Courtesy QTS Data Centers
An aerial view of the QTS Data Center in Cedar Rapids, Iowa.
A rendering of a 612-acre data center campus in Cedar Rapids, Iowa, operated by QTS Data Centers, one of many 'hyperscale' data centers hitting the country.
There’s a growing sense across Wisconsin that regulations are needed for data centers as several communities across the state are entertaining proposals for these energy-hungry, large data storage and processing facilities.
Madison’s city council unanimously passed a one-year moratorium on approvals for such centers on Jan. 13, a first-of-its-kind move for the state. Though state law currently leaves such centers unregulated, both Democratic and Republican state lawmakers have introduced legislation to safeguard environmental assets and protect ratepayers from increased utility bills. Demand for data centers has grown as AI models become increasingly popular.
The issue is also playing out prominently in the 2026 gubernatorial race. One candidate, Rep. Francesca Hong, D-Madison, is proposing a statewide moratorium on data center proposals. She’d like to see regulatory legislation in place prior to that moratorium being lifted, and would also seek to eliminate a sales and use tax exemption now in place for data centers and use the gained revenue to invest in renewable energy projects.
“The reason for this [moratorium] is so that we can get a clearer understanding of the environmental impact, whether or not there will be long-term economic benefits, as well as looking at rate payers' rate hikes for electricity and water use,” Hong tells Isthmus, adding that, in her view, data centers come with high environmental and economic "risks."
Wisconsin is an attractive site for data center companies due to its relatively low electricity rates and proximity to the Great Lakes. Projects have been proposed in Caledonia, Port Washington and DeForest. Those projects have been met with organized opposition from local residents concerned about potential environmental and energy bill impacts. Microsoft pulled out of the Caledonia project in October due to opposition from the community.
Bloomberg projected in April that data centers by 2035 would account for 8.6% of U.S. electricity demand, “more than double their 3.5% share today.” In order to accommodate additional data centers in Wisconsin, build-out of additional electrical infrastructure will likely be necessary, the Wisconsin Policy Forum found in a January report, but “it has yet to be fully determined how the costs of new infrastructure will be allocated and who will bear them.”
There is bipartisan agreement on the need to regulate data centers, though moratoriums have proven a less popular option. The Greater Madison Chamber of Commerce opposed the city of Madison’s proposed one-year moratorium in public comment during the city council meeting Tuesday night. Zach Brandon, president of the Greater Madison Chamber of Commerce, says in an interview that the moratorium, though temporary, risks becoming a “permanent disadvantage of this region” given rapidly growing demand for data centers.
“We have companies solving big, deep technological challenges,” Brandon says, citing Verona-based healthcare software giant Epic Systems. “And yet we're sending a signal locally, domestically and internationally that we aren't equipped to handle these conversations.”
The chamber would be similarly opposed to Hong’s statewide moratorium: “That would be met with the same answer that we gave to the city.”
Attempting to stymie data center growth could prove contentious. Some cash-strapped municipalities may welcome such centers, both for short-term economic investments that companies offer — Virginia-based company QTS Data Centers, for example, has committed to invest $50 million in “critical needs” in Dane County if its proposed campus in DeForest is approved — and the promise of millions of dollars in annual property tax collections. And though data centers offer minimal permanent jobs, some unions have rallied behind the proposed facilities for the hundreds of temporary construction jobs a given project might create.
Campus-area Ald. MGR Govindarajan notes that local institutions like UW-Madison — which in December received Board of Regents approval to open a college focused specifically on AI — and businesses already rely on data centers for their operations, and that smaller data centers already exist in Madison.
“The country as a whole is at that new point with data centers where you need to think about regulating this kind of technology, rather than prohibiting it altogether,” says Govindarajan, who works as a legislative aide in the Capitol but says he’s speaking from his perspective as an alder. “Yes, we don't want it to impact our Wisconsin environment, the lakes and everything, but we also don't want to stifle where the future is going.”
