As huge data centers spread across country, developers are halting projects in Minnesota

A company has halted two large-scale data center projects in Minnesota, saying the state would take too long to permit backup generators.

Excelsior-based Oppidan has paused work on data centers in North Mankato and the small city of Hampton in Dakota County. While the company is moving ahead with a data center in Apple Valley, the announcement signals that concerns over Minnesota’s regulatory climate will slow an industry that had been poised for explosive growth in Minnesota.

In May, Amazon abandoned plans for a multibillion-dollar data center in Becker after Minnesota utility regulators ruled the company must get a major state permit for power infrastructure to install 250 diesel generators. Amazon cited uncertain development timelines for permitting and other issues for halting the project.

“For context, data center permitting in California is shorter than Minnesota,” said Drew Johnson, senior vice president of development for Oppidan, in a written statement. “We know because we’ve delivered hyperscale projects in California.”

Minnesota has no large-scale data centers, but even without the two Oppidan projects, more than a dozen major data centers have been proposed in Minnesota to help Big Tech grow its artificial intelligence products and cloud computing muscle. Forum News first reported that Oppidan halted the projects.

The influx of data centers has sparked debate over whether the facilities will help or hurt Minnesota’s ambitions for a carbon-free electric grid. Some data center projects have drawn local controversy for their proximity to houses, potential water use and secrecy. Backers of data centers say they bring construction jobs, tax revenue and, potentially, lower electric bills for everyone.

The Minnesota Legislature approved a package of ground rules for the burgeoning industry. The laws impose new rules on energy and water consumption and other measures meant to shield utility customers from paying for the costs of supplying power to data centers.

Late last year, Amazon told the Minnesota Public Utilities Commission (PUC) that its fleet of diesel generators should not require a state permit that would make the company prove the infrastructure is necessary and that there is no cheaper, cleaner alternative.

After the PUC ruled against Amazon, the company and others in the industry failed to persuade the Legislature to relax regulations for backup generators because they would run infrequently and emit little carbon pollution. Diesel is not the only option for emergency power, but it’s the most common in the industry.

Johnson did not rule out reviving the data centers at some point, and some companies, including Google have signaled they still have interest in Minnesota.

But Johnson has also for months said the time to get a permit for backup generation would discourage development in Minnesota. Tech companies with huge demand for AI are looking to build fast.

Christina Brusven, an attorney for Fredrikson & Byron, said she would advise companies that it takes between 12 to 18 months for a developer to get the Minnesota permit data centers need for backup power.

However, no data center company has tried to get that permit yet for backup generators. It might take as long as two years for the first applicants, because the commission likely will need to hash out new issues in what might be a controversial case, Brusven said.

“It’s certainly causing some folks to pause and it’s taking some others to figure out how to navigate the process,” Brusven said. “You’re not seeing investment right now, you’re not seeing people going to construction or actually putting applications in. There might be a little ‘wait to see who goes first.’”

Other projects in the state have shown little evidence that they are close to construction.

The company CloudHQ told the city of Chaska that it’s looking for a large tech company to use its planned data center, and can’t move forward without one, said city administrator Matt Podhradsky. In June, the developer Tract withdrew a land-use amendment application for a data center in Rosemount, according to the city’s community development director Adam Kienberger.

Microsoft bought land in Becker in February of 2024 for a data center but has said little about its plans publicly and hasn’t proposed anything to the city since. Microsoft did not respond to a request for comment on the status of the project.

At a June event celebrating a relatively small data center in Eagan, Johnson told a crowd that Minnesota is, for now, “a very distant last place in our region” for data center projects.

Meta Platforms, the parent company of Facebook and Instagram, is building a data center in Rosemount that will be Minnesota’s first large-scale server farm.