Data Centers in Chattanooga
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Chattanooga – Resilient Infrastructure in a Strategic Location
Chattanooga offers a compelling alternative to primary data center markets for businesses prioritizing operational resilience and cost control. Its combination of affordable power and significant tax incentives makes it an excellent choice for disaster recovery sites and secondary workloads that require a stable, low-risk operating environment.
Chattanooga: At A Glance
| Factor | Rating / Data | Notes |
|---|---|---|
| Global Connectivity Grade | B | Solid regional connectivity, though not a primary international hub. |
| Direct Cloud On-Ramps | 0 – as of September 2025 | Direct connections are established via nearby hubs like Atlanta through private network extensions. |
| Power Cost | $0.06 - $0.08/kWh (est.) | Rates are competitive, supported by a strong nuclear and hydroelectric power mix. |
| Disaster Risk | High (NRI Score: 79.70) – as of September 2025 | The score reflects multiple potential hazards, requiring robust facility and infrastructure engineering. |
| Tax Incentives | Yes | Data center-specific sales tax exemptions are available for qualified equipment purchases. |
| Sales Tax | 7.00% (State Rate) – as of September 2025 | Local taxes may apply; however, significant exemptions can lower the effective rate. |
Network & Connectivity Ecosystem
Chattanooga is a secondary connectivity market with a capable network ecosystem sufficient for most enterprise and disaster recovery needs.
Carrier Density & Carrier Neutrality The market is served by over 4 providers, as of September 2025. While not as dense as major hubs, this provides adequate options for redundancy and competitive pricing within its single carrier-neutral facility.
Direct Cloud On-Ramps There are no direct cloud on-ramps within Chattanooga, as of September 2025. Businesses connect to major cloud providers like AWS, Google Cloud, and Microsoft Azure via the primary interconnection hub in Atlanta, which is readily accessible through high-capacity wavelength and private line services.
Internet Exchange Points (IXPs) Public peering is not a major feature of this market. Most interconnection is handled privately between carriers or routed through regional exchanges in Atlanta to optimize traffic flow and reduce latency.
Bare Metal Bare metal server options are available in the region, primarily through providers offering services out of nearby Atlanta data centers. Providers like Hivelocity can deliver dedicated infrastructure to serve workloads in the Chattanooga area.
Power Analysis
Chattanooga benefits from the Tennessee Valley Authority (TVA), one of the nation's largest and most reliable public power providers.
Average Cost Of Power Industrial electricity rates are estimated between $0.06 and $0.08 per kWh, as of September 2025. This competitive pricing can significantly lower total operational costs for power-intensive deployments. The grid's diverse fuel mix, led by nuclear (48%) and natural gas (~29%) as of 2023, contributes to rate stability.
Power Grid Reliability The regional power grid is well-engineered and provides reliable service. Data center facilities in the area are typically supported by redundant power feeds from separate substations, ensuring high levels of uptime.
Market Access, Business & Tax Climate
Chattanooga's strategic location and favorable business environment make it an attractive data center site.
Proximity To Key Business Districts The local data center supports Chattanooga's growing logistics, manufacturing, and healthcare sectors. Its location along major fiber routes provides low-latency connectivity to businesses throughout the metro area and the broader Southeast.
Regional Market Reach From Chattanooga, organizations can effectively serve a large geographic area encompassing Tennessee, Georgia, Alabama, and North Carolina. It is an effective hub for reaching major markets like Nashville, Knoxville, and Atlanta.
Tax Advantage For Data Centers Tennessee offers a significant sales tax exemption on qualified data center equipment and software purchases. This incentive directly reduces the capital expenditure required for new builds or equipment refreshes, improving the financial return on infrastructure investments.
Natural Disaster Risk
Chattanooga has a High natural disaster risk profile, with a FEMA National Risk Index score of 79.70 out of 100, as of September 2025. While the overall score is high, it reflects a combination of several moderate risks rather than a single extreme threat.
Key risks for consideration include tornadoes, severe winter weather, hail, and strong winds. Other notable risks are earthquakes and riverine flooding. Data centers in this market are engineered to mitigate these specific threats through hardened construction and resilient infrastructure designs.
