To keep up with rising data storage demands, tech companies accustomed to thinking about their resources in terabytes are now racing to build data centers by the hundred-thousand square feet. As these companies start owning assets, they face new challenges and opportunities inherent in operating in local communities. Tech companies can learn a lot from their brick-and-mortar peers about the benefits of being good neighbors.
Subsidizing the cloud
So far, companies building data centers have enjoyed warm welcomes. As they have grown their data center assets, Apple, Google, and Amazon have maintained their status as some of the world's most admired companies. Communities looking to revitalize local economies have been rolling out the welcome mat to data centers in the form of incentives.
Last month, Washington State – home to the data centers of Microsoft, Yahoo, Dell, and others – reinstated a law that exempts data centers from sales taxes on servers and electrical equipment. After losing out on data center contracts to its northern neighbor, South Carolina recently passed a bill exempting data centers from paying taxes on their electricity.
Individual companies have also benefited: Apple won $46 million in tax breaks for its North Carolina data center, while Facebook received roughly $16 million in incentives for its 300,000 square foot data center in Sweden.
Uncertain value for local communities
All of these communities eye a bigger prize: bringing a piece of the high tech boom closer to home. But success stories of economic growth are hard to find. Apple's 10,000 square foot data center in Oregon comes with a promise of only 35 permanent jobs. The eight companies operating data centers in North Carolina have created an average of just 50 jobs per project.
"You get a lot of construction for 18 months or so. For a while, there's a lot of revenue going into the town," David Cappuccio, chief of infrastructure research at Gartner, recently told the New York Times. "But once it's built, these things run virtually lights out."
Next page: How to avoid wearing out your welcome
Communities have begun to notice the gap between incentives and local benefits. In Maiden, North Carolina residents say they haven't seen much of a return on Apple's billion dollar data center. "Apple was the apple of everybody's eye, but that's about it," one resident told the Washington Post. "It was something for everyone to ooh and aah over."
Tech companies should be sensitive to wearing out their welcome. Most immediately at stake are the significant incentives for data centers. Data center siting decisions already involve weighing factors like the cost and source of electricity, the local climate and the cost of land. If incentives dry up, data center providers might face additional siting limitations.
As brick-and-mortar stores like Walmart know, losing the good will of your neighbors can mean a rise in red tape and other headaches. Further down the road, if tech companies neglect to address community dissatisfaction, they could risk tainting their distinguished reputation as models for innovation and responsibility.
How to be a better neighbor?
The most successful community engagement happens when businesses strategically leverage assets from their core business. In addition to providing financial support, Walmart sends members of its world-class logistics team to local food banks to improve efficiency. In drought-prone areas, The Coca-Cola Company works with World Wildlife Fund to turn used syrup containers from local bottling plants into rain-collecting barrels.
It may seem like data centers don't have much to offer their communities – certainly not spare rain barrels. What they do have, however, is substantial energy needs and expertise. The greatest potential for tech companies to improve community engagement is by partnering with the providers of their most important resource: electric power utilities.
Some data centers are already generating renewable energy on-site to meet their power needs, and utilities can advise on renewables and connecting technologies to the grid. In addition to reducing carbon emissions and other types of pollution, this collaboration can serve as a way to implement best practices in the emerging field of distributed renewable generation.
On-site generation facilities and sophisticated energy management tools also make data centers an ideal candidate to anchor the kind of community-based energy solutions leading utilities are beginning to offer. Duke Energy's Envision Charlotte connects local business leaders with technological and municipal resources to "demonstrate Charlotte's national leadership as a sustainable, progressive, cost-efficient place to do business."
Evaluating the potential for strategic partnerships with utilities early in the data center siting process can open up huge opportunities for innovation. That's good for the community and the company that operates in it.
Green data center photo courtesy of Google.