Data Centers in Tennessee

Tennessee – Resilient Infrastructure in a Core US Logistics Hub

Tennessee offers a compelling alternative to coastal data center markets, combining significant tax incentives with a central location ideal for reaching customers across the Southeast and Midwest. For businesses prioritizing disaster recovery, low-latency regional access, and operational cost savings, Tennessee provides a sturdy and well-connected infrastructure base. Its diverse and reliable power grid further enhances its appeal for mission-critical workloads.

Tennessee: At A Glance

Network & Connectivity Ecosystem

Carrier Density & Carrier Neutrality: Tennessee hosts a healthy and competitive connectivity market, with over 22 network providers operating within its borders as of September 2025. This ensures carrier-neutral facilities offer customers multiple options for redundancy and cost control, primarily concentrated in Nashville and Memphis.

Direct Cloud On-Ramps: As of September 2025, there are no public direct cloud on-ramps within Tennessee. Businesses connect to major cloud providers like AWS, Google Cloud, and Microsoft Azure through dedicated network connections to the primary regional hub in Atlanta. Private network extensions via wave or PNI are common solutions.

Internet Exchange Points (IXPs): Public peering is limited within the state. Most interconnection occurs via private peering inside carrier-neutral data centers or through network transit to major exchange points in nearby Atlanta or Dallas.

Bare Metal: Bare metal server options are available from providers operating within Tennessee data centers. Companies like ColoCrossing and Hivelocity can facilitate dedicated server deployments, offering an alternative to virtualized cloud instances for performance-sensitive applications.

Power Analysis

Average Cost Of Power: Industrial electricity rates in Tennessee typically range from $0.08 to $0.11/kWh as of September 2025. These competitive power costs, driven by a stable and diverse generation mix, allow businesses to manage operational expenses effectively for high-density deployments.

Power Grid Reliability: The state's power grid is exceptionally reliable, benefiting from a diverse energy portfolio that includes nearly 50% nuclear generation as of 2023. Major data center corridors in Nashville and Memphis are served by well-engineered infrastructure with redundant substation support, ensuring high uptime for critical facilities.

Market Access, Business & Tax Climate

Proximity To Key Business Districts: Data centers in Tennessee are strategically located near major economic hubs like Nashville, a center for healthcare and music, and Memphis, a global logistics and shipping powerhouse. This proximity serves businesses requiring low-latency connections to support financial, healthcare, and supply chain operations.

Regional Market Reach: From its central location, Tennessee provides excellent low-latency connectivity to a vast portion of the United States. It can effectively serve end-users and business partners across the Southeast, Midwest, and parts of the East Coast, making it a strong choice for disaster recovery and content delivery.

Tax Advantage For Data Centers: Tennessee offers significant financial incentives that lower the cost of building and operating a data center. The state provides a sales tax exemption on computer hardware, software, and other essential equipment purchased for a qualified facility, directly reducing capital expenditures.

Natural Disaster Risk

Tennessee has a High natural disaster risk profile, with a FEMA National Risk Index score of 79.70 as of September 2025. The rating is driven entirely by inland weather and geologic events rather than coastal threats, which are nonexistent.

Key risks for consideration include tornadoes, strong winds, hail, and ice storms. Other notable hazards are riverine flooding, earthquakes (related to the New Madrid Seismic Zone), and heatwaves. Careful site selection and facility engineering are critical to mitigate these potential disruptions.