Google cancels $600 million Minnesota data center project

[admin]

Says it might try again in future

December 22, 2022 By Sebastian Moss

Google has pulled out of a planned data center in Becker, Minnesota.

The company has been in talks to develop the $600 million site near the Sherco power plant since 2017, but this month its electric service agreement was terminated as it ended work on the project.

The data center was officially announced in 2019 via a regulatory filing, but Google never seemed to be in too great of a hurry. By February this year, it was revealed that it still had not bought the land from energy utility Xcel.

As 2022 drew to a close, Google affiliate Honeycrisp Power did not provide Xcel with a notice to proceed with the project. So, the company said in a regulatory filing, Xcel terminated its electric service agreements with Google on December 8. The news was first reported by the StarTribune.

"While this project isn't progressing right now, that doesn't rule out engagement on projects in the future," Google said in a statement.

While Google never began work on the data center, it negotiated tax breaks, and the county promised to invest $20.5 million in infrastructure improvements, including extending water and sewer mains.

It is not clear if such work has already taken place. DCD has contacted Sherburne County for clarification.

The purported data center project also prompted several others to consider building in the area.

This September, Elk River Technologies announced that it was buying 348 acres of land from Xcel near the Sherco plant for a $1 billion data center project. Elk River is a shell company created to obfuscate the identity of the real company behind the project.

This November, a third Fortune 100 company said that it would build a data center worth up to $700m near the power plant. Going by Amber Kestral, it also kept its identity a secret.

Given that data centers like to be built close to each other - and close to hyperscalers - the Google facility was likely factored into the building plans of the two mystery data centers. It is not clear how its termination will impact them.

It is also important to note, given some media speculation, that the cancelation of Google's Becker project should not be compared to that of Meta's recent flurry of project cancelations.

In this case, it is a single project that was slow to start, and where construction never began. Google regularly pursues several projects at the same time in a geographic area, to help force local tax incentives by playing states and counties against each other. It also gives it flexibility if demand grows faster than expected, or if another site runs into unexpected delays.

In Meta's case, it has canceled projects where work has already begun, contractors have been hired, and equipment has been ordered. It is completely redesigning its future data centers, and stopping work until it has worked out what it wants to build.

DCD