Data Center Site Selection in North Dakota

North Dakota’s power system is built on coal and wind. Coal remains the largest source of in-state generation, and wind supplied about 36% of net generation in 2023, the second-largest source and more than three times the national share.⁸³ That generation base, large relative to the state’s population, is the starting point for utilities and cooperatives now offering to serve hundreds of megawatts of new load.

The state’s pitch to data centers has three parts: power that large customers can buy at market-linked prices, a cold climate that suits outside-air and liquid cooling, and a sales tax exemption.¹⁶ The constraints are distance from major population and fiber hubs, winter design conditions and, since 2025, growing local concern about how quickly projects are announced. It sits between our Montana, South Dakota and Minnesota guides, and MDU buys energy for its largest data center load from the MISO market.⁴

The North Dakota Public Service Commission regulates the state’s three investor-owned utilities: Montana-Dakota Utilities (MDU), Otter Tail Power and Xcel Energy. A data center does not need a PSC permit of its own, but when it is served by one of those utilities or requires new utility infrastructure, the commission reviews the effects on reliability, cost and the grid.⁹ Much of rural North Dakota is served instead by distribution cooperatives, whose wholesale supplier is often Basin Electric, so confirm the utility service territory before anything else.

Montana-Dakota Utilities

MDU’s 2023 agreement for Applied Digital’s Ellendale site set the pattern. The PSC unanimously approved it on June 6, 2023, for a load of 180 MW at full capacity, about 28% of MDU’s generation portfolio. Energy for the load is purchased from the MISO market so it does not draw on supply for other customers, and MDU shares the revenue with its North Dakota customers through bill credits.⁴ MDU reported $38.4 million in such credits over three years. In 2026 MDU signed a second agreement, for Applied Digital’s Polaris Forge 3 near Center in Oliver County: 430 MW at full capacity, with Applied Digital paying for the energy from the market or other supply arrangements and operations expected to start in August 2027.²

Basin Electric and the cooperatives

Basin Electric’s member load grew about 5.5% a year from 2020 through 2025, largely from Bakken oil development, with cryptocurrency and data processing loads adding to it. In 2025 its board adopted a Large Load Commercial Program that uses a market price pass-through rate and requires new large loads to contribute substantially to the capital needed to serve them.⁵ In December 2025 Basin and NextEra Energy Resources announced plans to explore a roughly 1,450 MW combined-cycle gas plant under that program, as the foundation for a multi-gigawatt data center campus.¹² Distribution cooperatives also contract directly: Cass County Electric Cooperative is supplying Applied Digital’s Harwood campus.¹⁰ Our guide to what utilities and co-ops look for explains how these reviews usually go.

Applied Digital’s Polaris Forge 1 campus in Ellendale, in Dickey County, is the state’s anchor project.⁴ Two roughly 15-year leases with CoreWeave signed in May 2025 and a third for another 150 MW in August 2025 bring contracted critical IT capacity to 400 MW and anticipated lease revenue to about $11 billion.¹¹³ The campus is engineered to scale to 1 GW over time and was designed around North Dakota’s cool climate. The first 100 MW building was scheduled for service in late 2025, a 150 MW building for mid-2026 and the third lease for mid-2027.¹

Two further campuses extend the model. Polaris Forge 2, a $3 billion, 280 MW campus on about 900 acres near Harwood in Cass County, uses Applied Digital’s liquid-cooled design and was to break ground in September 2025.¹⁰ Polaris Forge 3, near Center, would need 430 MW and about 200 full-time jobs are expected.² Separately, Geronimo Power filed for a conditional use permit for a data center in Harmony Township, near the Bison Substation north of Mapleton, that would draw 540 MW at peak.¹¹

For landowners, the takeaway is that several large campuses have been announced since 2025 near rural substations, and their economics depend on substation capacity and the serving entity more than on the parcel itself.¹¹ Our guide to converting bitcoin mining sites to AI data centers covers a related path that several Plains sites have taken.

Cold air is an operating advantage. Developers have cited North Dakota’s cool climate as part of the reason for building there, because it extends the hours when outside air or dry coolers can reject heat with little or no mechanical refrigeration or water.¹ That fits high-density AI halls built on liquid cooling, where warm-water loops can reject heat to outside air for much of the year.¹⁰

Winter is also the hardest design case. Extreme cold affects generator starting and fuel, freeze protection for water and glycol loops, snow and ice loading on rooftop and yard equipment, and construction schedules. It is also when regional power demand and prices can spike, which matters most for loads that pay market-linked energy prices.⁴⁵ Confirm design temperatures and freeze-protection strategy with the mechanical engineer, and plan foundations and buried utilities for deep frost. Our guides to climate and cooling and air vs. liquid cooling go further.

North Dakota exempts enterprise information technology equipment and computer software purchased for use in a qualified data center from sales and use tax. To qualify, a facility must be certified by the Tax Commissioner and must meet the statutory tests below.⁶

• One or more buildings on a single parcel or contiguous parcels with at least 15,000 square feet in total, at least half of it used for data processing.
• Newly constructed or substantially refurbished after December 31, 2020.
• A sophisticated fire suppression and prevention system and enhanced security features.
• Equipment and software must be incorporated into or located within the qualified data center.

Colocation tenants can use the exemption: the owner gives them the Tax Commissioner’s documentation that the center qualifies, and tenants include it with their exemption applications.⁶ Property tax treatment is a separate, local question; MDU noted that the Ellendale data center added new property tax revenue for Dickey County.⁴ Confirm current rules with the Tax Commissioner and counsel, and see our comparison of data center sales tax exemptions by state.

The speed of recent announcements has created a political issue. At a 2026 legislative hearing, supporters of a bill to limit nondisclosure agreements said Harwood-area residents learned of the Applied Digital project only about six weeks before groundbreaking; Applied Digital testified that it used NDAs in compliance with state law. The bill lacked support in committee in September 2026,⁷ and North Dakota’s governor said a data center transparency bill was not needed.¹⁴ Earlier in 2026, a Republican candidate for the Public Service Commission called for a moratorium on data center development.¹⁵

None of that has stopped projects, but it has changed expectations. Plan for earlier public disclosure, county hearings and questions about rates, water and noise. Our guides to community engagement and moratoriums and local restrictions cover how to prepare.

Keep the division of authority in mind. The PSC reviews utility service, not the data center itself, so county zoning and conditional use hearings are where most local debate happens, as with Geronimo Power’s permit filing in Harmony Township.⁹¹¹

1. 01Identify the serving entity: MDU, Otter Tail, Xcel or a cooperative, and if a co-op, how Basin Electric’s Large Load Commercial Program applies.⁹⁵
2. 02Ask how energy would be priced (market pass-through or other supply) and what capital contribution is expected.²⁵
3. 03Check the nearest high-voltage substation and whether other large loads have already claimed its capacity, as at the Bison Substation area.¹¹
4. 04Confirm whether the facility design meets the qualified data center tests for the sales tax exemption.⁶
5. 05Ask whether revenue from your load would be shared with other customers through bill credits, as under MDU’s Ellendale agreement; regulators and residents increasingly look for that kind of benefit.⁴
6. 06Design for winter: generators, fuel, freeze protection and construction season.
7. 07Engage the county and community early, given the 2026 debate over NDAs.⁷

If you want an independent read on a specific tract, you can get a site reviewed. For a cooler-climate comparison in the Mountain West, see our Wyoming guide.