Data Center Site Selection in Montana

Montana produces far more electricity than its population uses. The state generated about 26.9 million megawatthours in 2024, with coal as its primary energy source.⁹ In 2022 coal supplied 42% of in-state generation, hydropower 38%, wind 15% and natural gas about 2%.⁵ That mix, and a cool, dry climate that suits air-side economization for much of the year, is the core of the state’s pitch.

What Montana lacks is a settled path to serve very large loads. NorthWestern Energy, the state’s largest public utility, has said it plans to serve at least three data centers that could scale up to about 2,250 MW by 2030.¹ For a utility of NorthWestern’s size, the question regulators are asking is who carries the cost and risk of new supply and transmission.

Compared with its neighbors, Montana is less mature than North Dakota, where cooperative and investor-owned utilities already serve operating AI campuses, and it has a different tax structure than Wyoming, which relies on a sales tax exemption. For the broader region, see Mountain West site selection.

NorthWestern serves much of Montana, including the Butte and Billings areas where the most visible projects are proposed, but rural parcels may sit with an electric cooperative or another utility, so confirm the service territory first. The defining rule is statutory. Montana law requires NorthWestern to show the PSC that a large load that buys from the utility will not harm other customers over the long term.¹ A coalition complaint filed in November 2025 cites Mont. Code Ann. § 69-8-201(1), which requires a commission determination before a utility serves a retail load of 5 MW or more.¹⁰

NorthWestern argued in 2025 that it did not need commission sign-off before serving these customers, a position the commission and consumer groups disputed.¹¹⁰ The utility now says it will not begin serving a new large-load customer until the commission has approved both the applicable tariff and the individual contract.⁶

NorthWestern filed its large new load tariff with the PSC in March 2026.⁷ The proposal splits customers into two bands:

For a developer, the practical effect is that service to a large campus in NorthWestern territory runs through a public proceeding, a long take-or-pay style commitment and likely collateral. Our guide to large-load tariffs and electric service agreements explains how minimum bills and terms usually work, and the large-load interconnection process covers the studies behind them.

The tariff case has drawn wide interest. Governor Gianforte’s administration, through the Department of Environmental Quality, moved to intervene, noting that the Major Facilities Siting Act gives it authority over certain large energy projects, including transmission triggered by large loads.¹¹ Butte-Silver Bow urged the commission to help prevent “boom-bust” fallout and to protect existing customers.¹¹

Consumer and environmental groups are pressing for more. A coalition represented by Earthjustice filed a complaint in late 2025 contending that NorthWestern’s data center supply practices are unreasonable and contrary to Montana law.¹⁰ In July 2026 a coalition asked the commission to regulate data centers as a separate class, arguing that loads of 5 to 49 MW would otherwise avoid public scrutiny and review for adverse impacts.¹²

The legislature is likely to set more rules. In September 2026 an interim committee unanimously advanced a draft bill for the 2027 session that would apply to new retail customers of at least 5 MW, direct the PSC to create a separate large-load class, prevent cost shifting and require financial security, including if the customer stops operating.⁴ NorthWestern said it was not opposed to the protections but called some language unrealistic.⁴ Plan for terms to tighten rather than loosen. For how this pattern is playing out nationally, see community engagement for data centers.

Colstrip, the coal plant in southeastern Montana, is central to NorthWestern’s supply story. On January 1, 2026, the utility closed its acquisitions of the Avista and Puget Sound Energy interests, raising its ownership to 55%, for no purchase price.² It holds the 370 MW Puget interest in a FERC-regulated subsidiary to keep those costs separate from Montana retail customers, has contracted to sell that capacity from January 2026 through late 2027, and says the resource may support future service to large-load customers.²

For a site buyer, that means the power for a Montana campus may be coal-backed for years, and its long-term cost will depend on how Colstrip’s operating, environmental and eventual retirement costs are allocated. Buyers with clean-energy goals should plan on bringing their own resources or contracts, and should read renewable energy procurement and siting before relying on the utility mix.

Butte is the most visible market. The Butte-Silver Bow council approved the sale of 606 acres in its industrial park for a potentially large data center.¹³ Sabey planned power starting at 50 MW in 2027 under a non-binding letter of intent with NorthWestern, with an option to grow to 250 MW or more by 2029.¹⁴ A June 2026 legislative staff briefing reported that the buy-sell agreement terminated on May 13, 2026, though Sabey remained interested in the area.⁸ The same briefing describes Atlas Power’s existing Butte load as cryptocurrency mining with an unclear future use.⁸

Near Billings, Quantica Infrastructure’s proposed campus at Broadview shows a different model: a large campus paired with gas-fired generation, in an area of Yellowstone County without zoning.¹⁵ The lack of zoning simplifies entitlement but leaves water, air permits and transmission as the real gates.¹⁵ Our guides to onsite generation and natural gas and bitcoin mining sites converted to AI cover both patterns.

Montana’s climate is a genuine advantage for air-side economization, but water is where local reception is most fragile. In Butte, the Sabey proposal looked to the Butte-Silver Bow government for cooling water from the Silver Lake Water System, which serves industry and also maintains in-stream fishery flows.¹⁵ Quantica has listed zero-water air cooling, deep aquifer wells, treated greywater and direct-to-chip liquid systems as options, with the final choice depending on environmental review and customer needs.¹⁵ A closed-loop or air-cooled design is often the easier path; see closed-loop and waterless cooling and water rights and groundwater.

Montana’s data center incentive works through the property tax code. Qualified data centers are Class 17 property with a taxable valuation rate of 0.9% of market value.³ To qualify, a facility needs at least 25,000 square feet of new or expanded space and at least $50 million invested in land, improvements, personal property and software within 48 months, with construction starting after January 1, 2019.³ In 2025 the legislature passed House Bill 424, which revised what counts as Class 17 property, extended the construction timeframe and revised ownership requirements.¹⁶

Confirm qualification and any later amendments with the Department of Revenue and a tax advisor. Our property taxes on data center projects guide explains how a classification rate translates into a tax bill.

1. 01Confirm the serving utility and the nearest transmission substation, and whether the parcel is NorthWestern, cooperative or other territory.
2. 02Size the load against the 5 MW and 50 MW thresholds, since each changes the contract term and level of commission review.¹⁷
3. 03Follow the PSC tariff docket and the 2027 legislative draft, and model longer terms, minimum usage and collateral.⁷⁴
4. 04Ask where the supply comes from (Colstrip, market purchases or new resources) and how cost allocation is proposed.²
5. 05Confirm water source and rights early, or design for low-water cooling.¹⁵
6. 06Test Class 17 eligibility and county zoning, including whether the area has zoning at all.³¹⁵

The site due diligence checklist covers general items, and our methodology explains how we weigh power timing against other factors. If you hold or are evaluating land in Montana, you can get a site reviewed.