Why developers come here
Minnesota offers a cold climate, abundant water, a MISO grid with strong transmission into the Twin Cities, and a stable utility (Xcel) with a large carbon-free portfolio that helps hyperscalers meet their own clean-energy targets. Meta built an $800 million campus on 280 acres at UMore Park in Rosemount; Microsoft and Amazon have projects at the former Sherco coal site in Becker; Google has proposed campuses in Hermantown and Pine Island; and Tract has a 340-acre, 12-building technology park approved in Farmington. More than a dozen projects have been announced.
What makes Minnesota different is that it decided in 2025 to write the rules before most of them were built. The state repealed its sales tax exemption on data center electricity, created a “very large customer” class at the Public Utilities Commission, and required every large-load contract to be reviewed publicly. Industrial power averaged 9.64 cents per kWh in the first half of 2026, and that plus organized local opposition has left several announced projects stalled.
Incentives
- Sales tax refund on equipment. Minnesota Statutes 297A.68, subd. 42, administered by the Department of Revenue with certification by the Department of Employment and Economic Development (DEED). A qualified data center is at least 25,000 square feet with $30 million invested within 48 months (new) or $50 million within 24 months (refurbished). The 2025 law added a “qualified large-scale data center” category: 25,000 square feet or more across fiber-connected buildings with at least $250 million invested by the facility and its tenants within 60 months after June 30, 2025. Exempt items include servers, networking and storage, cooling, power distribution, backup power, racking, and software kept at the site; building materials, generator fuel, and office furniture are taxable.
- Duration. The Department of Revenue page still lists 20 years from first qualifying purchase or June 30, 2042, whichever is earlier; the 2025 law is reported to have extended the term to up to 35 years per facility and pushed the program sunset out to 2077. Confirm the applicable term with DEED before relying on it.
- Electricity no longer exempt. Starting July 1, 2025, electricity purchases by data centers are taxable. This was projected to raise about $140 million over four years.
- Conditions attached in 2025. Facilities must certify that construction workers are paid prevailing wage and that the building meets sustainable design standards within three years. Data centers of 100 MW or more pay an annual fee to the state’s low-income weatherization (ECO) fund: $2 million for 100 to 250 MW, $3 million for 250 to 500 MW, $4 million for 500 to 750 MW, and $5 million above 750 MW. The Department of Natural Resources may conduct a preapplication water review for projects expecting to use more than 100 million gallons a year.
- Property tax. No state abatement. Cities negotiate local abatements individually; Hermantown’s proposed agreement with Google would have saved the company about $33.5 million over 28 years.
- 2026 session. A two-year moratorium bill, a ban on nondisclosure agreements between developers and local officials, and a requirement that data centers hold their own water appropriation permits all failed after opposition from building trades unions and business groups. The legislature adjourned in May 2026 without new restrictions.
Power
Minnesota is in MISO. Xcel Energy serves the Twin Cities and most of the population; Minnesota Power serves the Duluth and Iron Range region; Otter Tail Power serves the west; Great River Energy supplies most cooperatives. Municipal utilities and cooperatives are exempt from the 2025 large-load rules.
Minnesota Statutes 216B.1622 and 216B.1623 (2025) require the Public Utilities Commission (PUC) to create a very-large-customer class for new loads of 100 MW or more (and “system intensive” loads of 20 to 100 MW), require data centers to pay for all system upgrades built to serve them, require service to stay on track with the state’s carbon-free-by-2040 benchmarks, and require every electric service agreement (ESA) with a large customer to be filed and reviewed at a public PUC meeting.
The PUC approved Xcel’s large-load tariff on May 15, 2026: a 15-year minimum contract, an exit fee equal to 80 percent of remaining demand charges, and a separate rate class for data centers in future rate cases. Minnesota Power has filed its own tariff and Otter Tail has said it will. Two ESAs are pending as of September 2026: Harmony Group LLC (Google) with Minnesota Power for Hermantown (docket 26-159) and Echo Zone LLC (Google) with Xcel for Pine Island (docket 26-170).
Where the projects are
Dakota County south of the Twin Cities is the center of gravity: Meta in Rosemount, Tract in Farmington, and proposals in Lakeville and Inver Grove Heights. Sherburne County (Becker) has Microsoft and Amazon on Xcel’s retiring coal site. Google’s two proposals are at Hermantown, outside Duluth, and Pine Island in Olmsted County. Southwest Minnesota’s Nobles County saw and rejected a $4 billion Geronimo Power proposal near Worthington.
Local politics
Farmington is the reference case. The city approved Tract’s 340-acre Farmington Technology Park in November 2024; eight residents and the Coalition for Responsible Data Center Development sued on November 29, 2024, alleging the rezoning violated an orderly annexation agreement with Castle Rock Township and citing water, noise, and power. A judge issued an injunction, Castle Rock Township filed its own suit in January 2025, and the case slowed the project for nearly two years. The coalition withdrew its suit on September 9, 2026, citing legal costs; the township’s suit appears to remain pending.
Hermantown’s council tabled Google’s abatement and development agreements in May 2026 after residents objected to the nondisclosure agreement that hid the company’s identity behind the code name “Project Loon” and to a tax break for a trillion-dollar company; three council candidates are running on the issue and Google has since scaled the project back. Nobles County commissioners rejected a zoning change for data centers on farmland in April 2026 and ended the environmental review after Geronimo Power withdrew. Rosemount and Becker moved quickly for the jobs and tax base, and the building trades are the most vocal statewide supporters.
What a landowner should know
Twin Cities-area campuses have run 280 to 340 acres; Google’s greater Minnesota proposals are smaller single-user sites. Proximity to an Xcel or Great River Energy 345 kV or 115 kV line is the first screen. Option agreements of 12 to 24 months are typical, and because every large-load contract now goes through a public PUC review with a 15-year commitment, buyers will want to see the utility path before closing. Expect a developer to ask for a nondisclosure agreement; a public-records request is how Google’s Hermantown role became known, so assume the deal will become public. Water appropriation permits come from the DNR, and township orderly-annexation agreements can give a neighboring township veto power over rezoning, as in Farmington. The state contact is DEED’s Data Center Program, which certifies facilities for the sales tax exemption.