Data Centers in Baku
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Baku – Strategic Digital Hub for the Caucasus Region
Baku is emerging as a critical digital infrastructure hub for businesses targeting the Caucasus, Caspian, and Central Asian markets. Its strategic location and government-backed incentives provide a compelling base for deploying services that require low-latency access to a rapidly developing region. This market is ideal for companies in energy, logistics, and finance looking to establish a digital foothold between Europe and Asia.
Baku: At A Glance
| Factor | Rating / Data | Notes |
|---|---|---|
| Global Connectivity Grade | B | A developing market with improving terrestrial and subsea connectivity to neighboring regions. |
| Direct Cloud On-Ramps | 0 – as of September 2025 | Access is available via private network extensions to hubs like Frankfurt or Istanbul. |
| Power Cost | AZN 0.10 – 0.14/kWh (est.) | Fossil fuels provide over 90% of power, primarily from natural gas. |
| Disaster Risk | Moderate (4.4/10) | Primary risks are seismic activity and potential for river flooding. |
| Tax Incentives | Yes | DC-specific sales tax and import tariff exemptions on equipment are available until 2037. |
| Sales Tax | 18% VAT – as of September 2025 | A standard Value Added Tax applies to goods and services. |
Network & Connectivity Ecosystem
Baku's connectivity landscape is centralized and growing, serving as the primary digital gateway for Azerbaijan and the surrounding area.
Carrier Density & Carrier Neutrality The market features a focused group of over 15 local and regional carriers as of September 2025. While historically dominated by the incumbent, the presence of carrier-neutral facilities is increasing, offering more choice for interconnection.
Direct Cloud On-Ramps There are no direct, in-market public cloud on-ramps from major providers. Businesses connect to cloud services like AWS, Google Cloud, and Azure through private network extensions or IP transit to major European and Middle Eastern hubs such as Frankfurt, Istanbul, and Dubai.
Internet Exchange Points (IXPs) The primary local IXP is AZ-IX, which helps keep domestic traffic within Azerbaijan, reducing latency for local users. Most international peering occurs privately or through upstream transit providers.
Bare Metal Bare metal server options are available from regional providers and can be deployed within local colocation facilities. For global providers, services from companies like Leaseweb or Hivelocity can be connected via the network ecosystem.
Power Analysis
Average Cost Of Power Industrial power costs are estimated between AZN 0.10 and AZN 0.14 per kWh as of September 2025. The grid's reliance on abundant domestic natural gas contributes to stable and predictable energy pricing, which is beneficial for budgeting high-density compute deployments.
Power Grid Reliability The power grid in Baku is reliable, particularly in the central business districts where data centers are located. These facilities are typically supported by redundant power feeds from separate substations and equipped with standard N+1 or 2N UPS systems and generator backup.
Market Access, Business & Tax Climate
Proximity To Key Business Districts Data centers in Baku provide low-latency connectivity to the city's primary commercial hub, the energy sector's corporate offices, and the strategic Port of Baku. This supports industries like oil and gas, financial services, and logistics that are central to the nation's economy.
Regional Market Reach From Baku, organizations can effectively serve a population of millions across Azerbaijan, Georgia, and into parts of Central Asia. Its location on the Caspian Sea makes it a unique digital crossroads for traffic flowing east-west.
Tax Advantage For Data Centers Azerbaijan offers significant tax incentives specifically for data center investment. The government provides exemptions from VAT and import tariffs on technology equipment and services, directly lowering the capital expenditure required to build or expand a data center footprint.
Natural Disaster Risk
Baku has a moderate overall disaster risk profile, with a rating of 4.4 out of 10 as of September 2025. The risk assessment highlights specific environmental factors that require consideration for infrastructure planning.
The primary natural hazards are:
- Earthquake: The region has high seismic risk (7.8/10). Data centers must be built to modern seismic engineering standards.
- River Flood: There is a notable risk of river flooding (6.6/10) in certain areas.
- Drought: The area is susceptible to drought conditions (5.3/10), which can impact water resources.
- Epidemic: The potential for epidemics is rated as a moderate risk (4.3/10).
