Michigan Utilities Race to Power AI Data Centers, Grid Impact Looms
Michigan’s dominant electric utilities, DTE Energy and Consumers Energy, are embarking on a critical race to secure contracts that will power the burgeoning artificial intelligence sector. This pursuit of deals to serve energy-intensive computing facilities, particularly AI data centers, is poised to reshape Michigan’s power grid, potentially driving up electricity demand to levels not witnessed in decades. However, this rapid expansion also raises concerns among consumer advocates and environmental groups about the potential for increased power bills for other customers and a possible derailment of the state’s clean energy ambitions.
The stakes are high for Michigan’s energy future, with the debate intensifying as DTE and Consumers prepare to file their latest 20-year roadmaps, known as “integrated resource plans” (IRPs), in 2026. These comprehensive plans will detail how the utilities intend to meet future demand, maintain reliability, and comply with Michigan’s new clean energy requirements. Recognizing the significance of these forthcoming proposals, the Michigan Public Service Commission (MPSC), the three-member body overseeing utilities, is already soliciting public input to help shape the planning parameters. A public hearing is scheduled for September 9 in Grand Rapids at Grand Valley State University’s L.V. Eberhard Center, offering residents a chance to weigh in on the state’s energy direction.
Watchdogs are urging close scrutiny, particularly regarding the financial implications. Amy Bandyk, executive director of the nonprofit Citizens Utility Board of Michigan, emphasizes that while IRPs are designed to ensure the most cost-effective power supply, for-profit utilities also have an inherent incentive to pursue capital investments that generate returns for shareholders, potentially at the expense of ratepayers. Bandyk noted that the current situation is “unusual times,” with both DTE and Consumers actively seeking contracts with data centers that could drastically accelerate load growth.
The scale of this anticipated demand is substantial. Consumers Energy CEO Garrick Rochow recently informed investors that the utility has already secured a deal to serve a data center projected to add up to 1 gigawatt (GW) of additional demand by the end of the decade. To put this in perspective, Consumers’ current peak load across the Lower Peninsula is just over 7.5 GW, making this a significant addition. Rochow also revealed a “conservative” potential pipeline of other data centers and manufacturers that could collectively add another 9 GW of new demand. Meanwhile, DTE Energy’s Chief Operating Officer, Joi Harris, stated in late July that the utility is in advanced discussions with multiple “hyperscalers”—large cloud computing providers—proposing data centers that could total 3 GW of new load. These facilities are known to consume up to 50 times more energy than a typical office building. Harris indicated that this initial demand could exhaust DTE’s current 1 GW of excess capacity, necessitating new grid-sized batteries and, eventually, new natural gas-fired power plants. DTE aims to finalize a data center deal by year-end and is in ongoing discussions with tech companies that could bring an additional 4 GW of demand.
The upcoming IRPs will also outline how utilities plan to comply with a 2023 state law requiring a transition to 100 percent “clean” energy by 2040. While the law permits natural gas power plants if equipped with carbon capture and sequestration technology, consumer advocates, including Bandyk, remain skeptical due to the technology’s unproven track record of cost-effectiveness.
Environmental groups express deep concern that a rapid surge in power demand from data centers could prompt utilities to seek “off-ramps” from Michigan’s clean and renewable energy requirements, citing precedents in other states. They argue that this expansion might lead to a failure to meet climate targets and could saddle communities with unnecessary fossil fuel assets. Bryan Smigielski, Michigan campaign organizer with the Sierra Club, warned that the data center industry could prove highly speculative. He stressed that regulators must carefully evaluate this demand as a distinct aspect of the IRP process, asserting that when a single data center can consume as much power as a mid-sized city, it fundamentally alters the resource mix, the types of new power plants needed, and crucially, the rate impacts across all customer classes.
Beyond data center demand, the IRPs will also address a broad spectrum of other critical issues, including the power needs of electric vehicles, homes converting to electric heat pumps, the projected cost of natural gas, environmental compliance, and the rate of rooftop solar adoption. The plans will also detail programs for energy efficiency and flexible power demand to alleviate grid stress. In previous IRPs, both DTE and Consumers have committed to significant transitions, including expedited timelines for closing aging coal-fired power plants.
The MPSC plans additional public hearings across the state, with details yet to be announced. The integrated resource plans will undergo a rigorous legal process before the commission, involving extensive public input and thorough scrutiny from consumer, environmental, and business groups before final approval. Consumers Energy is expected to file its next plan by mid-2026, with DTE following suit by the end of the year, marking a pivotal period for Michigan’s energy landscape.