Oracle and OpenAI Win Michigan Approval to Power New Data Center
(Bloomberg) -- Michigan regulators unanimously approved a request from utility DTE Energy Co. to power a massive data center development planned by Oracle and OpenAI, during a contentious hearing where some members of the public pushed back on the project.
DTE had asked regulators for expedited approval of its plan to power the multi-billion dollar, 1.4-gigawatt facility in Saline Township. Each of the regulators said Thursday the proposed contracts between the utility and tech firms protected the power grid and regular people.
“They show a net financial benefit to DTE’s other customers,” said Dan Scripps, chair of the Michigan Public Service Commission. He added that the agreements require upfront collateral from the tech companies. “The contract doesn’t assume the customer will stay financially solvent,” he said.
The rapid build-out of data centers in the US has transformed the energy industry, with growing controversy over facilities that can suck up as much electricity as entire cities. The conflict at the hearing Thursday underscores an increasingly hostile environment for data centers in some parts of the US.
The agreement between DTE and Oracle would include minimum monthly charges and a termination fee, according to a DTE filing. The developers are helping to finance the project with a roughly $14 billion debt deal, people familiar with the matter previously told Bloomberg News.
DTE shares were down 0.9% on Friday, while Oracle rose with the broader market.
Citigroup Inc. noted the regulatory process was controversial and that the hyperscaler would be the first to lose power during a system emergency.
“This should help avoid the potential scenario where the lights are on for Oracle’s data center while the public has a blackout,” analysts wrote in a note Thursday.
Analysts with BMO Capital Markets, meanwhile, flagged the potential for more public opposition and challenges to future deals in a note to clients titled “Data Center Scrutiny Growing in Michigan.”
OpenAI has said the Stargate campus in Saline Township is part of its 8 gigawatts of planned capacity in the US and more than $450 billion in investment over the next three years that it’s previously announced with its broader set of Stargate partners. One gigawatt is equivalent to a traditional nuclear reactor.
A DTE representative said in a statement that the utility has the responsibility to serve all customers, including data centers, in its territory.
“We acknowledge there’s a range of viewpoints and emotions about this decision,” it said.
Oracle said the data center will deliver economic benefits and tax revenue for Michigan schools and township. The regulatory approval ensures Michigan customers will be protected from rate hikes, it said in a statement.
The Stargate campus would bring benefits like union jobs, a closed-loop cooling system to reduce water use and grid payments to stop local energy bills from going up, OpenAI said.
“We see this project as a powerful blueprint for how to partner with states and local communities to build AI that benefits everyone,” a representative said in an email.
Scripps was interrupted by data center opponents several times ahead of the vote. After one shouted comment he pointed his finger at the audience and said: “That’s the last one.”
During the hearing, a string of opponents stood in front of the podium to voice their concerns. Tim Bruneau, who lives near the development site, expressed concern about potential air and river pollution in his community.
Others had pointed remarks.
“Your legacy is bowing to the political pressure at the expense of the residents you serve,” said local farmer Beth Foley. “I drive by the project every day and it looks like Armageddon.”
(Story updates with analyst commentary in eighth paragraph and comment from OpenAI in 13th paragraph.)
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