Data Centers in Duluth
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Duluth, Minnesota, United States – Cost-Effective & Low-Risk Colocation
Duluth offers a compelling data center market for businesses prioritizing low operational costs and high physical security. Its combination of affordable power, generous tax incentives, and a very low natural disaster risk profile makes it a strong choice for secondary backup, disaster recovery sites, and latency-tolerant compute workloads.
Duluth, Minnesota, United States: At A Glance
| Factor | Rating / Data | Notes |
|---|---|---|
| Global Connectivity Grade | B | Solid regional connectivity, though not a primary national hub. |
| Direct Cloud On-Ramps | 0 – as of September 2025 | Nearest on-ramp hub is Minneapolis; private network extensions are available. |
| Power Cost | $0.08/kWh – as of 2021 | Competitive industrial electricity rates contribute to lower operating expenses. |
| Disaster Risk | Low (24.66 Score) – as of September 2025 | Very low exposure to major natural disasters like earthquakes or hurricanes. |
| Tax Incentives | Yes | State sales tax exemptions are available for qualifying data center equipment and software. |
| Sales Tax | 6.875% – as of September 2025 | Minnesota state sales tax. |
Network & Connectivity Ecosystem
Duluth is a secondary market with reliable, though not extensive, connectivity options. The ecosystem is sufficient for regional enterprise needs and disaster recovery but is not built for high-frequency trading or other ultra-low latency applications.
Carrier Density & Carrier Neutrality: Duluth has a focused carrier presence, with at least 2 providers operating in the area as of September 2025. The market offers carrier-neutral facilities, providing choice and redundancy for network services.
Direct Cloud On-Ramps: There are no direct public cloud on-ramps within Duluth as of September 2025. Businesses connect to major cloud providers like AWS, Google Cloud, and Microsoft Azure via the primary regional hub in Minneapolis. Private network extensions using point-to-point circuits or wavelength services are common methods to establish secure, dedicated cloud access.
Internet Exchange Points (IXPs): Public peering is limited in Duluth. Most network peering is conducted privately between carriers or routed through the MICE internet exchange in Minneapolis to connect with regional and national networks.
Bare Metal: Bare metal server options are available in the region, typically through providers located in the larger Minneapolis market. Services from national providers like Hivelocity or ColoCrossing can serve the area, offering dedicated compute resources.
Power Analysis
Duluth benefits from Minnesota's stable and reasonably priced power grid, making it an attractive location for managing energy-intensive infrastructure.
Average Cost Of Power: The industrial electricity rate is approximately $0.08/kWh as of 2021. This competitive pricing can significantly reduce the total cost of ownership for data center operations compared to more expensive coastal markets.
Power Grid Reliability: The region's power grid is well-engineered and reliable, with infrastructure designed to handle harsh winter conditions. Data centers in the area are typically supported by redundant power feeds from separate substations, ensuring high uptime.
Market Access, Business & Tax Climate
Duluth provides a stable business environment with significant financial incentives aimed directly at the data center industry.
Proximity To Key Business Districts: Data centers in Duluth serve local and regional enterprises in healthcare, logistics, and education. Proximity supports businesses that require a local data presence for performance or regulatory reasons.
Regional Market Reach: From Duluth, digital services can effectively reach Minnesota, Wisconsin, and parts of the Upper Midwest and Canada. It is a strategic location for disaster recovery sites for companies headquartered in the Minneapolis-St. Paul metropolitan area.
Tax Advantage For Data Centers: Minnesota provides a state sales tax exemption on data center equipment, software, and electricity for qualifying facilities. This incentive directly lowers the capital and operational expenses of building and running a data center, improving the return on investment.
Natural Disaster Risk
Duluth has a very low risk of natural disasters, making it one of the safer locations in the United States for critical infrastructure.
The region has a FEMA National Risk Index score of 24.66 out of 100, placing it in the "Very Low" risk category as of September 2025. The primary environmental risks are related to severe weather events. Key hazards include cold waves, heat waves, severe wind, tornadoes, and winter weather. Risks from earthquakes, hurricanes, and coastal flooding are negligible.
