On Tuesday, the Batavia City Council approved an amended agreement about utilities for a proposed data center project in the city.
The data center project is set to be built at 1780 Hubbard Ave. in Batavia, according to past reporting. Its developer is Batavia DC Corp., a subsidiary of Hut 8. It's expected to be a $500 million, 120,000-square-foot facility, and it could be operational by the end of 2026 or early 2027.
Back in July, the council approved a master services agreement addressing the possible data center's electric utility needs.
Because of the size of its energy load, the proposed data center wouldn't be getting its electric utility via Batavia's agreement with the Northern Illinois Municipal Power Agency, the joint action agency through which the city's municipal electric utility gets its power, according to Batavia's website. Rather, the city says Batavia DC Corp. will have to purchase its power on the open market.
That agreement also states that the developer would be responsible for paying for and constructing on-site electrical infrastructure improvements. The city would be responsible for off-site electrical improvements, but is asking that the data center pay them an estimated $18 million upfront for it. The city would then reimburse the data center for fronting those costs over time using revenue the proposed data center would pay to the city through the master services agreement for the electric utility, according to Batavia City Administrator Laura Newman.
According to a memo from Newman, the power needed to operate the data center when it is first up and running could generate $2.3 million in revenue for the electric utility and $5.5 million a year once its energy load is at capacity.
Despite some council members and residents asking the city to pause before moving forward with the agreement, the council ultimately passed the master services agreement addressing the data center's electric needs in July.
Now, the city is looking at the terms under which it will provide the data center water and wastewater services. That's the reason for the amended agreement.
At the Batavia City Council Committee of the Whole meeting on Aug. 26, Newman said that "it seemed to make more sense that there just be one master services agreement between the parties," which is why they're amending the one approved in July.
Newman noted that the data center has previously agreed to use a closed-loop cooling system, which limits the amount of water needed to cool the data center's infrastructure, but she said that explicitly requiring in the master services agreement that the technology be used "may not be advantageous in the future if there's a possibility of not using water at all in the system, for instance."
Instead, Newman explained, the amended agreement restricts the amount of water that can be used for cooling to no more than 1,000 average daily gallons. Per the agreement, that water usage will be measured by the city's metering equipment and will be subject to the city's water and wastewater rates.
Americans use an average of 82 gallons of water per day, per the United States Environmental Protection Agency, so the data center's daily water usage for cooling would amount to the equivalent of about 12 individuals' daily water use.
The data center is also prohibited from providing electricity, cooling or networking resources to things like bitcoin operations, per the agreement.
At the meeting, Hut 8 Vice President of Energy Chris Vickery said the agreement was clear and that the company intends to meet the city's request to limit water usage and restrictions on what the data center can be used for.
The agreement on water usage generated some questions from the council.
Ald. Abby Beck, for example, reiterated concerns about sustainability and questioned whether not requiring a closed-loop system in the agreement opens up the possibility of the data center using more water, even though it wouldn't be provided by the city's utility.
"To see it not baked into the agreement gives me great pause," Beck said.
Ald. Kevin Malone asked what recourse the city would have in such a situation.
Newman said the city's metering would indicate how much the data center is using from the city's utility and that, if they saw constant larger quantities of water being discharged, the city would address the data center's water usage with them.
Other council members weren't as concerned.
Ald. Tim Lanci said it was "a little nuts (the council is) spending this much time on water" because it is in the data center's benefit to be as efficient as possible and because environmentally-friendly practices are "where this space is going."
And council member Alice Lohman said she was "uncomfortable with the language" of the agreement, such as the statements related to water usage, and that there is no stipulation in the agreement that the data center won't be used for artificial intelligence.
Ald. James Fahrenbach noted that the data center developers had told the city they wouldn't be mining cryptocurrency because it wouldn't be cost-effective, and noted that AI includes "a myriad of technologies."
Ald. Alan Wolff added that he hadn't seen any contact from residents saying they didn't want the data center to be involved in AI.
And Ald. Tony Malay suggested that neither issue was a major concern, pointing to previous word from the data center developers that this facility couldn't handle the kinds of operations the council expressed concerns about, and said 1,000 gallons of water is essentially a large household's worth.
"I think we're finding ways to change what we decided on this," Malay said.
The agreement was ultimately recommended for approval by the Committee of the Whole, so it went on for a final vote at the Sept. 2 City Council meeting.
At that meeting, Newman reiterated the data center developer's agreement to not use more than 1,000 average daily gallons of water for cooling and to not allow the services at the data center to include blockchain computation.
And Mayor Jeff Schielke emphasized that the project is not yet set in stone.
"A year from now, this (project) could be off the table and be gone if it doesn't continue to go in what we think is the right opinions to do," he said.
Lohman again voiced concerns that what the council agreed upon was not reflected in the agreement.
Lanci stated that he believes the data center will use a closed-loop cooling system, but that the agreement is just allowing the data center to change its cooling method as cooling technology changes.
"Technologies change, things change," Lanci said. "We cannot get in these people's world that intricately, in my opinion. We can't tell them, 'This is how you do business today. This is how you do business forever.' I don't think a lot of business owners would like that."
Ald. Christopher Solfa suggested that this data center project was not out of the ordinary.
"There's no covert situation going on here," Solfa said. "I mean, this is just a business who wants to establish their base here in Batavia for something that is all over the place right now."
Malone echoed that the daily water usage wasn't significant, but said he didn't want to dismiss residents' comments about the process for the creation of the master services agreement, particularly the speed at which the agreement was discussed and approved.
Despite some concerns, the amended master services agreement was approved Tuesday by the council with council members Leah Leman, Alice Lohman and Abby Beck voting against it.