With Google project, Minnesota joins the boom in megasized data centers

In the 1990s, the big spending in technology produced giant factories for personal computers and lots of underground tunnels for fiber networks.

A decade ago, that heavy spending was for flat TVs, which led to display-panel factories bigger in square footage than skyscrapers, and for smartphones, which led to plants in places like Vietnam that had never seen high-tech production.

Today, billions are being spent to build mega-size data centers that form the backbone of the internet.

And this time, it looks like Minnesota will get some of the action.

Xcel Energy Inc. disclosed Thursday that it is negotiating for Google Inc. to purchase about 300 acres near the Sherco power generating station, the state's largest, in Becker, Minn., to build a center that consumes about 300 megawatts of electricity and will cost at least $600 million.

Several dozen such large facilities, called "hyperscale" by tech and real estate professionals, have been built by the top U.S. tech companies — Google, Amazon, Apple, Facebook and Microsoft — in the last decade. Midwest travelers can spot giant centers by Google, Microsoft and Apple looming next to interstates in Iowa, with another from Apple now under construction in the state.

The five companies spent about $50 billion in 2017 building giant data centers, consulting firm McKinsey reported, and are expected to have spent more last year. Apple last year announced plans to spend $10 billion over five years on data centers.

Even so, many analysts believe the industry is still in the early stages. "For North America, we're in the top of the third inning," said Pat Lynch, senior managing director of data-center solutions for CBRE, a commercial real estate firm. "We continue to create massive amounts of data."

The boom is being driven not just by that acceleration in the overall creation of data but a shift in where individuals and businesses store it. For example, consumers who used to listen to music they carried on an iPod but now get it streamed from a service like Spotify are likely interacting with such a hyperscale center. Meanwhile, companies that used to house their corporate data on their own premises have in recent years shifted instead into data centers run by other firms. In both cases, such behavior is known and marketed as cloud-based computing.

Just in the last two years, two of the nation's fast-growing providers of corporate data centers, Flexential and Stream, built sizable data centers in Chaska for cloud-based services to businesses. Even some large nontech companies that built data centers for their own purposes in the last decade now offer space in them to other firms.

While the size and costs of hyperscale data centers are huge — Google has spent more than $1 billion on each data center it has built — they are deceptive as economic drivers because they employ few people once they are up and running. The centers are essentially giant warehouses with thousands of computer servers and storage units stacked in racks. Just a few dozen people are needed to ensure that things run smoothly.

But the construction period employs hundreds of people and typically stretches for years as companies add more capacity to each site. Construction on Facebook's data center near Des Moines, for instance, started in 2013 and hasn't stopped. Its fourth phase, now underway, is expected to be finished next year.

Hundreds of skilled electricians are employed during construction of a hyperscale data center, and the building boom has sparked a huge demand for them. Of the 600 to 800 workers at the peak of the Facebook site construction in Iowa, more than half were electricians.

The electric load covers not just operating thousands of servers but keeping them cool and having a complete backup in case power is disrupted to either the computers or the cooling system. As a result, electric-related costs account for about $400 to $500 per square foot of the overall construction cost. By contrast, such costs amount to about $25 a square foot in a typical office building.

"It's a whole world unto its own," says Ole Meerwald, a Minneapolis-based consultant for data-center construction.

The newest centers also build in capacity to have their power and cooling systems updated as improvements come along. Over the past decade, for instance, servers have improved so data centers don't need to be cooled as much as they used to. "We used to be designing meat lockers," Meerwald said.

Builders and operators of data centers judge them by comparing the amount of power that goes to the servers to the amount of power for the whole building, a measure called power utilization efficiency, or PUE.

Google, which for more than a decade has published quarterly reports on its global-energy consumption, said its 15 hyperscale data centers around the world are the industry's most efficient with a PUE of 1.12.

The company for years has designed its own servers to meet energy efficiency requirements it set and, in recent years, just over one-third of the servers it deploys in data centers are refurbished from old ones. In cooling systems, Google doesn't use potable, or drinkable, water to reduce its impact on local water supplies. Instead, it relies on seawater and industrial water that it processes.

Google relies on renewable energy to power all of its data centers. It has been negotiating with Xcel to obtain wind energy for the prospective project in Becker. Google uses its hyperscale data centers chiefly to provide services directly to customers, including products like its search engine, maps, YouTube and Gmail, each of which has more than 1 billion daily users.

Evan Ramstad • 612-673-4241