Why Are There So Many Data Centers in Iowa?

Source: 
Coverage Type: 

The variables that determine where to locate a data center form a carefully calibrated form of real estate alchemy. When I’ve asked data center operations managers, the answer has varied from approximately forty characteristics to a blunt four: "Networks, land, power, and taxes." Regardless of the exact incantations and calculations performed, many companies have concluded that central Iowa was an ideal location for their data centers.

While there are somewhat romantic historical reasons that make Iowa a compelling location for data centers, the majority of factors that attracted these companies speak to more contemporary concerns, like power costs and environmental impact. Iowa's electricity rates are, relative to many other states, low. According to the U.S. Energy Information Administration, Iowa's electricity rates for August 2015 were 10.92 cents/kilowatt for commercial use and 7.03 cents/kilowatt for industrial use (for comparison, California's power rates are about 18.13 cents/kilowatt commercial and 13.87 cents/kilowatt industrial). While that rate isn't that much lower than the national average, Iowa also doesn't apply sales tax to power use. And while the majority of that power doesn't come from wind, it's a significant source - in 2013, 27.5 percent of Iowa's electricity generation came from wind power (58.5 percent came from coal).


Why Are There So Many Data Centers in Iowa?