At the Fifth Annual Southwest Data Center Summit, a discussion between data center operators, city and state officials, and electric utility companies quickly turned to what they can all do for each other.
Every company is a technology company these days. And nearly every city is interested in luring high-profile tech companies to invest in their town.
Google kicked off the craze in 2007 when it announced plans to invest $600 million in a new facility in Council Bluffs, Iowa. In October this year, Facebook began construction on a data center in Los Lunas, New Mexico, which was expected to cost $250 million in its initial phase alone. In November, Microsoft announced plans for its fifth expansion in six years at a data center site in Boydton, Virginia, representing a total investment of nearly $2 billion.
What city doesn’t want a piece of that action?
At the Fifth Annual Southwest Data Center Summit in Phoenix, a discussion between data center operators, city and state officials, and electric utility companies quickly turned to what they can all do for each other. The panel discussion was part of a one-day regional summit hosted by CapRate Events, which specializes in property related conferences and is the organizer of the National Data Center Summit Series.
Land, water, electricity . . . and more
Data centers move to a city or town for basics like land, water, and electricity. And more. Keith Dines, Director of Acquisitions and Development for Aligned Data Centers, said, “Of course we start with site selection, but the criteria have really changed. We care about power and water and fiber and safety from environmental hazards, but we also care about criteria like tax incentives, which enable us to offer more services and better pricing to our customers.”
A big part of finding the right location, Dines said, is being able to get up and running quickly, and being able to offer the best services and prices to our customers. The ability to do that is largely influenced by public officials. Dines said, “I have to compliment the public officials in the Greater Phoenix area. They’ve been fantastic to work with.”
The same goes for the local power utilities, Dines said. “What’s really important and what’s not often talked about is the energy provider – not only the rate they charge, but the capacity of the infrastructure that’s in place, and the provider’s willingness to work with you.”
Economic development on steroids
Consensus on the panel was that the ideal data center location is one that works well for everyone involved – the data center operator, as well as local authorities and utilities. Utilities, of course, benefit from having new customers. Cities and states benefit from the influx of investment, which has ripple effects through the economy.
In other words, there’s good reason cities and states are eager to attract data centers. Geoff Shumway, Vice President of Business Expansion at Arizona Commerce Authority, said, “Our mission is to foster and promote quality job creation and positive economic impact for the state. Recently we are a lot more focused on data centers, which have tremendous economic impact. These are the types of companies we want to attract.”
“Data center development is often economic development on steroids,” said Mark Loftus from Dakota Electric, an electric cooperative in the Minneapolis/St. Paul area.
Growing demand for renewable energy
Dines told the audience – made up of data center developers, investors, engineering firms, and end-users – that the data center market is changing because of a growing interest in sustainability and, in particular, renewable energy. “A half dozen mega data center users – the cloud providers, Azure, Softlayer, Google, and Amazon Web Services (AWS) – are at one end of the spectrum, accounting for half of the demand for renewable energy,” he said.
“For colocation data centers aiming to play at that end of the spectrum, with the cloud providers,” Dines said, “if you don’t have the ability to provide 100% renewable power, you won’t even get asked to the dance. That’s just becoming a requirement.” A few years ago renewable energy was “nice to have” but now it’s a flat out requirement for a data center to even be considered. More and more small- and medium-sized companies are also asking about renewable energy, Dines said.
That’s another factor that makes Arizona an ideal location for a data center: the utilities’ development of renewable energy sources.
Perhaps more so even than other business developments, building a data center is an undertaking that requires close collaboration between the data center operator, state and local officials, and the power utilities. So in addition to the “basic” criteria a data center provider should consider when scouting a new location, there’s other criteria as well, including the ease of doing business, tax incentives, and relationships with utilities. They’re all reasons we love Phoenix and Arizona.