A multi-billion-dollar project proposed in Deuel County is leaving residents and legislators with questions. That’s because as the data center boom enters the state, not everything seems clear.
That’s why, the company proposing the project offered an open house tour of one of its facilities currently being built in North Dakota.
Over 80 South Dakotans gathered in the Ellendale Opera House in small-town Ellendale, North Dakota. It's about 40 miles north of Aberdeen, just a few miles across the state line.
Each person here is looking for answers. Answers to questions about energy and water consumption, and economic impacts to name a few.
That’s because Ellendale, a town of a little over 1,100, is building a multi-billion-dollar AI data center that some believe is injecting the rural area with cash and fostering economic development.
One of those believers is Nick Phillips, the Executive Vice President of External Affairs for Applied Digital. That’s the company building the data center. He told the tour group the building they're entering is unlike anything they've seen before.
“This facility, this building you’re going to walk through today is one of its kind. There’s nothing else like it on the entire planet. It’s designed so that the four data halls together, the way that it’s designed can work as one single supercomputer,” Phillips said. “So, this could be the world’s fastest supercomputer right here in Ellendale, North Dakota. So, there’s a lot of, you know, incentive for folks to want to come here and want to work on that project and say, ‘I’m able to work in the world’s fastest supercomputer.’”
The building is over 300,000 square feet, roughly the size of two city blocks. While it looks like a giant, plain gray office building, cutting-edge technology for artificial intelligence, or AI, is set to be housed on the inside.
These massive data centers are popping up across the country to meet increased computational demands spurred by AI.
Phillips said his company likes rural areas and communities because they often have excess power for the data centers to tap into. Rural areas such as Toronto in Deuel County. There, Applied Digital is proposing a data center.
It’s a project almost unheard of for a community that size. Phillips said total investment could exceed $16 billion and produce 200 jobs.
Toronto itself boasts about 200 people, and Deuel County a little over 4,000. To do the project effectively, Applied Digital said the company takes a strategic approach to working with the community.
“Because the reality in rural communities is that if you don’t build a relationship with your community, you will never succeed. And Applied Digital has understood that since day one, and we’ve come in here and we’ve made sure that the community understands we are their friends," said Martin Vega, the company’s director of community operations. "We are their neighbors. And we’re here to stay. So, we develop those relationships and ensure that there’s positive benefit from both parties in doing so.”
He said that’s part of what events like the tour of the data center in Ellendale are about: giving the community a chance to see things up close and ask questions themselves.
One of those questions asked by someone in the tour group is about water usage. An official said the facilities the company operates here in Ellendale are only allowed to use 10 gallons per minute, similar to that of a single-family home in North Dakota.
Another is about energy use and if the project would cause residential rates to rise. Phillips said it isn’t as big an issue as you might expect.
“We’re not allowed to do things to make power go up and down. We’re not allowed to impact things; we have to prove that every year. I mentioned earlier the return of funds to consumer’s on MDU’s system," Phillips said. "That’s been a huge win. I know that hasn’t happened everywhere, but that’s what we’ve been able to do.”
Among the South Dakotans on tour is state Rep. Kent Roe of Hayti. The proposed project is in his district. He said he came with questions about economic development, but walking through the over 300,000-square-foot building was enlightening.
"I was skeptical. I didn’t know, I didn’t believe my eyes when we drove on sight. And it’s quite an undertaking,” Roe said. “The economic impact is going to land for a huge radius around little old Ellendale, North Dakota.”
Roe added he’s “looking forward to something like this coming to town.”
“We’re talking Toronto, Astoria, combined population maybe 500. And that’s on a Sunday morning," Roe said. "So, I think it’s important bringing good, good-paying jobs and a lot of them to good work. I don’t see any real downside to that.”
The North Dakota project is giving people in the community opportunities they might not have had otherwise, according to Vega.
“We noticed a couple of people that had always wanted to start a business. You know, a couple of them had always wanted to do baking, but there just was never really the support or the demand to be successful," Vega said. "And now that we bring in a lot of additional people and we bring in a data center that’s going to employ 300-400 people, you’re able to support that level of demand by understanding that the community’s going to grow and the resources need to be there.”
In addition to increased services and other needs, smaller communities like Ellendale and Toronto don't have a lot of housing infrastructure. Phillips said the company works to help that.
"[Residents said] we hope that you attract people to come here, but if you do attract people to move to Ellendale, we don't have anywhere for them to live. So, we got involved right away in trying to figure out housing," Phillips said. "It kind of worked well in the beginning: It turned out to be a lot of rehab of houses that weren't habitable at the time and, they got fixed up. We really ran out of that recently, so we have 20 single-family homes being built and an apartment building."
He said the nearby communities also benefitted because some of the construction workers and other workers chose to commute, so areas like Aberdeen have seen some increases economically from that. He said they take a similar approach to the road infrastructure if it needs it.
So, while the new wave of artificial intelligence data centers is looking at South Dakota, for it to come, some within the industry say the state needs to add tax incentives to make it happen. During the 100th legislative session, the Senate had a bill that would have created a sales and use tax refund for goods and services related to data center operations. That bill failed on the Senate floor 17-18.
Phillips with Applied Digital said without tax credits similar to those, the project isn't viable in South Dakota.
