Crusoe/Tallgrass Power Plant and Data Center
- hollingsheadforcom
- Sep 12
- 6 min read
Updated: Sep 16
This is a Wyoming News article authored by Alyssa Tolman in the Wyoming Tribune Eagle on September 11, 2025
Crusoe, Tallgrass partnership reinforces Cheyenne’s role as a prime location for data centers | Local News | wyomingnews.com
Crusoe, Tallgrass plan reinforces city’s role as prime data center location
https://wyomingnews-wy.newsmemory.com?selDate=20250911&goTo=A01&artid=2&editionStart=Wyoming%20Tribune Eagle
ALYSSA TOLMAN
Wyoming Tribune Eagle
September 11, 2025
CHEYENNE — As home to two in-development data centers for two of the largest technology corporations in the nation, Meta and Microsoft, Cheyenne has become an epicenter for other companies looking to build such centers, and power plants to support them.
The most recent in this development is a partnership between Denver- based artificial intelligence company Crusoe and Cheyenne-based energy infrastructure company Tallgrass.
CRUSOE/TALLGRASS POWER PLANT AND DATA CENTER
Betsey Hale, Cheyenne LEADS CEO, said Crusoe and Tallgrass are building both a data center and a large natural gas power plant to power new potential data centers.
The power plant will start at 1.8 gigawatts, but can be scaled up to 10 gigawatts, which is equivalent to 1 million homes worth of power. The power supplied by the plant using Rocky Mountain Natural Gas — a subsidiary of Black Hills Energy — will be used for companies that want to build data centers in a cluster around it.
According to a Crusoe news release published July 24, the new AI data center campus will integrate multiple energy sources fueled by natural gas and future renewable energy developments in the region.
The campus is designed to support high levels of power reliability and efficiency for the large computational demands of AI. Its proximity to Tallgrass’ existing carbon dioxide sequestration hub will also provide long-term carbon capture solutions, according to the release.
Tallgrass officials did not answer requests for comment from the WTE by publication time. Crusoe officials told the WTE they were not allowed to speak about the project yet.
WHY CHEYENNE?
Mayor Patrick Collins said Cheyenne is a popular location for data centers for an abundance of reasons. First, Cheyenne is home to Black Hills Energy, an electricity and natural gas provider.
Black Hills offers the Large Power Contract Service Tariff, which is required by the Public Service Commission to sell electricity.
The tariff requires corporations to pay 100% of the burden to bring electricity to their plan.
“When a data center, or what we call a hyperscaler, comes in, and they want to get electricity, this tariff says, ‘(Black Hills) can give you electricity at a very favorable rate, but you can’t impact the local public,’ so the residences, the small businesses and things like that,” Collins said.
If there’s an upgrade to a substation or power grid, Black Hills Energy won’t pay for that and charge it back to the residents, Collins said. They would actually charge the data center.
The second thing that makes Cheyenne stand out is the high-speed internet line that runs along the Union Pacific Railroad right of way along Interstate 80, which makes the latency quicker.
Cheyenne also has a cooler, less humid climate, which is attractive to companies looking to build data centers because one of a data center operator’s highest costs is cooling, Collins said.
“If you have thousands of (computers) in a room, imagine how hot it would be,” Collins said. “They can’t survive in a really hot environment.
So what has to happen is you have to cool them. That is a big advantage of what I think Cheyenne has.”
Another upside is that Cheyenne has acres upon acres of available land, Collins said, and a government that is willing to go through the process of annexations, zoning and land-use plans.
Collins said some states would take years to get these things done for a data center.
But here in Wyoming’s capital city, when Microsoft was looking into building its first data center, the entire preparation process took about two months.
Wyoming is one of 36 states that has a sales tax exemption for data centers, Collins said, because data centers are filled with billions of dollars worth of servers, which last about three years. When those servers reach the end of the threeyear mark, the company has to replace them. With the exemption, the company does not have to pay that sales tax.
“The reason why we had to (have the exemption) is we would never have a data center without that,” Collins said.
“There’s no large data center built in this country that’s not in a state that has this kind of an exemption. … If we got rid of that, they would rent for three years, and when those data centers expired, they would just move to another location.”
Without the exemption, sales tax could be up to $60 million every three years, which is more expensive than the buildings that are holding the data centers, Collins said.
Lastly, data centers are known to use copious amounts of water, Collins said, which would be bad for Cheyenne’s dry climate. But last year, Collins said data centers in Cheyenne used about 140 acre-feet of water. That’s enough to provide water to 560 homes, which is only 1% of the total amount of water used last year.
Rachelle Zimmerman, LEADS director of business recruitment and retention, said when a company is interested in building a data center in Cheyenne, they contact her. She said she always talks with companies looking to build data centers in Cheyenne about their water usage plans before approving development.
“There are other places that use a lot more water,” Collins said. “But with Cheyenne, what we’ve told the data centers is that they can’t use those older, inefficient water usage cooling systems. They’ve got to use newer technologies and more what we call ‘closed loop systems’ that reduce the amount of water that is necessary.”
Hale said when the first Microsoft data center came to Cheyenne in 2012, they initially used water as a way to cool their hardware.
“But all of our subsequent data centers, they don’t use that,” Hale said. “They cool their systems (in a way similar to) a radiator on your car. So I think one of the things that’s most important is this idea that data centers are stealing water is really wrong.”
BENEFIT TO CHEYENNE
It’s no secret that data centers use plenty of electricity and a bit of water. But as a way to offset that, the companies pay more in taxes to the city, county and state than almost any other industry, Collins said.
“We’re talking millions of dollars a month in sales taxes that they pay on the electricity that they use,” Collins said.
“They don’t pay sales tax on the servers, but they have to pay property tax on them.
And just for the city of Cheyenne, for every billion dollars worth of property they have, it’s $760,000 of property taxes that comes to the city.”
The property taxes are spread all across the city, Collins said. A portion of it goes to the Laramie County Library, fire districts, Laramie County Community College, local nonprofits, the city, the county and more.
The city also has a franchise fee that data center companies have to pay to use electricity.
“From my perspective, we’re trying to grow an economy here that’s maybe a little bit not as impacted by the boom and bust of the oil and gas that’s affected our state for years,” Collins said. “So, we’re trying to grow an economy that will give us enough tax dollars, and that we can provide the quality of life and get good roads and all the things that we’re trying to do here in Cheyenne, and I think this is an important component of that.”
Data centers also bring diverse, high-paying jobs that range anywhere between $144,000 and $175,000 per year.
Laramie County Board of Commissioner Chairman Gunnar Malm said in a news release Aug. 27 that balancing large-scale development with local business people should be a top priority.
“As these projects move forward, it will be vital for Crusoe and others in the data sector to work hand in hand with local contractors and tradespeople,” Malm said in the release.
“We must make sure that our skilled workforce continues to survive and thrive in a competitive wage market. That’s how we protect both opportunity and quality of life for our residents.”
Alyssa Tolman is the Wyoming Tribune Eagle’s local government/business reporter. She can be reached at 307-633-3167 or atolman@wyomingnews. com.
