HomeMy WebLinkAboutMemo - Mail Packet - 04/08/2025 - Memorandum of Travis Walker and Jacob Castillo re Data Centers and Impacts to the City
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700 Wood Street
PO Box 580
Fort Collins, CO 80522
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utilities@fcgov.com
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MEMORANDUM
Date: March 25, 2025
To: Mayor and City Councilmembers
Through: Kelly DiMartino, City Manager
Tyler Marr, Deputy City Manager
From: Travis Walker, Light & Power Director
Jacob Castillo, Chief Sustainability Officer
Subject: Data Centers and Impacts to the City
BOTTOM LINE
Data Centers are becoming more common in our region, and occasionally the City gets inquiries
from developers to site them here. There haven’t been any requests that have gone further than
a very initial inquiry so far- but going forward each request will be evaluated on a case-by-case
basis to understand what benefits or potential downsides given other factors there would be to
the City and the Utility ratepayers.
BACKGROUND
Light & Power and the Economic Health Office have convened to discuss this topic and better
understand one another’s approach. An area where we sought alignment was around what real
estate in and around Fort Collins would be optimal for this use. For example, we wouldn’t want
to take some of our prime employment sites out of play for job creation opportunities, however,
there are places in the City that may be a fit for a use like this. Knowing where we could site a
data center allows us to better respond to inquiries for this use.
Docusign Envelope ID: F2A53644-0C88-4FA6-A93F-E2655EFFAB7B
Data centers of most sizes that we’ve seen requested would immediately be some of our larger
Light & Power customers. They could be a financial benefit to Light & Power (and Water, if they
were placed in Water’s service area). They can provide for a steady power consumer and
predictable revenue source for utilities, both of which could help with a build out of renewable
resources and help with our capital needs going forward. In addition, they generate property and
use taxes that would benefit the City and the region.
On the power side, if done thoughtfully, they can provide additional benefits. In a future where
we have mostly renewable energy generation, we will have to “over build” solar and wind
resources to make sure we can cover most times of day and weather conditions. Since we
need to build more capacity than will be served most of the time, there will be many times where
it is very sunny and/or very windy where we (and PRPA) will have more power available than
the communities are using. At that point, PRPA would need to sell that power on the market,
likely at very low rates or even at a loss, because the surrounding region would also likely be
generating an excess. Many data centers can be configured as “interruptible loads”, and in the
times of highly available energy, they could take in that excess power. Even if we had to sell it
to them at a lower rate, we could be using our renewables in the community and not taking a
loss on them. If they are built to do that, and we can cooperate with them, it’s a benefit to both
parties to be flexible enough to be able to have somewhere to sell excess energy, and for
various loading conditions that we could use to help our distribution system. The downside to
this theory is that in times of use where renewables are short, they would have to scale down
their “computing capacity” or use other means to make up for it- likely in the form of gas turbines
or other dispatchable resources. Some large power users may need to bring their own
generation capability, and we don’t have a way of knowing that carbon-mix without specific
proposals.
While the One Water utility culture is shifting to partner with developers of all sorts, there are
some shifts we need to make to sooner than later to respond to construction of data centers.
Shifts would include an aggressive water rights acquisition strategy and better water
demand/supply modeling (currently in the early stages). The strategy would help us compete
with our neighbor utilities who are actively snapping up useful water rights to serve the east side
Docusign Envelope ID: F2A53644-0C88-4FA6-A93F-E2655EFFAB7B
of I-25 and south of Fort Collins. The modeling would give us a better idea of what we have,
what we use, and what we need versus the hypothetical. Although these are important
priorities, they are not at the top of our list for 2025. If we put these at or near the top of the list,
it likely means we need to push out other priorities to next year.
Proposals would need to be closely evaluated for water use and disposal- Initially, data centers
were also large consumers of water but have become more efficient including the use of closed-
loop systems and other methods of cooling.
We would also need to understand the useful life of such facilities, and what happens with the
infrastructure and equipment at end-of-life.
NEXT STEPS
Staff will continue to monitor requests for information from developers and respond to inquiries
at the state/local level if a use case would be determined as a fit in our community. If a request
comes up that is out-of-norm for size and/or land use, staff will consult with Council on next
steps.
Docusign Envelope ID: F2A53644-0C88-4FA6-A93F-E2655EFFAB7B