Data Centers: Understanding Their Function & Local Impact

Data centers are a hot topic of conversation right now. You’ve probably seen plenty of news articles referencing data centers, their increasing importance in powering our technology-dependent world, and the impact these facilities have on local communities.

To help members understand that not all data centers are the same, or have the same impact, we are answering some commonly asked questions.

What are Data Centers?

A data center is a physical facility that houses computing infrastructure. Organizations use these facilities to store, manage, and process large volumes of data using servers, networking equipment, and storage systems. There are five categories of data centers – enterprise, colocation, hyperscale, edge, and modular – and each plays a different role in our country’s data infrastructure. This reflects an evolution from centralized, company-owned facilities to a mix of shared, cloud-scale, and distributed computing environments.

Data centers are low-rise buildings designed to house rows of servers requiring set temperature and humidity levels. They operate 24/7 with stable power, cooling, and redundancy to avoid service disruptions. This nonstop activity is essential for services that cannot tolerate downtime, including financial transactions, cloud software, emergency communications, healthcare systems, and automated agriculture technologies.

How Do They Work?

Data centers perform several key functions that keep digital systems working reliably. First, they process enormous quantities of data every second, enabling online tools and applications to function smoothly.  Second, they store information securely, often across multiple servers and redundant systems to protect against data loss. Third, they transmit data across networks, acting as hubs that route information efficiently between devices, users, and organizations.

These facilities consume large amounts of power due to their continuous operation and the energy required for computing and cooling. In many cases, a single data center can draw as much electricity as a small town or major industrial load.

Who Uses Data Centers?

Many of the digital services people rely on every day depend on the uninterrupted operation of
data centers. They enable email systems, online banking platforms, and e-commerce transactions by securely housing the servers that manage these functions. Cloud storage, which allows businesses and individuals to access files from anywhere, also depends on server capacity within these facilities.

Data centers support navigation systems, weather forecasting tools, and other mapping technologies that provide real-time information critical for transportation and agriculture. Some farms
depend on digital tools such as precision agriculture platforms, GPS-guided equipment, automated irrigation systems, and remote monitoring devices.  All these systems rely on data being processed quickly and consistently, and data centers make that possible.

Why Build Data Centers in Rural Minnesota?

Minnesota’s rural communities attract data center projects due to land availability and utility infrastructure proximity. Interest in data center development in our state has expanded significantly as both private and public entities look to strengthen digital capabilities. Rural communities are often considered for these developments due to a combination of open land, local interest in economic opportunities, and proximity to existing utility infrastructure.

Data centers can boost rural economies through property tax revenue and economic diversification, though zoning and permits are critical. Job opportunities are also created, although this is primarily a benefit during the construction of a facility.

What is Project Skyway?

Project Skyway, located north of Pine Island, encompasses approximately 482 acres. Ryan Companies US, Inc. is a developer working with the City of Pine Island to prepare the land for future development. Currently, a technology campus, in partnership with Google, is under consideration.

Any necessary electrical infrastructure for this project will be paid for by the developer.  Xcel
Energy is the energy provider for the proposed project site. If a data center is built on the site,
there should be no impact on People’s Energy Cooperative (PEC) members’ electrical service
because the regional transmission line is not part of PEC’s distribution network.

Updates and additional information on the project can be found at pineislandmn.gov/skyway.

How Would PEC Respond to a Potential Data Center?

When we receive an inquiry for any large load, data center or otherwise, we work first with our engineering team. If the project is large enough, we may also utilize Dairyland’s (our wholesale power provider) engineering team to determine the potential impact to their transmission system and the cost before interconnections can be made. This interconnection process includes understanding the strain it may put on the broader grid. If the work goes beyond introductory considerations, the developer will have to pay deposits and other fees to account for staff time and other costs we incur. Additionally, we engage very early with our community partners to identify what the interest in, or resistance to, any projects considering the area would be.

Protecting grid reliability and rate stability remain top priorities for PEC. It is important that we make sure data center growth does not compromise reliability for the homes, farms, and businesses already served by the Cooperative, while exploring opportunities for long-term power usage that enhance rate stability for the future.