Michigan approves massive DTE battery build-out to back AI data center and coal retirements

Michigan regulators have approved one of the largest utility battery portfolios in the country, clearing the way for a wave of energy-storage projects meant to support a proposed 1.4‑gigawatt artificial intelligence data center and accelerate the state’s shift away from coal.

On March 27, the Michigan Public Service Commission (MPSC) signed off on six contracts totaling 1,332 megawatts of utility-scale battery storage for DTE Electric Co. The decision more than doubles the amount of storage previously approved statewide and pushes DTE’s total approved storage capacity to 2,606 megawatts, a level commissioners described as among the largest for any U.S. utility.

Three of the projects—accounting for 1,000 megawatts—are part of DTE’s long-term plan to retire coal plants and add wind and solar. The other three—332 megawatts of batteries—are tailored to serve a massive Oracle-affiliated data center planned for Saline Township in Washtenaw County, west of Ann Arbor.

Regulators and the utility say the data-center customer, not other ratepayers, will pay the full cost of the batteries built for it under a specialized Energy Storage Agreement. Michigan Attorney General Dana Nessel and consumer and environmental advocates have disputed whether that firewall is airtight and objected to how the deal advanced, arguing key details were approved with limited public scrutiny.

In a March 27 news release, the commission said the storage contracts “will improve grid reliability and drive down costs for customers while advancing the state’s clean energy goals.” It noted that the 1,383 megawatts of storage ultimately required for the data center is larger than DTE’s 1,150‑megawatt Blue Water Energy Center, a natural-gas plant approved in 2018.

Two buckets of batteries

The storage portfolio approved last week is split into two distinct categories.

Grid-focused projects tied to coal retirements

For the broader grid, the commission authorized three projects tied to DTE’s 2023 integrated resource plan settlement (Case U‑21193):

• Big Mitten Energy Center (450 megawatts) in Huron County under a 20-year tolling agreement
• Monroe I Energy Center (350 megawatts), company-owned, in Monroe County
• Fermi Energy Center (200 megawatts), company-owned, in Monroe County

DTE says the facilities will provide capacity and grid services as it retires its remaining coal units by 2032 and adds roughly 15,000 megawatts of new wind and solar.

First phase of storage for a single hyperscale customer

The remaining three projects—Fish Creek Energy Center (132 megawatts) and two 100‑megawatt sites called Cold Creek and Pine River—are the first phase of a larger storage obligation linked to a single new customer: Green Chile Ventures LLC, a subsidiary of Oracle Corp. planning a hyperscale data center in Saline Township.

Under a set of contracts approved in December, Green Chile is required to fund up to 1,383 megawatts of DTE-owned storage over 15 years, matching its contracted demand at the site. The 332 megawatts approved March 27 will be company-owned assets dispatched by DTE “to the benefit of its grid,” but the data-center customer will receive the incremental revenue from selling their output into the Midcontinent Independent System Operator (MISO) market.

“The costs of the energy storage projects … will not be passed on to the company’s other customers,” DTE witness N.T. Foley told the commission in written testimony in Case U‑21990, describing the arrangement.

A power-hungry AI hub

The Saline Township project, announced in late 2025, would be one of the largest data centers in the Midwest. Green Chile’s contracts with DTE contemplate a maximum load of about 1.383 gigawatts, with power demand beginning in January 2027 and ramping to full output by the end of that year.

Local officials and media have estimated the capital cost of the campus at $7 billion to $10 billion. The facility is intended to support Oracle’s cloud computing business and high-performance AI workloads—including work with OpenAI—on several hundred acres of mostly agricultural land.

To serve that demand, DTE sought and received approval for a Primary Supply Agreement (PSA) and a companion Energy Storage Agreement.

• The PSA runs through Feb. 28, 2045 and includes options for two 10-year extensions. It provides electric service under DTE’s existing primary rate D11. Green Chile will pay all standard surcharges, including the utility’s power supply cost recovery factor.
• The PSA includes additional protections beyond the standard tariff. Green Chile must pay based on a “minimum billing demand” equal to 80% of its contracted capacity during each stage of the load ramp and thereafter—even if actual usage is lower. If the data center shuts down early, the company faces an early-termination payment of up to 10 years of that minimum billing demand.

The Energy Storage Agreement allows DTE to develop a portfolio of storage projects up to 1,383 megawatts dedicated to serving the data center. DTE will recover the full capital and operating costs of those batteries solely from Green Chile, subject to the contract terms, and must credit the customer with incremental revenues from operating the storage in the MISO market.

In its December order approving the contracts, the commission also directed DTE to change its emergency procedures so that in rare load-shedding events, service to the data center would be curtailed before power is interrupted to other customers.

‘Strongest protections’ vs. calls for scrutiny

Commissioners approved the data-center contracts in an ex parte order on Dec. 18, 2025, concluding that because the agreements would not increase rates for other customers, state law did not require a fully contested, trial-like case.

The decision followed months of public attention. More than 5,000 people submitted comments, and a virtual public hearing drew over 1,500 participants. Opponents raised concerns about land use, wetlands and water, as well as potential bill impacts and the climate implications of adding a city-sized electric load.

Nessel, the state’s elected attorney general, criticized the ex parte approach.

“I am extremely disappointed in the MPSC’s decision to fast-track DTE’s secret application to service this massive data center without holding a contested case hearing,” she said in a Dec. 18 statement.

She argued that because “key contract terms were redacted,” the public could not assess whether the protections were adequate.

Her office and several environmental and consumer groups—including the Michigan Environmental Council, Natural Resources Defense Council, Sierra Club and Citizens Utility Board of Michigan—asked the commission to rehear or reopen the case.

On March 27, alongside the storage approvals, the commission denied those requests. It ruled that petitioners lacked legal standing and had not demonstrated errors, newly discovered evidence or changed circumstances that would justify revisiting its earlier order.

In its news release, the commission said its December approval included “the nation’s strongest protections to prevent other customers from having to pay the data center’s cost.”

Clean-energy goals and open questions

The storage approvals come as Michigan moves to implement a 2023 law requiring 100% clean electricity by 2040 and setting a target of 2,500 megawatts of energy storage statewide by 2030. Before last week’s order, the commission had authorized a little over 1,000 megawatts of storage across all utilities.

By itself, DTE’s new portfolio will exceed that 2,500‑megawatt target on an approved-resource basis. State officials have pointed to such investments as evidence Michigan can decarbonize its grid while attracting power-intensive industries such as data centers, electric vehicles and battery manufacturing.

As part of the data-center approval, regulators ordered DTE to explicitly model the facility’s impact in its next integrated resource plan and renewable energy plan, including scenarios with and without the additional 1.4 gigawatts of load. The company must also propose ways to recover any incremental costs of complying with renewable and energy-efficiency requirements “in an equitable, non-regressive way” that does not shift burdens onto households and small businesses.

Critics remain wary. They question whether, despite contractual language, some costs associated with shared grid upgrades, new substations and higher renewable procurement obligations could still be spread across ratepayers over time. Environmental advocates also warn that if renewable and storage build-outs do not keep pace, the surge in demand from the AI campus could increase reliance on fossil-fueled generators elsewhere on the regional grid.

Construction timelines for the Saline Township campus and the associated storage projects will determine how quickly those questions move from theory to reality. For now, Michigan has placed a large bet that pairing a gigawatt-scale data center with an even larger battery build-out—and making the customer pay for much of it—can keep its clean-energy transition on track while powering the next wave of digital infrastructure.