Data Center site selection has changed over the years. Way back in the ‘90s I remember looking over the (super secret!) fiber maps and trying to figure out where we could get a building close to the MFN or NextLink ring. Back then it was all about the fiber first, building second and then you’d call the power company and make sure you could get 4,000amps delivered, which would usually take 90 days or so.
Power availability became the defining site selection criteria of the 2000’s. Data Centers were growing dramatically, and a shared power circuit, or even dedicated circuits off the local substation, could not keep up with the ever-expanding total power draw. My first experience with dedicated substations came in 2006 with a major utility based in Southern California. I was told we’d have a substation built in two and a half years. It took five. Frustrating as it was, that was the only way to get the capacity needed for that project. The fiber, although always a concern, was no longer the driving factor. As for the building, well, we knocked it down and started from scratch. No more conversions.
As we continue to grow and add new projects, the site selection criteria has morphed yet again. Yes fiber and power are necessary criteria, but the focus has changed to cost. More specifically, cost avoidance. Where are the best incentives? Can I get a tax break on personal and real property? What about sales tax on all those servers? What costs can we avoid, or at least minimize? And about that cheap power, how long can we guarantee that rate?
Where can I operate my cloud for the lowest cost possible?
Prineville, Oregon; Quincy, Washington; Maiden, North Carolina. Unless you grew up there I bet you never heard of those places until huge data centers, of the likes of Facebook, Microsoft and Apple, put them on the map. But the reason they were chosen by the most innovative enterprise data center users is clear. These locations have the right cost structure first, and then the power and the fiber second.
Texas Governor Rick Perry this week has a bill on his desk offering data center users no sales tax on servers, software and other purchases so long as they invest $200 million and create 20 permanent jobs. Other states, including Washington, North Carolina and Virginia have similar laws on the books. Yes, these laws work as intended – Texas will see more data center investment.
Tax incentives will not drive every site selection decision, but it is becoming a larger and larger factor in the analysis; making this my #1 driver.