Agrees Brandon: “We have the largest and best health tech company in the world in our backyard. We are the designated tech hub for personalized medicine and biohealth. I promise you that the future of understanding and curing diseases will be accelerated by artificial intelligence. The idea that we somehow want to benefit from that economically and individually, yet think that we have no other responsibility for its development — it defies logic for us.”
Paulius Musteikis
Zach Brandon
Zach Brandon, president of the Greater Madison Chamber of Commerce, on Madison's moratorium: 'We're sending a signal locally, domestically and internationally that we aren't equipped to handle these conversations.'
It’s not yet clear how much leeway municipalities have to regulate data centers, Madison Mayor Satya Rhodes-Conway told Isthmus in December. “Anything that would look like a building code requirement,” for example, would be under state control, Rhodes-Conway said. That would include energy efficiency standards, which are governed by state building codes.
Dueling bills have recently been introduced in the state Legislature. The proposal from Rep. Shannon Zimmerman, R-River Falls, and Sen. Romaine Quinn, R-Birchwood, would require any water-cooled data centers to use closed loop systems that recycle the water that is used back into the system. It would also require that electric rate payers, through oversight by the state Public Service Commission, not absorb the costs of constructing electrical infrastructure to power data centers and also require operators to report annual water usage to the state Department of Natural Resources.
“[We want] to make sure that we do a better job ensuring that land, water, power and the way that we use them are done in a way that aligns with our values and also ensures that it gives us the opportunity to still be a home to data centers in a more important and hopefully, fruitful way,” Assembly Speaker Robin Vos, R-Rochester, said at a Jan. 12 press conference for the bill.
Another bill, authored by Sen. Jodi Habush Sinykin, D-Whitefish Bay, would similarly require that rate payers, through PSC oversight, not bear construction costs and also require that data centers report annual water usage. It differs from the Republican bill by: requiring annual reports on electricity usage; requiring buildings to conform to state energy efficiency or green energy standards; stipulating that 70% of energy use from data centers must come from renewable energy sources; and creating an annual fee collection to fund state energy projects..
Democratic Gov. Tony Evers has signalled opposition to the Republican proposal; the Democratic one is unlikely to pass the Republican-controlled Assembly and Senate.
Brandon says that though the Chamber has not taken a position on either proposal, he appreciates that both are “looking to find ways to both protect rate payers and the environment and local economies, while understanding that the future is here.” In Brandon’s view, having discussions about such standards is better than “closing the door” on potential projects through a moratorium.
Richard Bock
Francesca Hong.
Democratic Rep. Francesca Hong of Madison says the state needs 'a clearer understanding of the environmental impact' from data centers.
“If you're doing your job as an elected official, you should at least listen to [proposals] and tell the people willing to make multibillion dollar investments in your tax base, ‘What it would take to get to yes?’” Brandon says.
Hong says she has concerns with both the Republican and Democratic regulatory proposals, particularly because, in her view, they lack clear enforcement mechanisms like injunctions.
“It's unclear how we can ensure that there is enforcement around environmental protections and what are the metrics for economic development and long-term and short-term benefits,” says Hong. “I think that's lacking in both bills.”
She says she’ll put in “as much effort as I can” to try to get a moratorium passed through the Legislature if she is elected governor, though she recognizes that supporting such a measure might prove difficult for many legislators worried about economic instability and the desire to create good, union-paying jobs.
“That doesn't mean I'm not gonna try,” she says. She believes she might “get some Republicans with me on this,” citing concerns about land use from rural voters in farming districts.
And, she says, opposition to data centers is getting stronger and more organized.
“Port Washington is getting national attention, when you saw people being dragged out of a city council meeting. Caledonia told Microsoft to fuck off,” says Hong. “I feel like this bipartisan opposition is showing the strength of the purest form of democracy where the people come out, their voices are heard, and then action is taken.”
