Meta Platforms' planned Rosemount data center took a step forward Thursday when state utility regulators approved electricity contracts for the $700 million project.
Though it would create only 50 full-time jobs, the data center would be one of the largest construction projects in Minnesota in recent years, employing about 1,000 trades workers.
"It is exciting to see projects like this coming to Minnesota," Joe Sullivan, a Minnesota Public Utilities (PUC) commissioner, said at a meeting Thursday. "They have a really important benefit for all the jobs created."
The Meta data center would also have positive effects for Xcel Energy's ratepayers, he added. Minneapolis-based Xcel expects Meta would be among its top five customers.
The data center would house servers powering Meta's well-known internet sites, which include Facebook and Instagram.
The PUC Thursday unanimously accepted power agreements between Xcel Energy and Meta. The contracts include a discounted rate and contributions from Meta to fund Xcel's diversity, equity and inclusion (DEI) programs.
Meta's data center would be housed on 280 acres in the University of Minnesota's UMore Park along County Road 42. The U's Board of Regents last month approved a $39.7 million land sale to Meta. The deal is expected to close by the end of January.
Meta would like to start the project next year if it gets all necessary approvals, said Logan Martin, Rosemount's city administrator. Menlo Park, Calif.-based Meta did not respond to requests for comment.
Data centers run 24 hours a day and consume enormous amounts of electricity. The increasing adoption of artificial intelligence by Meta and other tech giants requires even more computational power and electricity.
The "initial" Meta data center would draw at least 10 megawatts of electricity, according to a PUC filing. That's expected to rise to at least 75 megawatts by the end of an initial 10-year contract, which Meta can then renew for another decade.
Meta would make monthly payments of $20,000 to support Xcel's DEI programs if the data center's average peak power demand from January through October is 60 megawatts or less. That would rise as Meta consumes more electricity, hitting $100,000 per month if demand is above 150 megawatts.
At Thursday's meeting, PUC Commissioner Valerie Means asked Xcel for specifics about the DEI programs.
Ian Dobson, Xcel's lead assistant general counsel, said the company has met several times with stakeholders to discuss DEI initiatives. "We have a lot of different ideas on the table to see where we want to move forward and where our stakeholders want to move forward."
The PUC will have final approval over Xcel's DEI proposals, which the company said will be aimed at communities of color and low-income communities.
As a large power user, Meta will receive an undisclosed discount off Xcel's general rates. The Minnesota Department of Commerce determined that the discount is not discriminatory to other customers and does not leave anyone "worse off," a PUC filing said.
The Meta data center would provide Xcel with more incremental revenue than costs, and it would benefit the company's ratepayers, the Commerce Department concluded.
The PUC approved a similar electric-services contract between Xcel and Google for Google's planned $600 million-plus data center in Becker, Minn. Google, however, pulled out of that project in December.
Meta, Google, Amazon and Microsoft are the kings of the mega data center market. Meta has 17 data centers operating or under construction in the U.S.
Xcel disclosed in November that it was working on a big data project with a company called "Amber Kestral." In late August, Amber Kestral was revealed to be Meta. The Rosemount City Council in June granted a tax abatement to a company called Jimnist for 280 acres in UMore Park.
Martin, the city administrator, said the city didn't know at the time that Jimnist was another Meta company. Under the abatement agreement, the city will retain the first $1 million in property taxes generated annually by Meta over the next 20 years.
If the $1 million is exceeded, additional tax revenue will be reimbursed to Jimnist. Still, the city is valuing the tax abatement at zero because it doesn't expect the $1 million level to be topped, Martin said.
The abatement agreement is essentially a "hedge" by Meta if the state Legislature changes valuations on data centers in the future, he said.
The UMore land that would host the data center is not currently generating property tax revenue. "We see this as a really big opportunity for the city," Martin said.
Rosemount's blessing of Meta's site plans is among the approvals the data center still needs.
Dakota County does not appear to be offering financial incentives to Meta. A spokesman for the Minnesota Department of Employment and Economic Development said Meta has not applied for any financial subsidies.