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Summary:

We interviewed executives at some of the biggest Internet companies, as well as hardware vendors, economic development groups, and utilities to find out why North Carolina has emerged as a hub for Internet leaders mega data centers. Here are the 10 biggest reasons:

Facebook's data center

This article is the second in a four-part series that we’re publishing this week.

If you live on the East Coast, there’s a decent chance that when you log into Facebook, the photos, comments and Likes that you see are being served up from a data center in the quiet, rural town of Forest City, North Carolina. Three months ago, Facebook flipped the switch on the first of two buildings here.

Facebook isn’t the only Internet giant that chose the so-called North Carolina data center corridor as home for one of its most important server farms. Within a couple-hundred-mile radius, Google and Apple have also built mega data centers, as have Wipro, Disney, AT&T and others.

Deciding where to build a data center has always been a complex decision. “We consider probably 50 different factors when we pick a site for one of our data centers,” says Tom Furlong, VP of site operations at Facebook. According to a GigaOM Pro report (subscription required), Microsoft has 43 criteria for its selection process.

But that decision has become increasingly complex as companies begin to factor in access to clean power and a growing population of Internet users in developing markets. Add to that decision the notion that webscale computing is fundamentally changing how servers are built

Around the Apple data center, substations are needed. Data centers consume a lot of power.

and connected and the decision becomes even more complicated. The data center has blown up, according to execs at our recent Structure conference.

We interviewed executives at some of the biggest Internet companies, as well as hardware vendors, economic development groups, and utilities to find out why North Carolina has emerged as a hub for data centers. Here are the 10 biggest reasons:

1). Low-cost power: You need to be able to offer electricity at the price of 4 cents to 6 cents per kilowatt hour before the data center operators will even talk to you, says Duke Energy spokesperson Thomas Williams. That’s how much it costs in North Carolina and that’s far below the national U.S. average. Part of the reason why the power is so cheap in North Carolina is because the electricity mix is 61 percent from coal, 31 percent from nuclear, and only 4 percent from clean power. Coal and nuclear are some of the cheapest forms of electricity generation.

2). Reliable and available power: These data centers are huge — as big as 500,000 square feet for Apple’s — and it’s tough to find places that have enough power transmission capacity available, says Facebook’s Furlong. The area around Charlotte, North Carolina (Duke’s headquarters), already had much of this capacity built out. As the textile industry in the area has contracted, and the local manufacturing and furniture production industries increasingly moved offshore, that has freed up capacity.

Because of that, Duke had extra industrial-sized capacity that was ready to be connected to the data centers, which commonly require energy of anywhere between 20 MW to as high as 100 MW. To put that in perspective Apple says its 40 MW of solar panels, and 5 MW of fuel cell power, will provide enough power for almost 11,000 homes per year.

Maiden, NC

3). Rural areas: A significant amount of North Carolina is rural, and that land is relatively inexpensive and available for large buildings and huge power substations. Data centers and populated areas don’t tend to go together; when they do intersect, they tend to lead to ‘Not in My Backyard’ push back from the local communities. Even in Maiden, a town of just over 3,000 people, about 60 miles northwest from Charlotte, residents are starting to complain about the construction of Apple’s solar farm — particularly the leveling of some 200 acres (over two locations) for the solar panels.

4).  Incentives from counties and the state: North Carolina law gives the state the ability to reduce sales tax on servers, says Furlong. That was a factor for all the Internet players that chose the area. When you have to buy new servers every three to five years those savings can add up.

North Carolina’s legislature approved $46 million in tax breaks for Apple, and local governments slashed Apple’s real estate taxes by 50 percent and property taxes by 85 percent, according to Greenpeace. Google (which was the first in the area, back in 2006) scored about $212 million in savings over 30 years, reported Bloomberg a couple years ago. That included tax breaks, infrastructure upgrades, and other incentives. Bloomberg reported that Google received “more than $1 million for each of the 210 jobs Google said it eventually hoped to create in Lenoir.”

Facebook’s data center

5). Available water: Water is always a factor when picking sites for data centers, and North Carolina has an abundance of rivers and moisture, said Facebook’s Furlong. Water is more crucial for some projects than others, like if it’s a warmer environment and the data center needs extra water for cooling. At the Forest City, North Carolina, site, Facebook is deploying evaporative cooling, which requires a mist spray of water to cool the air as it’s entering the data center.

Google has said that evaporative cooling commonly can use “hundreds of thousands of gallons of water a day,” and that’s why Google is looking at using recycled waste-water at some of its facilities. At Facebook’s data center in Oregon, it built a well onsite to provide water for evaporative cooling and that helps the company mitigate its use of the city’s water resources.

6). Fast deployment: Apple’s data center in Maiden was built within about a year from the time the site was selected, according to Scott Millar, President of the Economic Development Group for Catawaba County, which includes Maiden. That’s because the county had already developed a plot of land for a data center park. Likewise, Forest City also had a ready-to-go business park that it made available to Facebook for its data center. When searching for a site, we’ll “find that there are places where it just takes too long to build it,” says Furlong. My response to them is: “I’m sorry, my development horizon is just not that long.”

7). East Coast traffic: Internet companies are choosing North Carolina because they need a location close to the East Coast. The speed at which a web page is delivered is a major competitive factor for giant Internet companies — a couple milliseconds too slow can rule out a location. North Carolina can provide a quick enough web-serving turnaround for East Coast customers, as could many other locations close to the East Coast.

