For evidence that a new kind of information economy has come to the West, look not to San Francisco or Seattle, but south-central Wyoming. On the outskirts of Cheyenne, an Air Force town of 60,000 residents, Microsoft is building a massive, $158 million data center, a high-tech warehouse packed with computer servers that will store the company's "cloud" -- software and data like Gmail and Facebook that are used over the Internet. Last April, when Microsoft announced its plans, Wyoming Gov. Matt Mead remarked that "Wyoming is a perfect fit for data centers." Microsoft apparently agreed, in no small part because Wyoming's state government paid the company $10 million to locate there.
Big data centers have been popping up around the West in recent years. Some of the world's biggest Internet companies -- Google, Facebook, Amazon -- are being drawn to the region for a variety of reasons, including hefty incentives from local and state governments trying to attract economic development. The "cloud" would seem to exist in an ethereal, purely digital realm but its material manifestation is staggering, and is reshaping some Western communities. It's a recent trend that raises a couple of questions: Why do companies build data centers where they do, and what's in it for towns like Cheyenne?
The answer to the first question is relatively straightforward. Companies want to build data centers near existing fiber optic cables -- the bundled strands of glass that shoot information around the world at near light-speed. Installing the cables is expensive, so companies try to locate data centers within a few miles of existing networks, which tend to follow interstate highway routes and other major transport corridors.
After that, companies can choose where other factors are favorable. "The biggest thing is cheap electricity," says Jonathan Koomey, a Research Fellow at the Steyer-Taylor center for energy policy at Stanford University, because data centers use prodigious amounts of electricity to power computer servers and keep them from overheating. That's drawn companies to states like Wyoming, where electricity costs half as much as in California or New England. Along the Columbia River, companies tap reliable hydro power at inexpensive industrial rates, one reason that region has become a hotspot for data centers. The data centers in the Columbia River region use about as much energy as 190,000 homes, according to figures released by the Northwest Power and Conservation Council.
Climate is also a factor. Colder, drier climates make it easier to cool the computers, cutting down on electricity costs. When Facebook built its first company-owned data center in Prineville, Ore. in 2010, it installed a cooling system that uses less energy by evaporating water into the dry high-desert air. When T5 recently chose Colorado Springs as the place for a new $800 million data center campus, it cited the cool mountain climate as a major reason. But climate is becoming less of an issue as more efficient cooling systems are developed, says Koomey.
The biggest draw to companies, though, may be the tax incentives offered by local governments and states. Several states, including Washington and Wyoming, waive their sales tax for purchase of data center equipment, saving the companies millions of dollars. Oregon has no sales tax to begin with, and certain municipalities, mostly rural, have designated themselves as "enterprise zones," with certain property tax exemptions. That's saved Google $105 million since it built Oregon's first big data center in 2006 at The Dalles, on the banks of the Columbia River. Some states, like Wyoming, just outright pay companies cash, with hopes of recouping the money through property taxes and indirect economic benefits.
The enthusiasm for attracting data centers may be justified. Labor groups in Oregon welcomed Facebook, which used local, union labor to build the Prineville data center, bringing a solid boost to the region's construction trades. In Quincy, Wash., where half-a-dozen companies including Yahoo and Microsoft have built data centers since 2006, the small town's economy has prospered, says Tim Snead, Quincy's city administrator. According to a 2010 report by the Washington Resource Council, the town's property tax revenue nearly tripled between 2006 and 2009, increasing funding for schools and other public services by millions of dollars, even as the town and county cut property tax rates by 10 percent. After the wave of new construction left town, 220 permanent high-paying jobs remained.
But data centers have also stressed these small towns. When Facebook's data center came online, it used up most of the electric transmission line capacity, leaving local utilities scrambling to come up with enough electricity. In Quincy, Microsoft ran its huge back-up diesel generators -- intended for use during blackouts -- for 3,615 hours in 2010 while it made upgrades to its data center, causing some locals to complain about fumes and noise, according to the New York Times. In 2011, when the local utility threatened Microsoft with a $210,000 fine for overestimating its anticipated power use, the company dodged the fine by intentionally wasting millions of watts of electricity.
Quincy's Snead says there haven't been any notable incidents since 2011, and that overall most people in the community continue to view Quincy's new data centers favorably. But some communities are more ambivalent. Wasco County Commissioner Scott Hege told the Oregonian that when Google got a big tax-break package to build at The Dalles, "the deal that this community got wasn't that great" because the town gave up huge property tax benefits.
In any case, it's clear that big data centers are rapidly and unexpectedly reshaping some Western communities. After Microsoft bought 75 acres of bean fields for its data center near Quincy in 2006, the town coined a new motto: "Where agriculture meets technology!"
Marshall Swearingen is a High Country News intern.