Data Centers in Rapid City
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Rapid City, South Dakota – Reliable & Low-Risk Digital Gateway
Rapid City is an emerging edge market ideal for organizations requiring a secure, low-risk location for disaster recovery or to serve regional users across the Upper Midwest. The market's primary advantages are its exceptionally low natural disaster risk and strong state-level tax incentives, which combine to lower long-term operational costs and protect critical infrastructure.
Rapid City, South Dakota: At A Glance
| Factor | Rating / Data | Notes |
|---|---|---|
| Global Connectivity Grade | B | Represents a secondary market with solid regional connectivity options. |
| Direct Cloud On-Ramps | 0 – as of September 2025 | Cloud access is available via network extension from hubs like Denver or Minneapolis. |
| Power Cost | $0.23/kWh, as of September 2025 | High renewable energy mix, primarily from wind and hydro sources. |
| Disaster Risk | Low (NRI Score: 14.92), as of September 2025 | Significantly below the national average for natural hazard events. |
| Tax Incentives | Yes | Multiple sales, use, and property tax exemptions for qualified data centers. |
| Sales Tax | 4.25% (State), as of September 2025 | Data center-specific exemptions can significantly reduce or eliminate this cost. |
Network & Connectivity Ecosystem
Carrier Density & Carrier Neutrality The market is served by at least 1 colocation provider, as of September 2025, with connectivity from regional and national carriers. This provides foundational options for redundancy and network resilience, though carrier density is not as deep as in primary hubs.
Direct Cloud On-Ramps There are no direct public cloud on-ramps within Rapid City. Organizations connect to hyperscale clouds by utilizing private network links, such as PNI or wavelength services, to major interconnection hubs like Denver or Minneapolis.
Internet Exchange Points (IXPs) There are no public Internet Exchanges in Rapid City. Most network peering is conducted privately between carriers or established within facilities in larger regional markets.
Bare Metal Bare metal server options are available in the region, primarily through national providers that can service the market. Deployments from providers like Hivelocity can serve workloads requiring dedicated physical hardware.
Power Analysis
Average Cost Of Power The industrial power rate in Rapid City is approximately $0.23/kWh, as of September 2025. While this cost is higher than in some other markets, it is paired with a grid that benefits from a high percentage of renewable sources, particularly wind and hydroelectric power.
Power Grid Reliability The power grid supporting Rapid City is engineered for local industrial and commercial needs, offering stable service. The energy mix, with its strong renewable component, contributes to a predictable and increasingly sustainable power profile for long-term operations.
Market Access, Business & Tax Climate
Proximity To Key Business Districts Data centers in Rapid City are positioned to support key regional drivers, including federal operations at Ellsworth Air Force Base, healthcare, tourism, and regional finance. This location provides low-latency connectivity for businesses operating in Western South Dakota and surrounding states.
Regional Market Reach Rapid City provides effective digital infrastructure access for a broad geographic area that is otherwise underserved. It is a strategic location for serving end-users across the Dakotas, Wyoming, Montana, and Nebraska.
Tax Advantage For Data Centers South Dakota provides significant tax advantages, including long-term sales and property tax exemptions on equipment for qualifying data centers. These incentives directly lower the substantial upfront capital costs of building and outfitting a new facility.
Natural Disaster Risk
Rapid City has a very low natural disaster risk profile, with a FEMA National Risk Index score of 14.92 out of 100, as of September 2025. This places it in one of the safest regions in the country from a natural hazard perspective, making it an excellent choice for disaster recovery and business continuity.
The main environmental risks to consider are seasonal and include Winter Weather, Ice Storms, Strong Wind, Hail, and Wildfire. The area has no meaningful exposure to hurricane, earthquake, or coastal flooding events.
