Data Centers in Tennessee

Tennessee – A Strategic Hub for Southeast Digital Infrastructure

Tennessee offers a compelling mix of reliable power, significant tax incentives, and a growing connectivity ecosystem, making it an ideal location for businesses requiring low-latency access to the Southeastern United States. The state provides a stable and cost-effective platform for deploying critical infrastructure, balancing performance with long-term operational savings.

Tennessee: At A Glance

Network & Connectivity Ecosystem

Carrier Density & Carrier Neutrality: With over 22 network providers present, Tennessee offers solid carrier diversity as of September 2025. The market supports a healthy ecosystem of both regional and national carriers in carrier-neutral facilities, particularly in Nashville and Memphis.

Direct Cloud On-Ramps: There are no direct public cloud on-ramps within Tennessee as of September 2025. Businesses connect to cloud providers like AWS, Google Cloud, and Microsoft Azure through network extensions to major hubs, most commonly Atlanta or Ashburn. Private network connections ensure low-latency performance for hybrid cloud deployments.

Internet Exchange Points (IXPs): Public peering is limited within the state. Most interconnection occurs via private peering within colocation facilities or by connecting to major exchange points in nearby Atlanta, a primary peering hub for the Southeast.

Bare Metal: Bare metal server options are available from providers operating within the state's data centers. Companies like Hivelocity and phoenixNAP offer dedicated server solutions that provide direct access to the region's connectivity.

Power Analysis

Average Cost Of Power: Industrial electricity rates in Tennessee typically range from $0.07 to $0.09 per kWh, as of September 2025. These competitive rates, driven by a diverse energy mix, help lower the total cost of ownership for high-density deployments. The state's power generation includes significant contributions from nuclear (48%) and natural gas (29%), as of 2023.

Power Grid Reliability: The power grid, managed largely by the Tennessee Valley Authority (TVA), is well-engineered and offers reliable service. Data centers in major markets like Nashville are supported by redundant power feeds and modern substation infrastructure to maintain high levels of uptime.

Market Access, Business & Tax Climate

Proximity To Key Business Districts: Data centers in Tennessee are strategically located to serve the state's major business centers, including the healthcare and music industries in Nashville and the logistics and shipping hub of Memphis. This proximity provides low-latency connectivity for local enterprises.

Regional Market Reach: From a central location in the Midsouth, Tennessee provides effective application delivery to a large population across the Southeastern and Midwestern United States. It serves as an excellent disaster recovery location for primary sites in Atlanta, Dallas, or Northern Virginia.

Tax Advantage For Data Centers: Tennessee offers powerful tax incentives for data center operators and tenants. The primary benefit is a sales and use tax exemption on the purchase of computer hardware, software, and other essential equipment used in a qualified data center. This program significantly reduces the upfront capital expenditure required for new builds or hardware refreshes.

Natural Disaster Risk

Tennessee has a High natural disaster risk profile, with a FEMA National Risk Index score of 79.7 as of September 2025. The risk is not uniform across the state and is driven by specific, well-understood hazards rather than broad coastal threats.

Key risks include tornadoes, earthquakes (related to the New Madrid Seismic Zone), strong winds, hail, and river flooding. While the overall score is high, facilities built to modern standards in properly vetted locations can effectively mitigate these potential disruptions. The absence of hurricane risk makes it a viable disaster recovery site for coastal operations.