24 Nov Why the Midwest can be a data center haven
Editor’s note: The notion of Wisconsin as a haven for data centers is not new. A group of lawmakers led by State Senator Ted Kanavas has proposed a tax credit for “green” data centers, which they tout as an incentive for companies to build environmentally friendly data centers in Wisconsin.
The Midwest harkens images of rural America, hard-working individuals and data centers. Data centers?
The Midwest is the dark horse of information technology and the veil is being lifted as to how much of a catalyst the region can be for high tech. A mix of plentiful, inexpensive power combined with multiple renewable energy sources, a highly educated workforce, and excellent quality of life make the Midwest an attractive destination for IT businesses to locate.
There are a number of site selection factors that IT and data centers must consider when looking to locate their business and/or mission-critical infrastructure. For IT equipment, the major selection factors bring the focus down to five primary items:
- Reliable and inexpensive power.
- Renewable energy resources.
- Supportive social and business environments.
- Natural disaster avoidance.
Major Midwest cities include Chicago, Milwaukee, Detroit, Kansas City, Minneapolis, St. Louis, Columbus, and Omaha (where the richest person in the world lives). It also contains secondary market cities such as Des Moines, Cedar Rapids, Madison, and Cincinnati. Midwest cities frequently place in the top 10 for “best of” lists in Forbes and other magazines. They are known for friendly, hard-working people that enjoy low unemployment, quality education, a low cost of doing business, and an unsurpassed quality of life.
Reliable and inexpensive power
When browsing through price per kilowatt-hour energy prices, Midwest states have many of the lowest rates in the country. The average retail price of electricity in Midwest states ranges from six to eight cents per kilowatt-hour, compared with double-digit rates throughout the rest of the country. The Midwest is also blessed with cities that are not as densely populated as those on either coast, so power is much more plentiful and reliable as a result.
Energy companies are very progressive with power capacity, revitalization of technologies used to generate power, and their willingness to work with the communities they serve. CERA (Cambridge Energy Research Associates), a leading advisor to international energy companies, reports that Midwest power markets will continue to be oversupplied over the next five years. Their report on Midwest Power Market Fundamentals, 2008-2012, states that most incremental demand needs will be met by new coal-fired and wind-based generation.
Renewable energy sources
The Midwest is a hotbed of activity for renewable energy activities. The U.S. Department of Energy did an extensive study of America’s wind resource and concluded that wind could provide 20 percent of all U.S. electricity by the year 2030. Minnesota and Iowa place third and fourth, respectively, for installed capacity of wind energy in the U.S. Other abundant resources range from biomass to geothermal and hydroelectric energy to solar.
State governments throughout the Midwest have been known to be very progressive when it comes to renewable energy programs, incentives, and pushing the adoption of new technologies. Iowa alone offers 137 green pricing programs (Source: National Renewable Energy Laboratory). Renewable energy technologies also have the potential to deliver hundreds of thousands of jobs in the coming years.
Supportive social and business environments
Whether it is the quality of education that the Midwest is known for, a low crime rate and low terrorism threat, or simply the cost of living, those in the Midwest enjoy a very high quality of life.
Expansion Management conducts an annual survey of cities to develop a Quality of Life Quotient. The 9th annual survey for small metropolitans listed Midwest cities for ALL of the top 10 cities. Ranks 1 and 2 for the mid-sized metropolitans, and two of the top 10 for large metropolitans, were all Midwestern cities. Midwesterners have always had a strong sense of community, compassion, and a work-hard, play-hard approach to life.
Other major factors that separate the Midwest from the rest of the country include excellent public schools, universities, and continuing education opportunities; high graduation rates for high school students; and a vast, diverse labor market. A 2008 Boyd Company study of the most affordable data center markets listed four Midwestern cities in the top 10 list. The study ranks cities based on the total annual operating cost for a data center, including cost of land, labor, power, and property taxes.
Natural disaster avoidance
Avoiding natural disasters in the U.S. is next to impossible. Presidential disaster declarations have been made in every region of the country and pandemics reach everywhere. For technology companies, natural disaster avoidance is high on the list for protecting mission-critical equipment and people. The advantage of building a data center in the Midwest is not having to engineer for earthquakes, hurricanes, or other natural disasters that do not affect those states.
Network connectivity options
In the past, Midwest states did not automatically come to mind when thinking of vast amounts of dark fiber. This image has radically changed in the past decade, and now there is an abundance of fiber and connectivity to Midwest cities. Carriers and other regional fiber providers have expanded their networks, and connectivity speeds are climbing. State programs and private ventures have created advanced infrastructures to support local businesses.
Statistics and studies aside, the Midwest is an ideal place to start, relocate, or expand a business. Recent data center activity from Google, Yahoo, and Microsoft in the Midwest confirm that it is a quality selection for data centers and information technology businesses.
The opinions expressed herein or statements made in the above column are solely those of the author, and do not necessarily reflect the views of Wisconsin Technology Network, LLC.
WTN accepts no legal liability or responsibility for any claims made or opinions expressed herein.