Weekly Fiscal Facts are provided to Wisconsin Newspaper Association members by the Wisconsin Policy Forum, the state’s leading resource for nonpartisan state and local government research and civic education. The Wisconsin Policy Forum logo can be downloaded here.
Massive data centers are being proposed and built in Wisconsin to help power the global boom in artificial intelligence. The centers would significantly increase demand for water and especially for electricity, but do so after years of declining usage of both.
Tech companies are investing billions into the construction of data centers in Wisconsin, building massive facilities to store and process data. There are currently at least 40 of these facilities operating in the state, with more in the works. Projects are planned in Port Washington, Mount Pleasant, DeForest, Janesville, and Beaver Dam, with some drawing strong opposition from local residents.
In 2023, data centers used more than 4% of all electricity consumed in the United States. Federal officials expect that share to increase to between 6.7% and 12% by 2028, according to a study commissioned by the federal Energy Information Administration. Wisconsin is expected to follow that trend, with usage driven by massive investments into these facilities in response to growing demand for AI services.
In the past 20 years, electricity sales in Wisconsin, as measured in megawatt-hours have fallen by 9% — led by a 10.6% drop by industrial and commercial users. Peak electricity demand also decreased, from a high of 15 gigawatts in 2006 to 14.6 gigawatts in 2024, a 2.6% decline.
Based on projections reported to state public utility regulators, peak demand is expected to increase to 17.1 gigawatts over the next five years. Estimates cite the addition of new data centers as the primary driver of this increasing demand, as they have high and consistent energy needs. To meet the increased need for power, electric utilities in the state have proposed billions of dollars of investments in new infrastructure to generate and distribute power.
Large scale data centers like those planned across Wisconsin have, when built elsewhere, used tens of millions of gallons of water annually. While these are large numbers, it’s important to put them in context. Racine Water Works, which supplies the village of Mount Pleasant, saw a drop of more than 2.1 billion gallons in annual water sales between 1997 and 2022. That’s more than 250 times the 8.4 million gallons per year that a new Microsoft data center there is expected to use when fully operational.
Since 2022, water sales by the utility have only grown by 1.9%, despite the presence of the world’s most powerful Microsoft data center. Newer, closed-loop designs also are intended to dramatically reduce the amount of water consumed by the facilities.
Data centers have the potential to create jobs and increase the tax base in communities where they’re built. At the same time, they also would impose significant new pressures on our utility infrastructure. T
The power needs of data centers appear to be one of the most important areas for state and local policymakers to consider. In particular, it has yet to be fully determined how the costs of new infrastructure will be allocated — and who will bear them.
This information is provided to Wisconsin Newspaper Association members as a service of the Wisconsin Policy Forum, the state’s leading resource for nonpartisan state and local government research and civic education. Learn more at wispolicyforum.org.
