communities considering data center investments need access to rigorous, context-sensitive analysis rather than generalized promises about job creation or economic growth.”

Erik Nordman is the director of the Institute of Public Utilities, and he is an associate professor in the Department of Agricultural, Food and Resource Economics at the College of Agriculture and Natural Resources. He can comment on many issues surrounding data centers.
Contact: nordman7@msu.edu

“Many states, including Michigan, see data centers as an economic development opportunity. Michigan offers a tax incentive for hyperscale data centers. The data center owners are exempt from state sales and use taxes if they invest at least $250 million, employ at least 30 people above the prevailing wage, obtain 90% of their electricity from clean sources within six years of operation, and meet other requirements. A community that hosts a data center would receive property tax revenue from the facility. That tax revenue can support local services and schools. The facility may also require (and pay for) upgrades to the water and electric utilities, which could benefit the local residents.

“Hyperscale data centers may also bring economic and environmental challenges. Hyperscale data centers consume immense amounts of electricity — in some cases, as much as an entire city. The proposed data center in Saline Township, for example, would use 1,400 megawatts of electricity. That is an amount equivalent to about 1 million homes, or the entire city of Detroit (or Nashville or Boston). There are questions and concerns about how that electric demand will be met, how it might affect electricity and water rates, and how the air pollution could affect air quality and compromise the state’s clean energy and climate goals. Many rural communities have concerns about land use changes as well, such as the loss of agricultural land.”

Government management, regulation and trust

Erika Rosebrook is the director of MSU Extension’s Center for Local Government Finance and Policy at the College of Agriculture and Natural Resources. Her research centers on the relationship between state and local governments and how residents engage with governments. She can comment on the challenges and steps data centers present for local governments.
Contact: rosebroo@msu.edu

“Data centers present challenges for Michigan local governments as they try to balance economic development and community needs. While data centers may create initial investment, improve underutilized property, and add ratepayers to water and sewer systems, they create few, if any, local jobs. Communities will receive some revenue from property taxes, but the ability for Michigan cities, villages, townships and counties to capture revenue from data center operations is limited, so they generally don’t provide a boost of revenue that can be reinvested in the community. As local officials make decisions about data centers, it’s helpful to have a clear sense of how the development fits with community land use and economic development plans and whether the potential benefits outweigh costs over the short- and long-term.”

Erik Nordman is the director of the Institute of Public Utilities, and he is an associate professor in the Department of Agricultural, Food and Resource Economics at the College of Agriculture and Natural Resources. He can comment on many issues surrounding data centers.
Contact: nordman7@msu.edu

“Some states have adopted policies to protect utility ratepayers from price increases caused by data centers. The Michigan Public Service Commission approved a special rate class for data centers and other very large electricity users in the Consumers Energy territory. The rate class requires the data centers to pay for utility infrastructure that is built to serve them and locks them into a 15-year contract. These and other protections are aimed at ensuring that the data centers bear the costs of the massive build out of electricity infrastructure they require.”

Corwin Smidt is an associate professor in the Department of Political Science at the College of Social Science. An expert on American politics and research methods, he also serves as the interim director of the Institute for Public Policy and Social Research. He can comment on government trust and perception.
Contact: smidtc@msu.edusmidtc@msu.edu

“Michiganders trust their state and local governments at higher levels compared to the national government. But trends in MSU’s State of the State Survey show that trust in local and state government eroded during the pandemic, and those lower levels of trust have not rebounded through 2025, especially among local governments.”