“Network” Effects: Michigan Gears Up for Data Center Growth

Co-authored with Justin Ooms, Varnum LLP

Following the state legislature’s passage of sales and use tax exemptions related to qualified data centers and data center equipment through Public Acts 181 and 207 of 2024, Michigan’s two largest electric utilities [Consumers Energy Company (“Consumers”) and DTE Electric Company (“DTE”)] have signaled significant potential growth in data center operations in the coming years. Specifically, in a recent earnings conference call, DTE noted that it is in “advanced discussions with multiple Hyperscalers for over 3 GW of new load” and having “ongoing discussions with multiple other data center opportunities.”[1] DTE has since filed for approval of a supply agreement and energy storage agreement with Green Chile Ventures, LLC, a subsidiary of Oracle Corporation, to serve a data center with an expected load of 1.4 gigawatts.[2] Consumers recently announced that it has “reached an agreement with a new data center, which is expected to add up to 1 gigawatt of load growth” to its service territory,[3] and filed an application with the Michigan Public Service Commission to revise its Rate Book for Electric Service to specifically address data center customers,[4] which the Commission approved on Nov. 6, 2025.[5] In that application Consumers asserted that it “has data center inquiries that total over 15 gigawatts of electric load in the economic development pipeline.” For reference, this represents more than twice Consumers’ current peak load of 7 GW (although Consumers has confirmed the possibility that the 15 gigawatts may include one or more customers submitting requests for multiple locations).

Such substantial load growth—the first in decades—can represent significant local employment and utility rate and municipal tax revenue benefits. Depending on how preexisting fixed system costs are ultimately allocated to the new load, it can contribute significantly to those costs, diluting them and applying downward pressure to other customers’ electric rates. Nonetheless, the power needed for data center buildout will also almost certainly entail significant incremental investment in infrastructure to serve these facilities.  This can be expected to include the improvement of existing infrastructure and the siting of new infrastructure, particularly new thermal and renewable generation, energy storage, and high-voltage transmission lines. More specifically, Michigan’s renewable and clean energy portfolio standards will require that new generation investments comply with legislative mandates for electric providers to serve a percentage of their demand with renewable and clean energy, as defined by statute. Data centers can also be expected to seek to qualify for the tax exemptions referenced above, which include certain clean energy procurement requirements.

Alongside their benefits, data centers—which can occupy between an average of 20,000 to 100,000 square feet[6]—and their associated infrastructure demands also implicate important land use and planning issues that real property and real property-adjacent attorneys should be prepared to help address. For instance, the sufficiency or necessary revisions to existing zoning regulations to address these facilities’ operating characteristics will need to be considered. New generation siting, transmission easements, and access issues may proliferate as the grid expands, particularly given the Michigan Public Service Commission’s (and public’s) ongoing focus on the reliability and resilience of Michigan’s electric system.[7] Construction, operation and maintenance, and end-of life issues for installing, utilizing, and potentially ultimately removing this infrastructure will therefore need to be addressed as well.

Data center developments ultimately represent a particular opportunity for growth in a new and emerging industry and can be expected to drive considerable growth in the energy industry in Michigan as well. This growth implicates a number of important land use issues, however, which require careful consideration as these unprecedented and unique load additions set to materialize.

This publication is intended for general informational purposes only and does not constitute legal advice or a solicitation to provide legal services. The information in this publication is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. Readers should not act upon this information without seeking professional legal counsel. The views and opinions expressed herein represent those of the individual author only and are not necessarily the views of Clark Hill PLC. Although we attempt to ensure that publications are complete, accurate, and up to date, we assume no responsibility for their completeness, accuracy, or timeliness.

Reprinted with permission from the Dec. 1 edition of the “SBM Real Property Law Section Newsletter” ©Copyright 2025 State Bar of Michigan.

[1] https://s24.q4cdn.com/970999156/files/doc_financials/2025/q2/Q2-25-presentation-FINAL.pdf
[2] https://mi-psc.my.site.com/sfc/servlet.shepherd/version/download/068cs00001MH71XAAT
[3] https://s26.q4cdn.com/888045447/files/doc_financials/2025/q2/CMS-Energy-2Q25-Earnings-Release-Combined-Final.pdf
[4] https://mi-psc.my.site.com/s/case/500cs00000TedunAAB/in-the-matter-of-the-application-of-consumers-energy-company-for-ex-parte-approval-of-certain-amendments-to-rate-gpd
[5] https://mi-psc.my.site.com/sfc/servlet.shepherd/version/download/068cs00001Nipc9AAB
[6] https://www.ibm.com/think/topics/hyperscale-data-center
[7] https://www.michigan.gov/mpsc/commission/news-releases/2025/03/03/mpscs-focus-in-2024-boosting-electric-reliability