Data Centers in Chattanooga
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Chattanooga – High Speed Connectivity and Resilient Power
Executive Summary
Chattanooga is a strategic hub for enterprises requiring reliable infrastructure and ultra-fast fiber in the Tennessee Valley. Its position between Nashville and Atlanta makes it an essential site for low-latency disaster recovery and regional edge deployments. This market is purpose-built for companies that prioritize power stability and rapid regional data distribution.
Chattanooga: At A Glance
| Factor | Rating / Data | Notes |
|---|---|---|
| Global Connectivity Grade | B | Reliable regional fiber and diverse provider options. |
| Direct Cloud On-Ramps | 0 – as of December 2025 | Atlanta serves as the primary nearest on-ramp hub. |
| Power Cost | $0.07/kWh – as of December 2025 | Competitive rates supported by stable energy generation. |
| Disaster Risk | High (79.70) – as of December 2025 | Score reflects regional storm and geological activity. |
| Tax Incentives | Yes | Sales tax exemptions for qualified data center hardware. |
| Sales Tax | 7.00% – as of December 2025 | Based on current Tennessee tax rates. |
Network & Connectivity Ecosystem
Carrier Density & Carrier Neutrality: Carrier count: over 5. As of December 2025, the market features between 5 and 10 carriers. This density provides sufficient competition to keep pricing fair while ensuring diverse path options for local enterprises.
Direct Cloud On-Ramps: Over 0, enabling access to 0 cloud regions. There are currently no direct on-ramps in the immediate metro area as of December 2025. Most local deployments connect to major clouds via private transport or high-capacity waves to the primary hub in Atlanta, which is approximately 120 miles away.
Internet Exchange Points (IXPs): Public internet exchange presence is limited locally, meaning most peering occurs through private interconnects or via the regional exchange in Atlanta.
Bare Metal: High-performance compute resources are available through specialized providers like Hivelocity or phoenixNAP, offering dedicated hardware for local workloads.
Power Analysis
Average Cost Of Power: Industrial electricity is approximately $0.07/kWh as of December 2025. These low rates directly lower the cost of cooling and operating high-density racks compared to national averages.
Power Grid Reliability: The local grid is exceptionally reliable, drawing from a mix of nuclear, hydroelectric, and natural gas sources. This diverse generation portfolio provides a stable energy supply supported by a well-engineered regional transmission network.
Market Access, Business & Tax Climate
Proximity To Key Business Districts: Data centers here are centrally located to serve the growing manufacturing and logistics sectors. Proximity to these industries allows for low latency for automated supply chain and production systems.
Regional Market Reach: Chattanooga is a vital link between the Nashville and Atlanta markets. It provides a strategic failover site for companies operating across the larger Southeast region.
Tax Advantage For Data Centers: Tennessee offers specific sales and use tax credits for data center investments. This financial benefit significantly lowers the upfront cost of server hardware and infrastructure components for large-scale deployments.
Natural Disaster Risk
Overall Score: High (79.70) – as of December 2025. The risk profile is primarily influenced by seasonal weather patterns and regional geology. The highest-rated natural hazards for the area include:
- Tornadoes
- Strong Winds
- Severe Hail
- Lightning
- River Flooding
- Earthquakes
Other risks are considered minor or not listed for this inland location. Facilities in the region are typically purpose-built with reinforced shells to mitigate these specific environmental threats.
