On August 4, 2025, Inside Climate News reported that Michigan’s largest utility provider – DTE Energy – is working with big tech firms to procure up to 7 gigawatts (GW) of incremental power for new data center developments within the state. For context, 7 GW is more than a 25% increase in Michigan’s existing electric power capacity; last summer, the entire state peaked at delivering approximately 26 GW. Across its service area, DTE manages grid capacity of approximately half that figure (11 GW) and utilizes nearly all of it already, peaking at 9.5 GW. An additional 7 GW would far exceed existing grid capacities.
As a result, DTE or other utilities may need to leverage the so-called “offramp” clause (the “Offramp Clause”) under the state’s 2023 climate and clean energy legislation (the “Legislation”). The Legislation is well-known for codifying Michigan’s commitment to 100% carbon-free power by 2040 and, in effect, made the shift to clean electricity a requirement. The Offramp Clause is an emergency provision that enables utility companies to defer the transition away from fossil fuels if renewable capacity cannot adequately service demands for energy. Put another way, if the state is not generating enough renewable power to meet demand, traditional forms of energy can be pursued to bridge the gap. In DTE’s case, by committing to more power than the current system supports, it has arguably self-manufactured a strain on the grid that could trigger the Offramp Clause.
In utilizing the Offramp Clause to procure power for the proposed developments, DTE or other utilities may look to secure the approvals necessary to construct new coal, methane, or natural gas-fired plants, instead of hastening the retirement of these facilities. While the use of the Offramp Clause stands to promote increased power availability in the future (which data centers will benefit from), there are potential short-term consequences for data center owners during an “offramp” era that owners and developers should keep in mind.
- First, utilities may seek to cover costs for the construction of new coal or gas-plant infrastructure through project-specific riders or surcharges, directly affecting construction budgets and ongoing power expenses.
- Further, the very real uncertainties in connection with short-term grid stability, coupled with regulatory tensions, could complicate power purchase agreement negotiations, leading to tighter contract terms or higher pricing.
- Finally, beyond cost concerns, there are potential delay considerations tethered to reputational and sustainability risk. The political landscape in Michigan is exceptionally active right now: (i) environmental and community groups remain vocal in their opposition to any form of large-scale fossil-fuel dependence, and (ii) lawmakers on both sides of the aisle are concerned with the optical regression to the state’s clean-energy commitment. Projects may face extended public comment periods, additional environmental impact studies, or even targeted ballot initiatives aimed at preserving the Legislation’s chief agenda. Such delays push out in-service dates and erode investor confidence, especially for companies with stringent ESG standards or those keen on clean energy integration.
As Michigan’s energy landscape evolves, early legal involvement will be essential to lock in favorable terms, de-risk the power supply, and safeguard project economics.
