A lot of people wonder why data centers aren’t built only at the arctic and antarctic circles to take advantage of year-round free cooling.  The answer, in a word, is incentives.  When looking more indepth, a few words behind that are taxes and power costs.

The cost of power is one of the strongest reasons behind data center locations.  Oregon has attacted Google, Apple and Facebook for the low cost of power.  By negotiating tax breaks a good deal gets even better.  Tax incentives have been many and long, ranging from lower property taxes to server equipment taxes to business furnishings taxes.  When added up those taxes make up a big savings of the overall operational costs at a site.  State and local governments are aware of this and compete to lure data centers by offering better rates, longer terms, negotiating for lower power costs, or easing permit and regulations for a smooth process.

Those governments are hoping to lure a data center to their area, but the benefits can be murky when compared with the lower number of jobs provided and money made back by the community.  The construction is a one-time event, with additions and modifications usually separated by many years.  The data center may provide high-end tech jobs for the area, but if the data center becomes a ‘lights-out’ facility, these may change to security jobs instead.  On the other hand, the infrastructure for the surrounding communities may have been upgraded to accommodate the data center needs.  Not only power is considered, but water, roads, and civil projects are undertaken to support the data center.

Fiber connectivity has been an issue, but not as much as it used to be as more networks become available.  When comparing the cost of power and tax incentives to the potential savings from the reduction of cooling, the amounts aren’t yet as favorable for locating a data center at a latitude near 66.6 degrees north or south.

Posted in: Costs, Location

Filed under: Apple, Facebook, Fiber, Google, Incentives, Land costs, Location