Data Centers in Lexington
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Lexington – Cost-Effective & Resilient US Hub
Lexington, Kentucky offers a compelling market for businesses prioritizing operational stability and low power costs. Its strategic location in the central U.S., combined with a very low natural disaster risk profile, makes it an ideal site for secondary disaster recovery infrastructure and latency-tolerant applications. The market delivers significant value through aggressive state tax incentives and some of the lowest industrial power rates in the nation.
Lexington: At A Glance
| Factor | Rating / Data | Notes |
|---|---|---|
| Global Connectivity Grade | B | Solid regional connectivity with multiple fiber providers, though not a primary national hub. |
| Direct Cloud On-Ramps | 0 – as of September 2025 | Direct access is available via private network extension to nearby hubs like Cincinnati. |
| Power Cost | $0.06/kWh – as of 2023 | Extremely competitive rates position Lexington as a leader in low operating expenditure. |
| Disaster Risk | Moderate (37.13) – as of September 2025 | Very low overall national risk, with primary hazards being severe storms and wind. |
| Tax Incentives | Yes | Kentucky provides multiple DC-specific sales and use tax exemptions for qualifying projects. |
| Sales Tax | 6.00% (Kentucky) – as of 2025 | Data center-specific exemptions can eliminate this tax on equipment and electricity purchases. |
Network & Connectivity Ecosystem
Lexington serves as a reliable secondary market with a growing connectivity fabric. While not a top-tier interconnection hub, it provides sufficient infrastructure for most enterprise and disaster recovery needs.
Carrier Density & Carrier Neutrality: The market is served by over 3 providers, as of September 2025. Carrier-neutral facilities offer access to a mix of regional and national fiber networks, ensuring competitive pricing and redundancy.
Direct Cloud On-Ramps: There are no direct, in-market cloud on-ramps from major providers, as of September 2025. Businesses connect to cloud providers like AWS, Google Cloud, and Microsoft Azure via private network links to primary hubs such as Cincinnati or Nashville.
Internet Exchange Points (IXPs): Public peering is limited within Lexington. Most interconnection is handled privately within colocation facilities or routed through major exchange points in nearby metropolitan areas.
Bare Metal: Bare metal server options are available from providers like Hivelocity and ColoCrossing, offering dedicated compute resources for workloads requiring performance and control.
Power Analysis
Kentucky's power infrastructure is a primary advantage for data center operators, offering both low costs and stability.
Average Cost Of Power: The industrial electricity rate in Lexington is approximately $0.06/kWh, as of 2023. This highly competitive price point significantly reduces the total cost of ownership for power-intensive operations. The grid mix is primarily composed of coal and natural gas.
Power Grid Reliability: The regional power grid is well-engineered, with data centers typically supported by redundant feeds from multiple substations. This design ensures high levels of uptime for mission-critical infrastructure.
Market Access, Business & Tax Climate
Lexington provides a business-friendly environment supported by strategic location and strong state-level incentives.
Proximity To Key Business Districts: Data centers in the area serve Lexington's core industries, including healthcare, education (University of Kentucky), and manufacturing. The central location is ideal for corporate data backup and disaster recovery sites.
Regional Market Reach: From Lexington, organizations can effectively serve a broad geography across the Ohio Valley, Midwest, and Southeastern United States, reaching millions of end-users with reasonable latency.
Tax Advantage For Data Centers: Kentucky offers powerful sales and use tax exemptions on computer system equipment and electricity for qualifying data centers. These incentives directly lower the capital and operational expenses of building and running a data center.
Natural Disaster Risk
Lexington has a moderate natural disaster risk profile compared to the rest of the United States, with a FEMA National Risk Index score of 37.13 out of 100, as of September 2025. This low exposure to major catastrophic events makes it an excellent location for risk mitigation. Key hazards include severe winter weather, tornadoes, hail, strong winds, and riverine flooding.
