An Xcel Energy executive has said that data center growth in Minnesota will not prevent it from meeting the state's 100 percent clean electricity bill, but may require it to extend the life of its natural gas assets into the 2030s.

“As we take all of that coal off the system — even if you didn’t add data centers into the mix — I think we may have been looking to extend some gas (contracts) on our system to get us through a portion of the 2030s,” said Ryan Long, president of Xcel Energy’s Minnesota and Dakota division at the Minnesota Public Utilities Commission conference.

Long suggested that while the company remains confident in its plans to close all its remaining coal-fired stations by 2040, data center expansion across the state will likely require them to keep gas plants running to meet demand.

According to the US Energy Information Administration, renewable resources account for 33 percent of Minnesota’s electricity, natural gas for 24 percent, and nuclear power for 21 percent.

Xcel operates three natural gas plants in Minnesota with a combined capacity of 1.26GW.

Pete Wyckoff, Minnesota's deputy commerce commissioner for energy, voiced skepticism about the feasibility of meeting the state's clean energy bill. The bill requires all utilities to provide their Minnesota customers with 100 percent carbon-free electricity by 2040.

Despite recent permitting reforms in the state, Wyckoff suggested that utilities may struggle to supply the scale of electricity within the volumes and timelines data centers are expected to require.

Minnesota has seen a significant increase in data center load over recent years. As of Q4 2023, the state had a data center capacity of 60MW, with a further 15MW under construction.

Xcel Energy has signed several deals with hyperscalers over 2024. In March, it announced an agreement with Meta to develop an enterprise data center with a predicted initial load of 10MW, expanding to 75MW by the end of the first decade in service in Minnesota.

In addition, the utility has committed to investing more than $45 billion in new generation, transmission, and other projects over the next five years. The capital investment plan will focus primarily on clean energy, customer electrification, new load growth, and safety and reliability.

Despite these investments, utilities have increasingly considered natural gas a potential bridge to meet energy demands as renewable and low-carbon assets are built up.

Last month, Entergy proposed building a $3.2 billion natural gas plant in northeast Louisiana to power an adjacent data center.

The week before, Clair Moeller, president and chief operating officer of US grid operator Midcontinent Independent System Operator, reported that data centers could potentially pay for gas-fired generation to power their facilities in the short term as a bridging mechanism to low-carbon energy sources.

In early November, AltaGas CEO Vern Yu said its subsidiary Washington Gas was in discussions with customers about using the fossil fuel as a primary power source. According to Yu, the discussions were mainly driven by regional data center growth.

An October report from S&P Global found that demand for natural gas to support data centers could reach three to six billion cubic feet per day as the industry struggles to find power for an AI buildout.