As the digital age propels forward at an unprecedented pace, North and South Dakota are emerging as unexpected hotspots for technological advancement, particularly in the realm of artificial intelligence (AI). For property owners in these regions, the rapid rise of AI data centers presents a golden opportunity to enhance property values and stimulate local economies. Tapping into this trend could not only transform the states into key players in the tech industry but also provide substantial benefits to landowners who are keen to capitalize on this booming industry.
By listing properties on LandGate's marketplace, government and private property owners can connect with leading tech companies eager to invest in North and South Dakota's promising landscape for data center development. This strategic decision not only maximizes property value but also positions owners at the forefront of the state's tech industry.
Data Center Developments in North Dakota
As of September 2024, North Dakota hosts 7 operational data centers, but this number is expected to rise. Despite this limited number, North Dakota experienced the highest relative growth in electricity demand from data centers, with a 37 percent increase over four years, according to a July 2024 report by the Energy Information Administration (EIA). At least six additional data centers are in development, as noted by Aaron Birst, Executive Director of the North Dakota Association of Counties.
As first reported by The Information, during an August Public Service Commission meeting, Commissioner of Commerce Josh Teigen disclosed that two companies had approached him and Governor Doug Burgum about developing AI data centers. These projects would initially range from 500MW to 1GW, with the potential to scale up to massive 5-10GW facilities. Each project could reach costs of up to $125 billion. While the companies' identities were not disclosed, they were described as having trillion-dollar market capitalizations, possibly including giants like Nvidia, Amazon, Microsoft, Google, Meta, and Apple.
Advantages of Data Center Development in North Dakota
North Dakota could energy as a hub for the development of data centers, leveraging its abundance of fossil fuel resources and availability of underutilized sites such as retired coal plants. These factors, combined with robust government support, create an attractive environment for large-scale AI data center projects. Additionally, the state’s rich reserves provide a reliable energy supply, essential for powering the energy-intensive operations of data centers.
1) Utilization of Fossil Fuels to Power Data Centers
Unlike many other states across the U.S., electricity and grid connection might not be among the most important concerns for future data center companies setting up shop in North Dakota, with some companies looking to create their own power using natural gas, as Commerce Commissioner Josh Tiegen alluded to.
There is a vision to transform North Dakota into a data center hub, leveraging the state's abundant fossil fuels and its willingness to utilize them. The Department of Commerce views data centers as a potential boon for the state’s oil industry, which grapples with increasing natural gas output from the Bakken Formation. North Dakota’s ample natural gas reserves could address the state's soaring energy demands effectively. This resource could be harnessed for "behind the meter" power generation, allowing data centers to establish their own power plants. While the idea itself isn't new, the scale of implementation is, as noted by representatives from various organizations.
2) Leveraging Retired Coal Sites for Data Centers
Many have highlighted the state's coal-fired power plants as ideal sites for new data centers, due to the existing industrial infrastructure. While Rainbow Energy Center, the operator of Coal Creek Station, has not confirmed a data center utilizing its power, company officials have made public comments suggesting such a possibility. The establishment of new data centers on retired coal sites presents an opportunity to leverage and monetize these underutilized properties.
Across the nation, numerous coal sites have closed in recent decades, mainly due to the low cost of natural gas electricity generation and, more recently, the declining prices of renewable energy. Coal Creek Station almost faced closure until a substantial state initiative prompted Rainbow to purchase it. This competition is further intensified by federally mandated requirements for costly pollution-control equipment in coal plants.
Many government agencies own large underutilized brownfield sites, such as retired coal plants, that may be suitable for data center development. Developing data centers on agency-owned property generates revenue and contributes to local economic growth, among other benefits. If your government agency is interested in discovering if any of your property assets are suitable for data center development, book a call with the government team at LandGate for a free site analysis below:
3) Government Incentives & Policies
Commerce Commissioner Teigen said that the interest in data center projects has increased, adding that he is "at the table with the companies that are most aggressively pursuing this." Teigen is urging the state to simplify the process for companies to rezone land and access power, warning that failure to do so could result in missing out on significant investments.
