Why developers come here
North Dakota sells three things: surplus baseload power from lignite and wind, a cold climate that cuts cooling costs for most of the year, and a permissive regulatory climate in which the state does not license data centers at all. The state was an early home for bitcoin mining for the same reasons, and Applied Digital’s pivot from mining to AI hosting at Ellendale and Jamestown gave North Dakota a head start when GPU demand arrived. Industrial electricity averaged 8.18 cents per kWh in the first half of 2026, up from 7.46 a year earlier, still competitive but no longer the bargain it was.
The scale changed in 2025. Applied Digital’s Polaris Forge 1 campus at Ellendale signed CoreWeave to 400 MW across three leases, and Polaris Forge 2 at Harwood, north of Fargo, broke ground on a 280 MW first phase with a lease reported to be with Oracle. A third site in Oliver County followed in July 2026. Sales tax exemptions claimed by data centers jumped from $15.3 million in 2024 to more than $65 million in 2025.
Incentives
- Sales and use tax exemption. N.D.C.C. 57-39.2-04.17 exempts enterprise information technology equipment and computer software bought for use in a qualified data center, including servers, networking, cooling, power distribution, backup power, racking, raised floor, and cabling, plus upgrades and replacements. Building materials are taxable. A qualified data center is a new or substantially refurbished facility of at least 15,000 square feet, at least half used for data processing, completed after December 31, 2020, with fire suppression and enhanced security, and certified by the Tax Commissioner. There is no investment or job threshold, no annual cap, and no sunset in the statute.
- Transparency change (2025). The 2025 legislature added reporting so the Tax Commissioner can publish aggregate exemption totals; the new rules apply to claims by data center owners from 2025 on and do not reach tenants, so a hyperscale lessee’s purchases are not itemized. Totals published in August 2026 were $5.4 million (2021), $7.8 million (2023), $15.3 million (2024), and more than $65 million (2025).
- Property tax. There is no data-center-specific property tax abatement; any local property tax arrangement is negotiated with the county. Applied Digital’s Oliver County project came with a county road-use and operations agreement rather than a state package.
- What did not pass. HB 1579 (2025), which would have given the Public Service Commission siting authority over data centers, was withdrawn and converted to an interim study of large energy consumers. Legislative leaders created a separate interim Artificial Intelligence and Data Center Committee in June 2026, and a special session is considering a temporary ban on nondisclosure agreements between developers and local governments.
Power
Eastern North Dakota, including Fargo, Ellendale, and Jamestown, is in MISO; the western half, including Basin Electric’s and Montana-Dakota Utilities’ service areas, is largely in SPP. Investor-owned utilities (Otter Tail Power, Xcel, Montana-Dakota) are rate-regulated by the Public Service Commission (PSC). The rural electric cooperatives that serve much of the state, including Cass County Electric and its wholesale supplier Minnkota, are not, which matters because the largest projects connect through co-ops.
The PSC has no direct authority over data centers. It sites high-voltage transmission, new substations, and generation, and it sets rates for investor-owned utilities so that infrastructure built for one customer is paid for by that customer. In April 2026 it granted a variance allowing early construction of a $110 million Minnkota substation and 1.74-mile 345 kV line to serve Harwood, with Applied Digital paying for the project and Cass County Electric delivering power at up to 280 MW peak. Applied Digital has also committed $75 million to grid upgrades in eastern North Dakota as it expands west. No state large-load tariff exists; terms are set contract by contract, and the interim Energy Development and Transmission Committee is studying cost allocation and grid capacity for the 2027 session.
Water has been a smaller issue than in the Southwest, but noise has not: Atlas Power’s Williston facility drew a 2023 resident lawsuit, a $5 million noise wall, and confidential settlements in 2026.
Where the projects are
Dickey County (Ellendale, Polaris Forge 1) and Cass County (Harwood, Polaris Forge 2) hold the AI-scale campuses. Jamestown in Stutsman County has Applied Digital’s 106 MW JMS01 site. The next wave is in lignite country: Oliver County near Hanover and Center, and Morton County near Mandan, where the 2026 exemption reporting shows new claims. Williston in the Bakken hosts Atlas Power and other former mining loads.
Local politics
Harwood-area and north Fargo residents objected in August 2025 when Applied Digital’s campus was announced, in part because local officials had known for months under a nondisclosure agreement before the public did; the Dakota Resource Council drew about 100 people to a February 2026 meeting. Oliver County commissioners adopted and then repealed a 180-day moratorium before signing a road-use agreement on July 10, 2026, after the company held town halls and bused residents to tour Ellendale. Ellendale itself has welcomed the company as a taxpayer and employer, and the company has used tours of that campus to reassure other communities.
At the state level, the complaint is less about the projects than about who decides. Legislators such as Senator Brad Bekkedahl have said developers “need to engage the communities” and offer benefits beyond property tax, and the NDA debate is the current flashpoint. Tax Commissioner Brian Kroshus has said the exemption total “will grow without question,” and no repeal bill has advanced.
What a landowner should know
Applied Digital’s pattern is instructive: more than 900 acres contracted at Harwood, a campus designed to scale beyond its first 280 MW, and a site chosen for proximity to an existing 345 kV corridor and a cooperative willing to build a dedicated substation. Sellers in the I-29 and I-94 corridors and near Basin Electric or Minnkota transmission are the most likely to hear from a site selector. Option periods of 12 to 24 months are typical while the developer secures a co-op power agreement and county road-use terms.
Because the state does not license data centers and co-ops are outside PSC jurisdiction, the county commission and the township are the only local approvals, and many rural counties have no zoning. Ask a buyer to identify its power supplier and whether a load agreement is signed. The state contact is the North Dakota Department of Commerce; exemption certification runs through the Office of State Tax Commissioner.