Data Centers in Delaware
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Delaware – Strategic Hub with Zero Sales Tax
Executive Summary
Delaware offers a compelling niche in the East Coast data center market for businesses prioritizing capital efficiency. Its primary advantage is the complete absence of sales tax, which dramatically reduces the cost of hardware deployments. While not a primary interconnection hub, it provides a cost-effective colocation alternative for serving the dense Philadelphia, Baltimore, and Washington, D.C. corridor.
Delaware: At A Glance
| Factor | Rating / Data | Notes |
|---|---|---|
| Global Connectivity Grade | B | Solid connectivity, but not a primary peering or interconnection hub. |
| Direct Cloud On-Ramps | 0 — as of September 2025 | Nearest hubs are Ashburn and Philadelphia; private network extensions are available. |
| Power Cost | ~$0.11/kWh (Industrial) | Sourced from a natural gas-heavy grid; costs are competitive for the Mid-Atlantic. |
| Disaster Risk | High (NRI Score: 92.94) | Primary risks include hurricane, coastal flooding, and strong winds. |
| Tax Incentives | No | Delaware does not offer specific state-level data center tax incentives. |
| Sales Tax | 0.00% Sales Tax | A significant financial benefit that eliminates tax on hardware and software purchases. |
Network & Connectivity Ecosystem
Delaware is a secondary connectivity market positioned strategically between larger hubs. It serves as a solid point of presence for regional service delivery but is not a primary interconnection point for national or global networks.
Carrier Density & Carrier Neutrality The state has over 5 network providers, as of September 2025. Carrier-neutral facilities are available, though the provider diversity is much lower than in the neighboring hubs of Ashburn or Philadelphia.
Direct Cloud On-Ramps There are no direct public cloud on-ramps within Delaware, as of September 2025. Businesses requiring dedicated cloud access connect to providers like AWS, Google Cloud, and Microsoft Azure through private network services extending to interconnection facilities in Ashburn, VA, and Philadelphia, PA.
Internet Exchange Points (IXPs) Public peering is limited within the state. Most large-scale traffic exchange is managed through private peering or via the major IXPs located in Philadelphia and Ashburn.
Bare Metal Bare metal server options are available, often through providers who have a presence in regional data centers. Providers like ColoCrossing offer solutions in the area, meeting demand for dedicated, non-virtualized compute.
Power Analysis
Delaware’s power infrastructure is reliable for standard enterprise and colocation needs, though it is not built out to the hyperscale capacity seen in neighboring Virginia.
Average Cost Of Power Industrial power costs are competitive for the Mid-Atlantic region, averaging around $0.11/kWh, as of early 2024. This pricing helps offset other costs for compute-heavy operations. The state’s power grid is heavily dependent on natural gas, which generates over 80% of its electricity.
Power Grid Reliability The power grid is well-engineered and reliable for commercial and industrial use. Data centers in the primary corridors typically have access to redundant power feeds from separate substations to support uptime requirements.
Market Access, Business & Tax Climate
Delaware’s business environment is defined by its advantageous corporate laws and unique tax structure, making it a desirable location for specific types of deployments.
Proximity To Key Business Districts Data centers in Delaware provide low-latency connectivity to the financial, legal, and corporate services industries concentrated in Wilmington. The state's location also effectively serves the major metropolitan areas of Philadelphia, Baltimore, and Washington, D.C.
Regional Market Reach From Delaware, organizations can effectively serve a population of over 25 million people across the Mid-Atlantic with good network performance. It is a logical location for disaster recovery sites for businesses with a primary presence in New York or Northern Virginia.
Tax Advantage For Data Centers The state’s 0% sales tax is its most significant financial incentive. This policy eliminates a substantial cost component for any company purchasing its own servers, storage, and networking equipment for a colocation deployment, directly reducing capital expenditures.
Natural Disaster Risk
Delaware has a High natural disaster risk profile, with a FEMA National Risk Index score of 92.94, as of September 2025. The state's coastal location makes it susceptible to Atlantic weather systems.
Key risks for data center operations include hurricanes, coastal and riverine flooding, strong winds, and severe winter weather. Site selection and facility engineering must account for these potential weather events to ensure operational resilience.
