Data Centers in Lexington
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Lexington – Cost-Effective Hub for Regional Workloads
Lexington, Kentucky offers a compelling data center market for businesses that require a low-cost, stable operating environment to serve the Southeastern and Midwestern United States. Its primary advantage is extremely competitive power pricing, coupled with a very low natural disaster risk profile. This combination makes it a strong choice for secondary disaster recovery sites and cost-sensitive production workloads that do not require dense, direct cloud connectivity.
Lexington: At A Glance
| Factor | Rating / Data | Notes |
|---|---|---|
| Global Connectivity Grade | B | Solid regional connectivity, though lacking direct cloud access found in larger hubs. |
| Direct Cloud On-Ramps | 0 – as of September 2025 | The nearest major on-ramp hubs are in Ashburn, VA and Chicago, IL. |
| Power Cost | $0.06/kWh – as of 2023 | Significantly below the national average, driven by a coal and natural gas-heavy grid. |
| Disaster Risk | Moderate (37.13) – as of September 2025 | Very low overall risk score from FEMA, with no single high-impact threat. |
| Tax Incentives | Yes – DC-specific | Kentucky offers sales and use tax exemptions for qualifying data center projects. |
| Sales Tax | 6.00% (Kentucky) – as of 2025 | Standard state sales tax applies, though data center-specific exemptions are available. |
Network & Connectivity Ecosystem
Lexington is a regional connectivity hub with foundational infrastructure capable of supporting enterprise needs. While not a top-tier interconnection market, it provides reliable access to major carriers.
Carrier Density & Carrier Neutrality: The market is served by over 3 network providers as of September 2025. Facilities are typically carrier-neutral, offering a choice of regional and national networks for redundancy and competitive pricing.
Direct Cloud On-Ramps: Lexington has 0 direct cloud on-ramps and serves 0 cloud regions as of September 2025. Businesses requiring dedicated cloud connections must utilize private network extensions or wavelength services to major hubs like Ashburn or Chicago.
Internet Exchange Points (IXPs): Public peering is limited within Lexington itself. Most interconnection occurs through private peering arrangements within local data centers or by backhauling traffic to larger IXPs in cities like Atlanta or Chicago.
Bare Metal: Bare metal server options are available in the region, providing a cost-effective alternative to public cloud for dedicated performance. Providers such as ColoCrossing offer services in this market.
Power Analysis
Kentucky's power landscape is defined by low costs and a traditional energy mix, delivering significant operational savings for high-density deployments.
Average Cost Of Power: Industrial electricity rates are approximately $0.06/kWh as of 2023, which is one of the lowest rates in the United States. This pricing structure provides a substantial long-term operating expense advantage for data centers. The grid is predominantly supplied by coal (around 70%) and natural gas (around 25%).
Power Grid Reliability: The power grid supporting the Lexington area is well-engineered for industrial use. Data centers typically have access to redundant power feeds from separate substations, ensuring high levels of uptime for mission-critical operations.
Market Access, Business & Tax Climate
Lexington provides a stable business environment with strategic market access and attractive financial incentives for data center operators.
Proximity To Key Business Districts: Data centers in Lexington are well-positioned to serve the city's significant healthcare, university (University of Kentucky), and manufacturing sectors. This proximity enables low-latency connectivity for local enterprise and research institutions.
Regional Market Reach: From its central location, Lexington offers effective low-latency access to major metropolitan areas across the Midwest and Southeast, including Cincinnati, Louisville, Nashville, and Indianapolis.
Tax Advantage For Data Centers: Kentucky provides targeted sales and use tax exemptions on equipment and software for qualifying data center projects. These incentives directly reduce the upfront capital investment required to build or expand a facility, improving the project's financial return.
Natural Disaster Risk
Lexington has a very low risk profile for natural disasters, making it an inherently resilient location for critical infrastructure. The FEMA National Risk Index score is 37.13 out of 100, placing it in the "Very Low" risk category nationally as of September 2025.
Key risks are primarily limited to severe weather events common to the region. The main threats include severe wind, tornado, riverine flooding, ice storms, and winter weather. The area has minimal exposure to catastrophic events like earthquakes or hurricanes.
