Iowa is emerging as a magnet for massive data centres owned by Google, Meta, Microsoft, and Apple—companies that have invested over $17 billion statewide, according to the Iowa Economic Development Authority. But officials and energy experts warn that growing electricity demands could outpace capacity and strain water resources, especially as artificial intelligence and cryptocurrency mining expand.

A newly obtained draft bill from Gov. Kim Reynolds appears to pave the way for a nuclear comeback in Iowa—an old solution returning just as momentum builds to restart the state’s only nuclear plant.

Reviving a reactor amid a data centre surge

NextEra Energy, which operates the shuttered Duane Arnold nuclear facility near Palo, confirmed to Iowa’s News Now that it has filed notice with the Nuclear Regulatory Commission to request a licensing change that could allow Duane Arnold to restart by 2028.

“Resuming operations at an idled nuclear plant requires a comprehensive evaluation, and many factors need to be considered,” NextEra spokesman Bill Orlove said in a statement. “This is an important first step in establishing the regulatory pathway to restore the facility’s operating license.”

The potential revival of Duane Arnold—once producing 600 megawatts—comes as data centres consume vast amounts of electricity to power servers and cool equipment. University of Iowa engineering professor Jerry Schnoor said some of Iowa’s current data centres use about a million gallons of water per day, a figure large enough to concern communities already monitoring aquifer depletion.

“We have 64 data centres in Iowa now,” Schnoor said. “We’re one of the leaders in the data centre industry and they are big resource users.”

Economist Peter Orazem explained Iowa’s draw for technology companies.

“Iowa has a couple resources that are extremely important to data centres. Number one is they’re very energy intensive, and so the fact that Iowa has access to relatively inexpensive renewable electricity makes Iowa attractive. Secondly, Iowa has a lot of land and not that many people,” he said.

But Orazem also noted that a typical data centre “may have around a million square feet of space and maybe 30 employees,” raising questions about how much local benefit accrues from these large-scale, capital-intensive projects.

Iowa’s new draft legislation—numbered LSB 1121XL—underscores the urgency to “ensure an adequate base load” of power. It specifically promotes nuclear reactors as part of a broader strategy:

 “It is also the intent of the general assembly to encourage the development of nuclear electric power generation within the state using nuclear reactors and to use nuclear power to meet local and regional electric needs,” the bill reads.

Critics highlight the risk that utility customers could end up footing the bill. Clean Energy Districts of Iowa policy analyst Jim Martin-Schramm said he worries ratepayers may be stuck paying for infrastructure expansions that primarily benefit big data users.

“What I’m most concerned about there is that any investments that are made to meet the demand needs of these new customers, that those costs don’t come back to fall on ratepayers,” he said, pointing to what happened in Georgia, where Plant Vogtle’s nuclear expansion soared from $14 billion to $35 billion. “Ratepayers have been paying since 2011 before the first watt was even produced,” Martin-Schramm said of the plant.

Schnoor, on the other hand, believes nuclear can be the clean baseload Iowa needs to replace fossil fuels.

“We’re making parts of the planet uninhabitable,” he said. “Fossil fuel emissions have to go to zero in the next few decades. Therefore, I would pursue nuclear.”

Orazem agreed there is logic in turning to nuclear.

“Independent of the data centres, nuclear seems to be one of the logical ways of providing a clean source of baseline energy generation,” he said. “Nuclear always has some risks, but all energy generation has some risk. Once again, the issue is, do we think technologically that we can mitigate that risk?”

Data centres’ rapid expansion

Google alone has invested $5.5 billion in Council Bluffs and is building another $576 million campus in Cedar Rapids, while Microsoft operates six data centres in West Des Moines. Meta (Facebook’s parent company) has a $2.5 billion data centre in Altoona. Stacey Yip, a company spokesperson, told Iowa’s News Now Meta’s “electricity use is matched with 100% renewable energy,” adding that its “global operations have reached net zero emissions.” Apple, who a $1.3 billion data centre in Waukee told Iowa’s News Now in an email that it uses “zero water for cooling” opting for air-cooled chillers instead.

Yet not all rely on air cooling. Many Iowa centres depend on groundwater for evaporative cooling.

“They usually use groundwater, and the groundwater is rather plentiful in Iowa compared to other states, but there are places where it’s in danger from over-pumping,” Schnoor warned.

Meanwhile, cryptocurrency miners have added another layer of demand. A single Bitcoin mining site operated by MiningStore in Grundy Centre uses more electricity than all the town’s homes combined. Martin-Schramm noted that “there is so much data processing that is happening, and you need electricity to power those chips” and that “now with Bitcoin recently at record highs, the folks engaging in Bitcoin mining or getting into it are increasing.”

With this fierce growth, utility companies are upping their infrastructure. MidAmerican Energy’s recent Resource Evaluation Study shows it foresees “a generation capacity need” linked to large loads under contract—namely data centres. The company is even considering nuclear. “MidAmerican is exploring the potential development of a small modular reactor in the future,” spokesperson Geoff Greenwood told Iowa’s News Now.

Orazem thinks consumers will “one way or another bear the cost,” whether from higher electricity rates or indirect fees.

 “If the private company has to generate more electricity, they’ll only do that if they’re going to get a return on that investment that could potentially be spread to all the customers,” he said. He added that “Iowa is a regulated industry, but if we’re not getting charged for the electricity, we’re going to get charged by the data centres for accessing that service.”

A critical crossroads

Microsoft has already struck an agreement to restart part of Pennsylvania’s Three Mile Island nuclear facility, famous for its 1979 partial meltdown, to service its data centres. As artificial intelligence expands at a rapid clip, states are scrambling to stay competitive. This February, a Chinese AI model called DeepSeek triggered $2 trillion in volatile U.S. stock sell-offs, underscoring how quickly global competition is catching up and the stakes at hand.

“If Iowa doesn’t do it, someone else will,” said Orazem who cited how California and Texas have seized major data centre expansions. “Massive increases in employment and wealth generation in California and Texas and in Massachusetts—and the Midwest has not been part of that information technology expansion,” he said. “If we’re not part of this particular expansion, we’re going to miss the next wave. That doesn’t mean we won’t use them—it’s that we’ll be paying people in California and Texas.”

Gov. Reynolds’ draft bill, if passed, would modernise how Iowa’s Utilities Board sets rates and regulates power generation. It would also enable advanced ratemaking for nuclear reactors, streamline development of new transmission lines, create a new energy-and-water infrastructure loan fund and impose updated environmental standards for anaerobic digesters. Critics including Martin-Schramm say any new nuclear plan should include robust oversight and integrated resource planning. 

“You’re talking about a mothballed reactor that didn’t melt down, but hasn’t been used in years. Think about what happens to a car when you don’t drive it for a year,” he said referring to Duane Arnold.

For Cedar Rapids leaders, the decision to accommodate big data is already in motion. The city just confirmed a $750 million data centre project near a new $529 million Google facility, calling it the largest investment in city history. The city even agreed on rebates estimated at $529 million in property taxes over 20 years for the site. In a statement to Iowa’s News Now, the city’s Communications Division Manager Phillip Platz said current projects will not exceed city water capacity and the city not forecasting ratepayers will be paying more for electricity because of them for now.

Whether nuclear ends up powering the next chapter in Iowa’s data centre boom remains uncertain. If the governor’s bill passes, NextEra could be closer to reviving Duane Arnold, but the cost—and who ultimately pays—will likely drive heated debate. 

Martin-Schramm wants to see guardrails for ratepayers: “I worry about the fairness. The big data centres they do come and go, and I don’t want the rest of us to be holding the bag.”

 

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