8). Close to an airport, major city: Data centers, like many big infrastructure projects, need to be accessible for employees as well as for goods and services. Access to the Charlotte airport and the city of Charlotte was a significant driver for the Internet firms. During the height of construction of the data centers, some 600 to 800 workers are involved, and during operation there can generally be 50 to 100 workers.

Workers building out power lines around Apple’s data center and solar farm

9). The Lemming effect: Catawba County’s Millar says there tends to be a clustering effect with data center operators. When one or two big ones come in, the others feel more comfortable following. That’s because the executive, or team, that has to pitch the data center location to the rest of the company and the board feels safer choosing a spot that has already been validated as a successful site. When making hundred-million-dollar – or even billion-dollar – decisions, it’s not surprising that companies try to de-risk the decision by following other companies, says Millar. Other resources in areas can be shared between data centers, like fiber data links.

10). The climate: While North Carolina isn’t exactly cold, Facebook’s Furlong told me that it was one of the only areas on the East Coast where it wasn’t so hot and humid to preclude open air cooling. That allows companies to get rid of the bulk of the power-hungry air conditioners that cool most data centers, and instead use the outside air for cooling, which uses a lot less energy. At the Forest City data center, Facebook cools the air as it enters with a water spray. For the rare occasion that the weather gets too hot or humid, Facebook has built a set of coils that cool the warm moist air as it enters.

Here’s the rest of the 4-part series this week:

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  1. Sorry coal and nuclear are not the cheapest forms of electricity. The reason we pay less for them is we don’t include the external cost in their price. If we included the co2, mercury, and destruction to mine coal and uranium and the still unaddressed problem of all the nuclear waste and the dangers of nuclear power and the fact that both enjoy govt support they would be far more costly than wind solar

    1. Yolanda Troxell – Wolverine Fire rsmurf Thursday, July 12, 2012

      Solar cheap? Let’s see…. I believe solar has gotten it’s fair share of govt subsidy. And do you know what it takes to make solar pannels. The pits that contain serious chemicals are contained and diked and are very hazardous. All forms of energy have costs and risks associated with them. Still Caol and Nuclear are the cheapest.

  2. Katie Fehrenbacher Tuesday, July 10, 2012

    The US at a federal level doesnt put a price on carbon and doesnt include those other externalities. So they are still the cheapest forms of electricity.

  3. Great post.

  4. Great explanations to every reason Katie. Also, adding the pictures was a great idea !

  5. No mention of tornadoes, hurricanes and earthquakes. I imagine this is one of the better places east coast to minimize the possibility of all three, just east of the Blue Ridge on the Piedmont.

  6. Kristin Mendorf Matthews Friday, July 13, 2012

    Can wait for the twister!

  7. Might want to look up a term before you use it. The Lemming Effect is nothing as you described.

  8. Sandeep Kamat Saturday, July 14, 2012

    4c to 6c per kw/hr is cheap. i pay around 11c per kw/hr.
    A 20 MW to 100 MW data center @5c per kw/hr would cost between $9million to $45million in just the electricity cost. Thats a lot of money for just one data center. i wonder who datacenters are needed for Facebook and Google.
    Also given that each server needs about 2kw/hr to operate 100MW

  9. Jeff X Williams Sunday, July 15, 2012

    FYI
    Federal Lawsuit Regarding Bloom Energy

    http://www.breitbart.com/Big-Government/2012/06/21/884-May-Be-Bloom-Energys-Fatal-Number-Fuel-Cell-Efficiency-Federal-State-Tax-Credits

    “Buried deep in the permit application, in Table 1 on page 161 of a 163-page application, was the number 884. On that page, under penalty of perjury, Bloom officially told the world that its energy servers emit 884 pounds of carbon dioxide per megawatt hour.”

    Also buried on page 161 of the permit application is a Table 2 notation that says these 235 “clean” servers would emit 22.56 pounds of volatile organic compounds (VOCs) per day. But Delaware, like other states, regulates VOC emissions at far lower levels (Maryland, for instance, regulates boat repair shops that emit more than 15 pounds per day). Moreover, if the same amount of power had been generated by combined cycle gas turbines, only 0.249 pounds of VOCs would be emitted daily. That’s 90 times less pollution!
    To top it off, because of the Bloom servers’ low efficiency and high capital cost, Delaware citizens will pay Bloom over $200 per megawatt hour of power delivered to their electricity transmission grid. But in January 2012, the U.S. Energy Information Agency said the projected “levelized” cost of electricity over the next 30 years from advanced gas-fired combined cycle power stations is $65.50 per MWH.

    1. For a company like apple they can’t put up a 500 MW, 60% efficient, low polluting combined cycle plant. They can put in bloom boxes to help with their 20MW demand.

      I have no idea why delaware would put in bloom boxes though.

  10. Do you have a source for claiming there are complaints about the construction of Apple’s solar plant(s)? I googled and found one article claiming “no objections were raised” at the planning meeting, and one other one saying there was only some problem with the contractor burning the trees they cleared instead of giving the wood away.

    1. Her source is the residents that she personally talked to when she visited the area. If you had read all four parts in this series of articles, the author stated that some locals had complained of dust and smoke coming from the construction site.

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