Data centers: Wyoming’s next Powder River Basin?

Defeating House Bill 88 – Data center tax exemption-repeal, which would have eliminated the tax preferences to data centers, is not enough if Wyoming wants our piece of this growing industry. If we truly want our fair share of the $20 billion spent annually on data center construction (creating high paying jobs that use many of the skills found in our mining sector), we also need to embrace renewable energy.

A data center is an enormous building filled with servers, routers, switches, controllers and firewalls. They are the factories of tomorrow, and are mostly owned by enormous and wealthy companies. 

I understand the frustration felt by backers of HB 88, who question why Microsoft shouldn’t have to pay Wyoming taxes while the owners of the gun shop and lumber yard pay theirs. Nonetheless, other states are offering these same tax breaks. Which means that if we want to get into the game, we have to pay the ante.

However, competing on tax breaks alone is not enough to wrest business from nearby states like Utah and Nevada, which are home to over ten times the number of data centers as Wyoming and are closer to metropolitan areas. Fortunately, our state has something data centers owners need far more than tax abatements: Massive fiber backbones, land and if we so choose, a low carbon footprint. 

Some of the highest capacity fiber optic cables in the country run east-west through the Interstate 80 corridor and north-south between Cheyenne and Sheridan. That’s because existing railroad rights of way greased the skids for laying fiber. We also have a lot of land that is flat, easy to access and inexpensive when compared to many other parts of the country.

Which brings us to electricity and temperature. Data centers use massive amounts of electricity to power the equipment and cool the building. The largest ones require over 100 megawatts — more than what is necessary to power the entire city of Cheyenne. In fact, if the IT sector were a country, it would be the third largest user of electricity in the world, behind China and the United States. That also means that companies like Facebook and Google collectively contribute as much CO2 emission as the entire airline industry.  

Which is why Microsoft, Apple, Amazon, AT&T, Netflix and many similar companies have pledged to be carbon neutral by 2030. That’s tough to do when your facilities consume more energy than entire cities. And their problem is getting worse. Because of population growth and our insatiable appetite for streaming video, data centers are projected to grow from 2% of global electricity use to a whopping 7%.

Wyoming, which has the best coal reserves in the country, also has the country’s best wind for electrical generation. As well, especially in our southwest corner, we have considerable solar capacity. In parallel, we have the fourth lowest average temperature in the lower 48, which means less energy required to cool the building. We are in a perfect position to offer data center builders a low carbon footprint along with land and fiber. Taken together, Wyoming can offer a package that few other states can match.

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But we’re losing the race to states with far less to offer — states like Nevada, Utah and Arizona — because of our internal struggle over renewables. If we want our share of this enormous market, and to find jobs for our out-of-work coal miners and rail workers, Gov. Mark Gordon and his economic development team should fast-track our wind and solar generating capacity with the same enthusiasm we once applied to developing our coal mines. We know by now that more wind and solar generation along I-80 won’t have any impact on what happens nationally with coal production. 

We should market the heck out of our state, making it clear to companies like Apple and Amazon that if they want something more than a tax break, if they want land, fiber and low carbon footprint, there is no better state than Wyoming!