Discover the significant impact of data centers on the Wisconsin economy and the opportunities for future growth and development.
How are Wisconsin’s new data centers affecting the economy? That was the topic of a recent forum that brought together over 100 leaders from various sectors, including manufacturing, construction, energy, and infrastructure, to explore key investments driving growth for the next decade.
Key takeaways
The forum highlighted several pioneering approaches for serving a rapidly changing local economy. Participants discussed the ripple effect of both short and long-term opportunities, domestic and inbound investments to date, and key strategies for capitalizing on opportunities over the next decade.
Wisconsin’s changing landscape
The mood among manufacturers was the focal point. Moderator Kurt Bauer, CEO of Wisconsin Manufacturers & Commerce (WMC), relayed the following from his listening sessions across the state:
- Most executives he spoke with rated the economy as an A or B, with only a small number participants rating it as C or D.
- Interest rates and tariffs are also hot topics. While members were generally happy with a quarter-point reduction in interest rates, there was uncertainty about tariffs. Despite this, members were resourceful and resilient, with more members supporting tariffs than opposing them. Smaller members were eager to bid for new projects, while larger members were more opposed to tariffs.
- While around 93% of manufacturers are not worried about immigration enforcement, the cap on HB1 visas at 85,000 was seen as a challenge.
- Lastly, interest is high around the "gold rush" of data center builds in Wisconsin. The state has a rich history of transitioning from wheat to dairy, to corporate farms, to simple assembly, and finally to the advanced manufacturing Wisconsin is famous for today. As the largest manufacturing state per capita, Wisconsin is well-positioned to capitalize on the data center boom.
The Microsoft opportunity
One of the most significant topics explored was the impact of Microsoft's investment in data center builds in Wisconsin from an energy perspective. With an additional 1,800 megawatts of demand through 2029, this represents a 20% increase over five years, a level of growth not seen since the 1950s and 60s. This investment is expected to create 2,300 construction jobs and 2,000 permanent jobs. Concerns were raised about the demand data centers will have for electricity, with Microsoft's Kenosha facility alone expected to demand the equivalent of around 20 steel mills.
Electrical grid reliability
Electrical grid reliability was another major topic. The Midcontinent Independent System Operator (MISO) plays a crucial role in monitoring grid stability. The forum discussed the shifting reliability risks from summer peaks to year-round concerns. The diversity of supply sources, including gas, solar, and wind, was emphasized. Plans for building 1,100 megawatts at the Oak Creek site, with a target in-service date of 2027-2028, were also discussed.
Renewables and transmission
The forum highlighted significant investments in renewables, with plans to add 4,300 megawatts of carbon-free generation, representing a $9.1 billion investment. The first substation at the Microsoft site will be massive, twice as big as the largest substation in Wisconsin. The importance of very large customers, like Microsoft, was emphasized, to confirm who would pay for massive investments required in energy capacity. WEC Energy Group has been cautious and included cancellation consequences as part of the Microsoft deal.
Data center opportunities
The potential for additional data center builds in Wisconsin was discussed, with rumors of half a dozen more projects. The Microsoft site in Southeast Wisconsin alone will be 10 times more powerful than any computer in the world, with cables that could wrap around the world four times. The halo effect of jobs was also noted, with a powerful multiplier effect of four indirect jobs for every direct job.
Why Wisconsin?
Wisconsin's ability to move faster due to its non-deregulated status, abundant affordable land, energy, and water resources compared to other areas were highlighted as key advantages. The state's workforce, including pipefitters, welders, and electricians, is well-equipped to handle the demands of data center construction.
Investments in workforce
Investments in workforce development were also discussed, with one panelist noting the construction of an education center and the addition of 100 technicians focused on data centers for the next five years. Another panelist emphasized building the workforce of the future, starting in high school. Wisconsin has the highest rate of manufacturing jobs per capita, and the number of workers needed to build data centers exceeds those required to operate them.
Preparing for data centers
The forum discussed how businesses can prepare for data centers, with lessons learned from coping with massive supply chain disruptions during COVID-19. Concerns about labor shortages, the pace of technology change, and the potential obsolescence of data centers were also addressed. The importance of sustainability and efficiency in data centers was emphasized, with discussions on closed-loop water systems and the need for more efficient cooling solutions.
How CLA can help advise businesses
The forum provided valuable insights into the significant impact of data centers on the Wisconsin economy and the opportunities for growth and development in the coming decade. Looking to scale up your business to serve fast-growing sectors? CLA can help with that. Let’s talk!