Bigger data centers are coming. How can Wyoming get ahead of the boom?

As data centers pop up across Wyoming, many communities are concerned about what this could mean for utility rates and water use.

But there are ways to get ahead of these issues, according to a November white paper from the Wyoming Outdoor Council, a nonprofit conservation advocacy group based in Lander.

The paper highlights potential legislation to make data center developers pay for adding demand to the power grid, reduce greenhouse gas emissions and be accountable to the public.

“We do just need to get in front of the boom and not have to play catch up,” said Jocelyn Wulf, the Wyoming Outdoor Council fellow who wrote the paper.

This comes as counties approve large hyperscale data centers, including one from Tallgrass and Crusoe in Laramie County, which could be the largest single artificial intelligence campus in the country.

Wyoming lawmakers have yet to file bills specifically tied to data centers for their upcoming budget session, which kicks off Feb. 9. But Wulf is hopeful they will pass legislation in the coming years.

She sat down with Wyoming Public Radio’s Hanna Merzbach to talk about her research.

Editor’s Note: This interview has been edited for clarity and brevity.

Hanna Merzbach: Why did the Wyoming Outdoor Council decide to study this topic?

Jocelyn Wulf:  We're paying pretty close attention to data center development right now because Wyoming is kind of at the very beginning of what could be a major data center build-out, especially a major hyperscaler data center build out.

Courtesy of Jocelyn Wulf

HM: For our listeners who haven't heard of these before, these hyperscale data centers are essentially really big data centers, right?

JW: Absolutely, they can be 10 to a hundred times bigger than your regular data centers that you might have seen even just 10 years ago. They're consuming upwards of 350 megawatts of power a day, which just for context, is about as much power as a small city [like Cheyenne] consumes.

What's drawing them in is pretty straightforward. We have a lot of open land, a cool climate that reduces cooling costs, comparatively cheap power, a pretty light regulatory environment and also very generous sales tax exemption. So, all of those factors taken together — and especially the tax breaks — make Wyoming extremely attractive to these hyperscale data center developers.

HM: One of the things you all are really looking at is energy generation. The Tallgrass-Crusoe project in Laramie County is projected to use more energy than all of Wyoming households.

JW: Yes. And that is a huge amount of power. There are two options for data centers to really get that energy.

The first option is, they tap into the preexisting grid. They can put enormous strain on it, so utilities have to build out a lot of infrastructure to support them. That's extra power plants and extra transmission lines, and that obviously costs a lot of money.

There are concerns about whether your average Joe residential ratepayer would have to foot the bill for that. The answer is that it depends. You see a lot of data center developers working hand in hand with utilities to make sure that doesn't happen, but it's by no means required of them.

I think that's something for the state to look into. And actually, they did start looking into it in the last year with their drafted, but not introduced, “Extremely large electrical loads” bill. I would say look into this again, very seriously, so that those ratepayers can be protected.

HM: A lot of data centers, like one being developed in Evanston from Prometheus Hyperscale, are turning to a concept called “islanding.” They're creating their own private power plants and not connecting to the grid at all, in part because making those connections are very difficult. They're able to take away this potential strain from ratepayers this way, but it seems like you found some challenges with that model as well.

JW: Yes, that is door number two. It's not a super well-regulated space. The Wyoming Public Service Commission has regulatory authority over these kinds of power plants, but the utilities overall are pretty frustrated that they don't have any power here regarding regulations, especially since it does prevent them from being able to accurately forecast load growth for the future, perhaps a future where those data centers are gone and they do have to integrate that islanded power plant back into the grid. It creates some potential logistical problems for down the road.

HM: These data centers need a lot more power. In some places this has meant keeping coal plants alive or relying on more natural gas. What are some of the ways we can get ahead of those emissions?

JW: There are certainly environmental concerns with regard to greenhouse gas emissions with all of this new energy production that we are seeing and that we're going to see. One of the biggest tools I think Wyoming could use is adding incentives for these data centers to operate more cleanly, to have goals for operations, so we don't release this egregious amount of emissions into the atmosphere.

HM: In what other ways could data centers impact the environment?

JW: I think water is really the big one here. Whenever I talk to people about data centers, their first question is, ‘Don't they use so much water?’ Traditionally, data centers have been huge consumers of water. They use thousands of gallons of water every day to cool their operating systems so that they don't overheat.

However, with the rise of hyperscale data centers, we're seeing this new air cooling technology. You pump cool air through the system. This does take a lot of energy.

There's also closed loop cooling, which is where you take water up from an underground aquifer and run it through the system. It then heats up and goes back into the aquifer and gets cool again.

I think the problem really here is that the research just isn't there yet, so we do have to take what these data centers are saying with regard to water at face value. I think that increased transparency, increased public reporting around water use would be important. Water is a public good. Why should there not be public reporting about it?

HM:  It sounds like compared to a lot of other places in the West, water might not be as big of a problem as many people think, here in Wyoming at least.

JW: Exactly. And that comes as a surprise to a lot of people, but I think there really is good reason to be cautiously optimistic about this new technology and what it means for water use in the West.

HM: Let's move on to permitting processes and that public accountability part. You talked a lot in your report about the Industrial Siting Act. Tell me more about that.

JW: The Industrial Siting Act (ISA) is probably the best tool that Wyoming has in its toolbox to regulate these data centers. It provides a review process for large industrial projects like mines or data centers. It basically puts them through a very rigorous socioeconomic environmental analysis, mandates coordination with state agencies and also provides impact assistance funding to communities that might be negatively affected by these projects.

So it's really important. The only problem with it is that it takes a really long time to go through that entire process. I think there's a statutory mandate for it to take a maximum of 135 days. But in reality, it can take upwards of 18 months. When data centers see this timeline, they're not huge fans. So they found this loophole, whereby they can site themselves in these preexisting county industrial parks and kind of get around the ISA.

That doesn't mean that they're not still subject to state and federal regulations, but there's certainly a lot less oversight, especially since these counties have significantly less capacity to conduct that thorough review. These communities might not have an opportunity for formal involvement in the process.  Their voices might be left completely out of it, and they wouldn't even have the funds to help themselves if something bad were to happen.

HM: What are some of the solutions you all are proposing to make sure the public is able to speak up?

JW: We're seeing a very promising model for this in Cheyenne, which is the Cheyenne LEADS [the economic development organization for Cheyenne and Laramie County] model. Cheyenne LEADS is a nonprofit that provides a one-stop shop for these data centers who go around the Industrial Siting Act. It provides a forum for that public input and gets those conversations going with utilities and local government so that these potential pitfalls don't arise. I think a statewide model mirroring that in some way would be great.

HM: Is there anything that surprised you when researching data centers in Wyoming?

JW: I think one big surprise has been how little framework exists for managing something this big. You can end up with these facilities consuming the same amount of resources that a small city does that doesn't go through the kinds of checks and balances you'd expect to see for that scale of impact. I do think that is something that could and should be rectified through legislation.