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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowWhen it comes to large-scale data center activity, Indiana has gone from what feels like zero to 60 in a little over a year.
Until late 2023, Indiana was home to numerous smaller-scale data centers around the state, but it had zero hyperscale centers—large-scale facilities operated by tech giants such as Amazon, Google, Meta and Microsoft.
Since then, all four of those companies have announced plans for at least five hyperscale projects in Indiana. Those projects combined represent nearly $25 billion in total potential investment, with a heavy concentration in northern Indiana.
Part of that activity, undoubtedly, is connected to the data-center-specific economic development incentives Indiana enacted in 2019, which offers significant tax breaks of up to 50 years for operators of qualified data centers. About half of U.S. states currently offer some type of incentive specific to data centers.
But experts say the recent proliferation of data center announcements in Indiana (and other parts of the country) is largely driven by two factors: Big Tech’s huge need for additional data centers to handle the demands of artificial intelligence and the availability of power to run these data centers.
“Generative AI, over the last year, has changed everything. And these tech companies are hugely hungry for electricity and data through data centers,” said Beth Plale, the Michael A. and Laurie Burns McRobbie Bicentennial Professor of Computer Engineering at Indiana University’s Luddy School of Informatics, Computing and Engineering. “So I think [data center operators will] go where they can, is my sense.”
In an August report on North American data center trends, Dallas-based real estate firm CBRE predicted that “markets such as northern Indiana, Idaho, Arkansas and Kansas will continue to draw interest from hyperscalers and developers due to land availability and power availability timelines.”
“We’ve seen data centers built outside of central business districts in Iowa, in Nebraska. There’s announcements in Louisiana, Wisconsin, in Mississippi, which we would have never even dreamed of five or 10 years ago, because everyone wanted to co-locate near the coasts,” said Gordon Dolven, an Indiana University graduate and CBRE’s Denver-based director of data center research for the Americas.
It’s difficult to determine the precise level of data center activity in each state because there is no single source for that information, and various entities offer differing numbers.
But those entities all paint the same general picture: Even with the recent flurry of announcements, Indiana is by no means a hot spot for data centers. The level of data center activity here is tiny compared with the nation’s most active states, such as Virginia, Texas and California.
In its report, CBRE identifies northern Virginia; Atlanta, Georgia; the Dallas/Fort Worth area; Chicago; Phoenix; Silicon Valley; Hillsboro, Oregon; and the New York City metro area as the primary markets for U.S. data center activity. The report also names 10 secondary markets in the United States and Canada, but none is in Indiana.
One common way to measure data centers is by the megawatts of electricity they consume at any given time.
According to numbers provided by Denver-based data center research and advisory firm Baxtel Advisory, for instance, Indiana’s existing data centers currently use a combined 47 megawatts of electricity. An additional 366 megawatts’ worth of projects are under construction, with 3,091 megawatts’ worth in the “potential” category, meaning the projects have been announced but construction has not begun.
So even though the growth in Indiana data center activity has been “massive” recently, “It’s coming off a really small base—a really, really small base,” said Baxtel founder and managing partner Eric Bell.
As a comparison, Bell said, data centers in Texas use 8,296 megawatts of electricity. The state has an additional 5,797 megawatts’ worth of projects under construction and 13,992 megawatts’ worth of potential projects.
Closer to home, Ohio’s numbers for current, under-construction and potential data centers are 1,960, 1,469 and 3,537 megawatts, respectively. In Illinois, those numbers are 1,723, 899 and 2,221.
Bell said he believes proximity to Chicago is one factor driving data center growth in northern Indiana right now.
Once a cloud provider is established in a certain market, he said, that provider typically wants to grow within that same market. And Indiana’s tax incentives and available power make northern Indiana an attractive area for operators who already have data centers in Chicago, he said. “It’s a logical extension of Chicago, to some degree.”
Data privacy laws are also helping northern Indiana attract data centers, said Andy Cvengros, the Chicago-based managing director and co-lead of U.S. data center markets at Chicago-based Jones Lang LaSalle, or JLL, a global real estate services company.
Illinois’ Biometric Information Privacy Act governs how companies handle and store Illinois residents’ biometric information, such as digital fingerprints, face scans and retinal or iris scans.
Cvengros said he’s aware of several data center projects that ended up in Indiana rather than Illinois because Indiana has no such privacy law.
The rush to build additional data centers in Indiana and elsewhere is likely to continue for the foreseeable future, sources say.
In October, New York City-based financial firm Blackstone Inc. forecast that over the next five years the United States will see $1 trillion in data center investments.
Cvengros said he’s aware of multiple Indiana projects that are currently under contract but have not been finalized. He also sees places like Lafayette and Crawfordsville gaining traction as potential sites.
The driving factor to all of it, he said, is that operators are going to sites where electricity is available. “You’re just kind of jumping around playing hot potato—whoever’s got the power.”
Indeed, Morgan County’s plan commission is expected to hear a rezoning request Feb. 10 from an unidentified developer and end user for a proposed data center. The Morgan County Economic Development Corp. has filed the rezoning request for the 391-acre site on the applicants’ behalf. The Morgan County EDC’s executive director, Mike Dellinger, said the property is traversed by an AES Indiana electrical transmission line, which is one reason the site caught the applicants’ attention.
As for how long it might be before Indiana’s available power supply is tapped out, Cvengros was hard-pressed to say. “We’re trying to figure that, as well.”
The answer, he said, depends on factors such as projected demand from both data centers and other users, how much utilities invest in adding capacity, the availability of other types of power sources such as natural gas, and the number of proposed data centers that actually end up getting built.•
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Other than power companies and telecommunications companies, exactly how will Hoosiers benefit from the state of Indiana getting into the data center business?
Is the concept that all the kids are moving away and heading elsewhere, may as well do something else?
The idea that this is positive economic development is laughable. The same old tired idea that any development, is good development.