Wisconsin is in need of statewide legislation that ensures large-scale AI data centers in the state all have to follow the same rules and pay for their energy infrastructure, according to a new report.
“America will not outbuild China by copying its model,” the report from the University of Wisconsin-Madison’s Center for Research on the Wisconsin Economy concludes. “It can compete through private capital, abundant energy, enforceable contracts, and faster construction. Wisconsin has the manufacturers, workforce, land, and industrial experience to compete on those terms.”
The report argues that sales tax exemptions for data centers are reasonable because neighboring states provide the same exemptions, and sales taxes are intended for end use sales, not suppliers like data centers where the product would then be subject to sales tax multiple times.
The report entitled ‘Winning the AI Race: Who should pay for Wisconsin’s data center boom’ detailed how the terms for providing energy to the state’s largest AI data center projects are different and therefore is not durable regulation since the protections in the Public Service Commission’s April 2026 order on costs are not extended statewide.
“The order gets the central allocation right: customers that require dedicated generation must pay for it,” the report said. “But it covers only one utility, leaves part of the transmission exposure unresolved, and can be revisited by a future commission.”
The report cites a Legislative Audit Bureau analysis that showed $1.5 billion in forgone state sales tax during construction and $369 million annually once four certified projects are fully operational.
The report then identified supplying data centers as a large opportunity for the Wisconsin economy to succeed.
“Wisconsin’s larger opportunity may be as a supplier,” the report says. “The state already makes the motors, drives, generators, cooling systems, enclosures, and modular infrastructure the buildout requires. Three Wisconsin manufacturers report at least $1.6 billion in data center orders and backlog, while several others report substantial activity without disclosing a dollar value.
