South Dakota is weighing its first 500 MW‑class data center site near Sioux Falls, with zoning approved but still vulnerable to a citizen referendum and no end user signed yet.
The developers are positioning the site for hyperscale, AI, or “neocloud” GPU‑heavy workloads, but the economics hinge on a proposed 50‑year sales tax exemption on IT and software, which would mainly benefit the eventual operator.
Power is the make‑or‑break factor: Xcel and Gemini have verified up to 500 MW is feasible, but only if Gemini funds a new on‑site substation and Xcel grid upgrades, with long‑term take‑or‑pay style power agreements.
Water is constrained by design, with the city limiting use to “domestic” levels and the developer committing to modern low‑water cooling, which matters as AI data centers face rising scrutiny on resource intensity.
Gemini is a first‑time sole data center developer with other sites in power‑constrained markets, so execution risk is real, and the project is still at concept stage pending a flagship tenant.
This is a good link to watch for how second‑tier markets use tax policy, utility partnerships, and land use rules to compete for GPU‑driven AI builds.
Source: Sioux Falls data center developers detail next steps – SiouxFalls.Business
