How AI data centers are reshaping America’s aging grid

If there’s one thing most Americans can agree on, it’s that they don’t want a data center in their backyard.

A Gallup survey conducted in March found that 71% of Americans opposed the construction of a data center in their local area. Chief among their concerns: energy usage. Half of Americans surveyed by Pew Research Center in July and August said data centers would be mostly bad for the environment and for household energy costs.

Now Google is betting that a massive AI data center can help finance a cleaner, more reliable power grid. Its proposed deal with Xcel Energy would add more wind, solar and battery capacity than the data center is expected to use.

Under the agreement, Google would help pay for the added capacity and continue paying, even if it doesn’t use all of the power.

Pine Island, Minnesota, is a small town of about 4,000 residents an hour southeast of Minneapolis. Google hopes that its new 780-megawatt data center plan will build goodwill with the Pine Island community and keep the company on track to meet its goal of operating on carbon-free energy, 24 hours a day, seven days a week by 2030.

Google — whose cloud business powers its own Gemini AI and brought in nearly $25 billion in second-quarter revenue, an 82% increase from a year earlier — says it has found a model for doing this the right way. The company plans to finance the addition of 1,400 megawatts of wind, 200 megawatts of solar and 300 megawatts of battery storage to Xcel’s grid.

Those additions amount to more than the capacity of the data center itself, which Google said is because wind and solar do not generate energy at all times. Xcel Energy said the new power will serve all customers in the local area, not just Google. Xcel also said the upgrades will help advance the local grid’s carbon-free energy supply.

The proposed agreement between Google and Xcel includes minimum demand charges and exit fees, which Google says will keep the company on the hook for the infrastructure being built on its behalf, even if the AI boom cools. Google will pay for at least 75% of its contracted capacity, even if it uses less, and would owe up to eight years’ worth of those 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,” said Amanda Rome, executive vice president and chief customer officer at Xcel Energy. “That’s where these protections come in.”

The agreement between Google and Xcel Energy is pending approval by the Minnesota Public Utilities Commission.