Chicago-based Decennial Group is looking at investing $7 billion in an expansion of the Digital Crossroads data center at the former State Line Generating Plant on Lake Michigan in Hammond, right on the border of Chicago. It's looking to invest $2 billion to build more buildings to house computer servers at the isolated lakefront site, which is ringed off by railroads and power lines, and another $5 billion in computer equipment.
Hammond Mayor Thomas McDermott Jr. said he's been working to get the deal done for years and has an agreement with the data center developer to fund the city's College Bound program for 20 years, putting thousands of kids through college. However, officials have concerns about whether the Merrillville-based utility NIPSCO will be able to supply power fast enough to the site to be able to secure the investment.
"It's not a lot of permanent jobs because it's basically a hotel for computers," he said. "But they're high-paying tech jobs, this can bring more tech investment, and it would be huge for the city."
The Digital Crossroads data center expansion would be the largest private sector investment in Northwest Indiana history. It would be nearly double the $4.2 billion the BP Whiting Refinery invested in the multi-year modernization project that allowed it to refine crude oil instead of Texas sweet, which had been the largest private-sector investment in Indiana history until Amazon Web Services recently started building an $11 billion data center in New Carlisle.
Like utilities across the nation, NIPSCO is now figuring out how it will fund new capacity for the data center building boom ignited by a growing demand for data, especially from the rising use of artificial intelligence. It filed a case with the Indiana Utility Regulatory Commission to allow it to create a spinoff called GenCo to negotiate rates directly with the data centers that would consume the additional power that would have to be supplied.
NIPSCO spokespeople said the subsidiary would shield existing customers from the cost of risk of bringing on so much new electric generation capacity. Industry observers project that billions of dollars worth of data center projects will come to Northwest Indiana over the next few years due to spillover from Chicago and the state's favorable tax incentives.
David Pavlik, a managing member of Decennial Group, filed testimony with the IURC in the GenCo case in which he expressed concerns about how a spinoff might affect the expansion plans for the 20-megawatt, 105,000-square-foot Digital Crossroads data center that replaced a coal-fired power plant that was one of the biggest polluters in the United States.
"After initial construction was completed in November 2020, DX Hammond’s predecessor began leasing out its available server capacity to cybersecurity firms and large cloud service providers that provide computing and storage services at enterprise scale," Pavlik wrote in his testimony. "DX Hammond purchased the Hammond Data Center in July of 2021, and purchased expansion land on the Digital Crossroads Campus in 2022 and 2023. By early 2024, the Hammond Data Center had reached capacity. DX Hammond began planning DX3 in 2022 and began engaging potential customers for the DX3 site in 2024."
The developer has been working with NIPSCO since early 2023 to bring more power to the site, paying it millions of dollars for feasibility, design and engineering studies.
"The site can currently only support up to 20 megawatts of load via a dedicated substation. DX Hammond intends, however, to add 1,800% more artificial intelligence data center computing capacity, which will occupy over 400,000 square feet of additional facility space and require over 200 megawatts of incremental power in order to host tens of thousands more servers in this second phase," Pavlik wrote.
Digital Crossroads would end up as a mega load customer that McDermott said would end up consuming more power than U.S. Steel's Gary Works steel mill.
"The need for DX3 to have access to reliable and affordable power infrastructure is foundational to the DX Hammond team spending thousands of man-hours negotiating firm lease terms with AI-capable customers, soliciting billions of additional investment capital to be deployed for the benefit of the Northwest Indiana local economy, developing site-specific engineering plans, and securing incentives with the City of Hammond that benefit both our AI-capable customers and the City of Hammond community," Pavlik wrote. "All of these efforts—a projected total of over $7 billion of development, tens of millions of dollars in new tax revenue, and the creation of cutting-edge technology that can form the basis of an AI economy for Indiana—is dependent on successfully contracting with NIPSCO as a 'megaload customer.'"
More than 300 construction workers built the first phase of the Digital Crossroads data center, which was a $120 million investment. It now employs 20 workers, as well as local tradesmen who help maintain and repair it.
Decennial Group expects the expansion would employ more than 1,200 construction workers for months.
"This would mean a ton of jobs for the guys," Northwestern Indiana Building & Construction Trades Council Business Manager Randy Palmateer said. "It was a great facility to build. They hired a local workforce. This would be a good development to get."
Decennial Group is looking at investing $2 billion in construction in the expansion, far more than earlier contemplated, as the data center market has exploded since the project was first announced in 2018. It would hire an estimated 36 more full-time workers after the work is complete.
"Through the initial investment and continual reliance on the local workforce, the project will further solidify the region as a growing hub for innovation and economic opportunity. The approximately $2 billion construction investment will facilitate an additional $5 billion of investment in highly specialized, state-of-the-art AI, quantum computing and advanced computing infrastructure," Pavlik said. "This investment will lay the foundation for next-generation jobs in the community for decades to come and serve as the anchor for research and development on cutting-edge technologies that will be used across the United States."
McDermott said the site was ideal for a data center as it had no neighbors to complain, which has held up data center projects in Porter County. He said the investment would be huge, bringing the city more property tax revenue and completely paying for the College Bound program that sends Hammond High School graduates to state colleges for the next 20 years.
"My administration has worked exhaustively for more than six years to recruit advanced AI and quantum computing projects to Northwest Indiana. In fact, Hammond is already home to Indiana's first data center, and we intend to build on that foundation," he said. "Right now, we're preparing for a major expansion of the Digital Crossroads Hammond data center campus, set to kick off this summer. This new data center project is a huge win for Hammond and all of Northwest Indiana. It will employ hundreds of trades workers — a major victory for our local unions — and it moves our region forward in the rapidly growing AI industry."
McDermott said he has been meeting regularly with NIPSCO leaders to try to ensure that enough power can be extended to the site to bring the project to fruition.
"At this point, the only piece we are waiting on is NIPSCO. We need their commitment to provide the large amount of power this data center requires. As soon as NIPSCO finalizes that agreement, Hammond is ready to move forward and close this deal," he said. "I'm cautiously optimistic, but let me be clear: If NIPSCO does not act soon, Indiana risks losing this investment to one of the many states aggressively courting this project. Time is of the essence."
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