Amazon must prove it needs 250 diesel generators at Becker data center, Minnesota utility regulators say

Minnesota utility regulators on Friday said Amazon must prove it needs 250 backup diesel generators at its proposed data center in Becker.

The Minnesota Public Utilities Commission (PUC) voted 4-0 to reject the tech giant’s request for an exemption from a “Certificate of Need.” It’s a first-of-its-kind test of how the state will regulate a wave of giant server farms.

The issue has spilled over to the Legislature, where Republicans have advanced a bill to exempt Amazon by changing state law. Many DFLers oppose the idea.

Current Minnesota law says a power plant that can generate 50 megawatts or more of electricity must prove the infrastructure is necessary and that no cheaper, cleaner alternative exists.

Amazon’s diesel fleet would produce 600 megawatts at full capacity, rivaling the output of Xcel Energy’s nuclear plant in Monticello.

Amazon argued the law did not apply to its emergency generators because they would supply only the data center and not the larger grid.

Becker officials said Amazon suspended site-preparation work ahead of the ruling and told the city that a permit process could delay the project by two years and limit the size of the data center. The project would be next to Xcel’s soon-to-be retired coal plant and a large solar farm.

In a statement, Amazon spokesman Duncan Neasham said the PUC’s decision provided “clarity,” but did not say whether the ruling changes the company’s plans in Becker.

“We remain committed to working collaboratively with state leaders to determine the best path forward for any future projects,” he said.

Attorney General Keith Ellison and some climate advocacy organizations said the Certificate of Need was the best way for the state and public to understand the extent of greenhouse gas emissions from the diesel generators and explore alternatives.

In letters to the PUC, Amazon said its diesel generators would run fewer than 15 hours a year for testing and maintenance, then whenever a power outage interrupts the supply from Xcel.

The company said its data center needs on-demand backup within 10 seconds of an outage to keep applications and data running for customers.

Diesel backups are common in the industry, and other new Minnesota data centers will likely want to use them. So the outcome of the Amazon case will resonate beyond it.

Amazon contends it qualifies for an exemption because its data center would use all the electricity produced by its diesel generators, and therefore nothing will flow into the grid.

Becker officials and three construction unions sided with Amazon, saying the issue is outside the PUC’s realm.

A utility “has no business whatsoever with what you do in your home when their power goes out,” said Kevin Pranis, research manager for the Laborers International Union of North America in Minnesota.

Amazon is not asking to be exempt from air pollution permits overseen by the Minnesota Pollution Control Agency. The company also needs a site permit from the PUC.

Commissioner John Tuma, a Republican, said maybe it would be better to have something connected to the larger grid that can benefit others and potentially protect the electric system from problems, such as if the data center itself goes offline.

“I keep hearing from the Amazons and all these [data center companies] that they want to do the right thing, they want clean energy, that’s why they’re coming to plop their data center right next to that solar facility,” Tuma said. “I want to hear that those discussions have happened.”

Some commissioners cast doubt on the idea that obtaining the Certificate of Need would significantly delay Amazon’s project because it could happen along with the site permit.

Minnesota House Republicans have advanced a bill that would exempt data centers from Certificates of Need, which would override the PUC decision.

Amazon and the data center industry supports the bill, but opposition from House DFLers suggests the measure could stall.

A study published in December in Virginia, the world’s largest data center market, said each data center there on average is permitted to have 54 generators and the industry in that state has about 8,000 in total.

Nearly all of the facilities in Virginia use generators that pollute more than what Amazon is planning to install in Minnesota. Amazon’s cleaner diesel generators are more expensive, according to the study.

Virginia found that since 2015, nitrogen oxides emissions — which contribute to smog — from data center diesel generators have more than doubled. Carbon monoxide emissions have tripled and particular matter emissions grew by five times.

Yet those emissions are less than 4% of nitrogen oxides emissions in northern Virginia and 0.1% or less of regional carbon monoxide and particulate matter emissions.

There are at least 11 large-scale data centers proposed in Minnesota, many clustered in the southern Twin Cities metro area. Only one is under construction, an $800 million project by Facebook’s parent company in Rosemount set to open next year.

Meta is planning diesel backup at its data center under construction in Rosemount, but the project will be much smaller than Amazon’s. Meta spokeswoman Stacey Yip said the generators would be “an order of magnitude under the PUC threshold.”

The PUC is still ironing out how it will regulate large-scale data centers and their effect on Minnesota’s electric system.

Last week, the commission ordered Xcel to outline how it will add these new data centers while ensuring other utility customers don’t pay extra costs, meeting the state’s carbon-free standards, and protecting customers from financial risks if the utility builds new power sources for data centers but those projects don’t get built or are smaller than anticipated.