Data Centers in Rapid City
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Rapid City, South Dakota, United States – Resilient Edge & Low-Cost Operations
Rapid City offers a unique combination of extremely low natural disaster risk and significant tax incentives, making it an ideal location for businesses prioritizing uptime and cost-effective operations. This market is particularly well-suited for disaster recovery sites, secondary compute workloads, and edge deployments serving the Northern Plains. Its favorable business climate ensures long-term operational savings.
Rapid City, South Dakota, United States: At A Glance
| Factor | Rating / Data | Notes |
|---|---|---|
| Global Connectivity Grade | B | Solid regional connectivity, limited long-haul fiber routes. |
| Direct Cloud On-Ramps | 0 – as of September 2025 | Nearest major on-ramp hubs are in Denver or Minneapolis. |
| Power Cost | $0.23/kWh – as of September 2025 | High renewable energy mix contributes to price stability. |
| Disaster Risk | Low (14.92) – as of September 2025 | One of the lowest risk profiles in the United States. |
| Tax Incentives | Yes | Multiple sales, use, and property tax exemptions for qualified data centers. |
| Sales Tax | 4.25% – as of September 2025 | South Dakota state sales tax; local taxes may apply. |
Network & Connectivity Ecosystem
Carrier Density & Carrier Neutrality: Carrier count is over 1, as of September 2025. The market is served by at least one colocation provider, offering access to regional and national carriers.
Direct Cloud On-Ramps: There are no direct cloud on-ramps in Rapid City, as of September 2025. Secure, private connections to major cloud providers like AWS, Google Cloud, and Microsoft Azure are established via network extensions to hubs in Denver or Minneapolis.
Internet Exchange Points (IXPs): Public peering is limited in Rapid City. Most network interconnection is handled privately within the data center or routed through major exchange points in larger regional markets like Denver.
Bare Metal: Bare metal server options are available. Providers such as phoenixNAP offer dedicated server solutions that can be deployed in regional facilities.
Power Analysis
Average Cost Of Power: The industrial electricity rate in Rapid City is approximately $0.23/kWh, as of September 2025. This rate, combined with a grid powered predominantly by renewable sources like wind and hydro, provides predictable and stable energy expenditures.
Power Grid Reliability: The regional power grid is well-engineered for the local climate. Data centers in the area are supported by reliable utility infrastructure designed to maintain service during seasonal weather events.
Market Access, Business & Tax Climate
Proximity To Key Business Districts: Data centers in Rapid City support local and regional industries including healthcare, government, and tourism. The location provides low-latency connectivity for businesses operating throughout western South Dakota and the broader Northern Plains region.
Regional Market Reach: Rapid City serves as a strategic digital infrastructure hub for a wide geographic area that includes South Dakota, North Dakota, Nebraska, Wyoming, and Montana. It is a logical point for edge computing and content delivery into these underserved markets.
Tax Advantage For Data Centers: South Dakota provides substantial tax advantages that directly lower the cost of building and operating a data center. These incentives include long-term sales and property tax abatements on equipment and software, significantly reducing capital and operational expenditures.
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 minimizes the threat of environmental disruptions to operations and enhances infrastructure resilience.
The primary risks for the region are atmospheric and weather-related. Key hazards to consider include hail, strong wind, winter weather, and drought. Other risks such as riverine flooding and wildfire are present but are less significant contributors to the overall score.
