Amazon wants to limit review of 250 diesel generators at its Minnesota data center

Amazon wants to install so many backup diesel generators at its potential data center in Becker, Minn., that the maximum power output would rival Xcel Energy’s nuclear plant in Monticello.

The Seattle-based tech giant also wants that fleet of 250 emergency generators to be exempt from a state permit that would require Amazon to prove the infrastructure is necessary and that there is no cheaper, cleaner alternative.

Under state law, a power plant that can generate 50 megawatts or more of electricity and uses transmission lines to connect to the grid must get a “Certificate of Need” from the Public Utilities Commission (PUC).

Company officials argue the law doesn’t apply to its generators and that red tape could hurt its ability to quickly build a mega project that could bring construction jobs and tax revenue to Minnesota.

The exemption request made to Minnesota utility regulators has drawn opposition from environmental organizations, as well as state officials.

Attorney General Keith Ellison said the PUC should closely scrutinize the data center plan, in part because of diesel’s greenhouse gas emissions and other pollution.

“Energy generation technology is rapidly evolving and potential alternatives to diesel backup may grow or become cheaper,” Assistant Attorney General Katherine Hinderlie wrote in a Jan. 31 regulatory filing. Without the permit, “the ability to explore reasonable alternatives from evolving technologies may be cut off.”

The debate over Amazon’s backup diesel plan is the first of its kind in Minnesota. The state has no large-scale data centers yet, but tech companies and utilities are planning an influx of these power-hungry facilities.

That makes the decision a test for the PUC. The board’s ruling, expected Feb. 28, could set a precedent for other data center projects.

At the same time, Republican state lawmakers have advanced a bill that would exempt data centers from the permit requirement, taking the issue out of the PUC’s hands.

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

The data center needs on-demand backup within 10 seconds of such an outage “because it provides customers, including hospitals and first responders, with reliable and secure access to their critical applications and data,” Amazon wrote in a letter submitted by attorney Christina Brusven on Feb. 10.

These generators would only power the data center, separate from the larger electric grid. Diesel backups are common in the industry and other new Minnesota data centers would likely use them.

Amazon contends it falls below the 50 megawatt threshold for a Certificate of Need, even though its diesel generators could produce up to 600 megawatts.

The company believes what counts is power transmitted to the grid. Since Amazon’s data center would use all the electricity produced by its diesel generators, the effective output would be zero.

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

Becker officials and three construction unions sided with Amazon. The city and those unions pressured the PUC to act quickly, saying a long regulatory process could delay or scuttle the project.

Amazon compared its plans to a 1993 case involving Xcel Energy. The PUC then exempted Xcel from a Certificate of Need to install a much smaller set of backup diesel generators at its Prairie Island nuclear power plant to cool the reactor core during an outage.

Ellison and the Commerce Department maintain the diesel would surpass the 50-megawatt threshold under their interpretation of the law.

The AG’s office also said that, unlike with Amazon’s data center, federal regulators required the generators at Prairie Island.

Hinderlie, the assistant AG, told the PUC that Amazon choosing backup generators still affects the grid even if the diesel fleet wouldn’t be connected to it.

For example, Hinderlie said air pollution permits will limit how long diesel generators can be used. She said a cleaner backup power source could be used more extensively, and hooked up to the grid to cut costs or help the bigger system in times of high power demand.

Amazon is not asking to be exempt from air permits overseen by the Minnesota Pollution Control Agency.

Data centers are exploring natural gas, fuel cells and other alternative technology as backup power that could mitigate emissions, Hinderlie wrote.

Amelia Vohs, climate director for the Minnesota Center for Environmental Advocacy, said other state permits Amazon needs don’t allow regulators and the public to effectively evaluate alternatives.

She said there is no common understanding in Minnesota of whether there even are other options because the issue is so new. For example, she said she didn’t know if Amazon is picking diesel because it’s cheapest, or if the company could pair diesel along with solar and batteries.

“All of that discussion is absent” without a Certificate of Need, Vohs said. “Amazon is the keeper of that information.”

Meanwhile, state House Republicans heard a bill Thursday that would exempt data centers from a Certificate of Need and let cities handle an environmental analysis.

The legislation was introduced by Rep. Shane Mekeland, R-Clear Lake, who represents Becker. The data center industry supports Mekeland’s bill, but opposition from House DFLers suggests the measure could stall.

Still, the Commerce Department was open to the concept. The agency said Thursday that changing that law to exempt data centers would be all right as long as the PUC, not cities, handle environmental review as part of a site permit.

Mekeland said in an interview that Amazon’s plans are the same as a hospital or other businesses wanting backup power, only bigger. Amazon’s backup electricity should not be regulated like a public utility, he said.

“This power is not to be sold to the public,” Mekeland said.