Data Center Developments in South Dakota
As of September 2024, there are 4 data centers operating in South Dakota, but this number is set to increase. With its cold winters, low occurrence of natural disasters, reduced risk of acts of terrorism, and low operating costs, South Dakota could emerge as a prime location for data center development.
Advantages of Data Center Development in South Dakota
South Dakota offers a promising landscape for data center development, characterized by a solid telecommunications infrastructure and low risk of natural disasters, which makes it an ideal location for maintaining secure and reliable operations. The state's commitment to harnessing its abundance of renewable resources, such as wind and hydroelectric power, further enhances its appeal by providing sustainable energy solutions for the industry. Additionally, strong government support in South Dakota ensures a favorable regulatory environment and access to incentives, which collectively create a competitive edge for developing AI data center facilities.
1) Solid Telecommunications Infrastructure
South Dakota boasts a strong telecommunications infrastructure and a wealth of IT security talent. The local power grid and regional airport adequately support the data center clientele. Additionally, electricity costs in South Dakota are lower than in many other states, offering a financial advantage.
2) Low Risk of Natural Disasters
South Dakota's low risk of natural disasters presents a significant advantage for data center development. In an industry where continuous operation and uptime are critical, the reduced likelihood of encounters with hurricanes, earthquakes, or severe storms provides a stable environment essential for maintaining uninterrupted service. This stability translates to lower insurance costs and reduced risk of costly operational disruptions, making South Dakota an attractive option for data center investments. Moreover, businesses and clients seeking data center services are often concerned with the reliability and security of data storage and management. The assurance of minimal natural disaster-related interruptions further enhances South Dakota's appeal as a data center hub.
3) Abundance of Renewable Energy Sources
The state has a strong track record in renewable energy, with 30% of its electricity generated from wind power, and a further 9% from hydropower. This could prove attractive to companies looking to promote their green credentials by locating their data centers in an environmentally-friendly state.
Furthermore, there is a growing shift towards integrating renewable energy sources into data center operations. Integrating renewable energy sources is vital in supporting the growing data center industry sustainably. Renewable energy provides a green alternative that can meet increasing electricity needs without exacerbating environmental issues, and they are a catalyst for job creation and stimulate local economies by generating employment opportunities in the construction, maintenance, and technology development sectors. South Dakota's ample natural resources present an opportunity for data center developers to construct new projects that are reliant on renewable energy and drive renewable energy development.
4) Government Incentives & Policies
South Dakota offers several tax incentives for businesses, including no corporate income tax, no personal property tax, and no personal income tax on wages. The state's Governor Kristi Noem has also shown support for data center development, stating that she is "committed to empowering businesses to invest in our state and create jobs for South Dakotans." This supportive environment could make South Dakota a highly competitive location for data center development.
Capitalizing on Data Center Demand: Leasing or Selling Opportunities
The potential development of AI data centers in North Dakota and South Dakota highlights the growing interest in utilizing these states’ resources and infrastructure for powering massive computing facilities. With low-cost energy sources, solid telecommunications infrastructure, ample natural resources, and government support for data center development, both states offer compelling reasons for tech companies and data center developers to set up their operations. The continued growth of the digital economy makes it likely that we will see more developments like this across the country as companies look to meet their increasing data storage and processing needs. Therefore, it is an opportune time for public and private property owners in North and South Dakota to capitalize on the demand for data centers by either leasing or selling their facilities to interested parties.
Listing your property on LandGate’s marketplace is an efficient way to showcase your property's potential to host a data center to tech companies seeking strategic locations for their data operations. LandGate’s marketplace offers the advantage of broad visibility and easy access to a large pool of interested lessees actively seeking suitable sites for data center development. With no costs for listing or obligations to accept any offers, property owners can explore this opportunity without financial risk. Find your property on LandGate's map to get started:
