Data Centers in Rapid City
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Rapid City – Low-Risk Hub with Strong Tax Incentives
Rapid City is a strategic market for organizations prioritizing operational resilience and cost control. Its extremely low natural disaster risk profile, combined with substantial state-level tax incentives, makes it an ideal location for disaster recovery sites, secondary workloads, and long-term data archiving. This market delivers financial and operational stability for risk-averse businesses.
Rapid City: At A Glance
| Factor | Rating / Data | Notes |
|---|---|---|
| Global Connectivity Grade | B | Reliable connectivity for a secondary market, focused on regional traffic. |
| Direct Cloud On-Ramps | 0 – as of September 2025 | Nearest major hubs are Denver and Minneapolis for private cloud access. |
| Power Cost | $0.23/kWh – as of September 2025 | Industrial power costs are offset by a predominantly renewable energy grid. |
| Disaster Risk | Low (14.92 Score) – as of September 2025 | One of the lowest risk profiles in the United States. |
| Tax Incentives | Yes | Multiple DC-specific sales, use, and property tax exemptions are available. |
| Sales Tax | 4.25% – as of September 2025 | South Dakota sales tax. Note that exemptions can reduce this significantly. |
Network & Connectivity Ecosystem
Carrier Density & Carrier Neutrality The market features 1 provider offering colocation services, with access to a focused selection of regional and national carriers as of September 2025. Carrier neutrality within the primary facility ensures competitive connectivity options.
Direct Cloud On-Ramps There are no direct public cloud on-ramps within Rapid City as of September 2025. Businesses connect to hyperscale clouds via private network extensions (PNI) or wavelength services to major hubs like Denver or Minneapolis.
Internet Exchange Points (IXPs) Public peering is not a feature of this market. Most network peering is conducted privately between carriers or routed through major national exchange points in larger metropolitan areas.
Bare Metal Bare metal server capacity is available in the region. Providers like phoenixNAP can service deployments for businesses requiring dedicated, non-virtualized compute resources.
Power Analysis
Average Cost Of Power The average industrial electricity rate is approximately $0.23/kWh as of September 2025. While higher than the national average, the grid's reliance on renewable sources like wind and hydro can provide price stability and help meet corporate sustainability goals.
Power Grid Reliability The power grid serving Western South Dakota is reliable and engineered to support regional commercial and governmental needs. The energy mix is dominated by renewable sources, providing a stable and resilient power profile.
Market Access, Business & Tax Climate
Proximity To Key Business Districts Data centers in Rapid City serve the regional economy, including healthcare, financial services, tourism, and key government installations like Ellsworth Air Force Base. Proximity allows for low-latency support for these local and regional operations.
Regional Market Reach Rapid City provides a strategic digital infrastructure hub for the Northern Plains. It effectively serves businesses and users across South Dakota, North Dakota, eastern Montana, and Wyoming.
Tax Advantage For Data Centers South Dakota offers powerful, long-term tax incentives for qualifying data center projects. These programs include significant sales, use, and property tax abatements on equipment and infrastructure, directly lowering the total cost of ownership for large-scale deployments.
Natural Disaster Risk
Rapid City has a very low natural disaster risk profile, with a FEMA National Risk Index score of 14.92 as of September 2025. This places it among the safest locations in the nation for critical infrastructure.
The primary environmental risks to consider are severe weather events. Key risks include drought, hail, strong wind, wildfire, and winter weather. The area has minimal exposure to seismic, hurricane, or widespread flooding events.
