Data Centers in Chattanooga
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Chattanooga – Strategic Hub for Resilient Infrastructure
Chattanooga is an emerging edge data center market ideal for organizations prioritizing operational resilience and cost-effective disaster recovery solutions. Its location provides low-latency access to major Southeastern US markets while offering significant protection from many coastal and seismic risks, securing critical data and applications.
Chattanooga: At A Glance
| Factor | Rating / Data | Notes |
|---|---|---|
| Global Connectivity Grade | B | Solid regional connectivity, suitable for diverse enterprise and DR workloads. |
| Direct Cloud On-Ramps | 0 – as of September 2025 | Nearest on-ramps are in Atlanta; private network extensions are available. |
| Power Cost | ~$0.07-0.09/kWh (est.) | Rates are competitive for the Southeast, supported by a favorable generation mix. |
| Disaster Risk | High (79.70) – as of 2023 | Elevated score due to atmospheric and inland risks, but avoids major coastal threats. |
| Tax Incentives | Yes | State and local programs include sales tax exemptions for qualified DC equipment. |
| Sales Tax | 7.00% (State) – as of 2025 | Local taxes may apply, but specific data center exemptions reduce the overall burden. |
Network & Connectivity Ecosystem
Chattanooga's connectivity landscape is well-suited for regional enterprise needs and disaster recovery strategies, providing reliable access to primary production sites in cities like Atlanta.
Carrier Density & Carrier Neutrality: The market is served by over 4 national and regional carriers as of September 2025, offering diverse routing options within a carrier-neutral environment.
Direct Cloud On-Ramps: There are no direct public cloud on-ramps within Chattanooga as of September 2025. Businesses connect to cloud providers via the nearest major hubs, primarily Atlanta, using private network interconnects, wavelength services, or other Layer 2 solutions.
Internet Exchange Points (IXPs): Public peering is limited in the immediate Chattanooga market. Most network peering occurs privately between carriers or is routed through major exchange points in Atlanta.
Bare Metal: Bare metal server options are available in the region, often provisioned from nearby data center hubs. Providers like Hivelocity offer solutions that can serve Chattanooga-based workloads with low latency.
Power Analysis
Chattanooga benefits from a reliable and cost-effective power grid managed by the Tennessee Valley Authority (TVA), one of the nation's largest public power providers.
Average Cost Of Power: Industrial electricity rates are estimated between $0.07 and $0.09 per kWh as of 2023. This competitive pricing, driven by a high percentage of nuclear and hydroelectric generation, helps lower total operational costs for data centers.
Power Grid Reliability: The regional power grid is well-engineered, drawing from a diverse generation portfolio that includes 48% nuclear and ~10% hydroelectric power. This mix contributes to stable and reliable power delivery, essential for maintaining uptime in critical data center operations.
Market Access, Business & Tax Climate
Chattanooga offers a strategic location combined with a pro-business environment, making it an attractive site for data center investment.
Proximity To Key Business Districts: Data centers in Chattanooga serve the city's growing logistics, healthcare, and advanced manufacturing sectors. The location provides a crucial link between Nashville and Atlanta's larger corporate ecosystems.
Regional Market Reach: From Chattanooga, businesses can effectively serve end-users across Tennessee, Georgia, Alabama, and the Carolinas. Its position offers a valuable low-latency edge for applications supporting the broader Southeastern United States.
Tax Advantage For Data Centers: Tennessee provides significant tax incentives for data center operators. The primary benefit is a sales tax exemption on the purchase of computer hardware, software, and other essential equipment, which directly reduces the capital investment required to build or expand a facility.
Natural Disaster Risk
Chattanooga has a high natural disaster risk profile, primarily driven by atmospheric and geological hazards common to the inland Southeast.
The area's FEMA National Risk Index score is 79.70, categorized as "Relatively Low" by FEMA but high based on its percentile ranking as of 2023. Key risks include severe storms, tornadoes, hail, and riverine flooding. The location is advantageous for avoiding direct impacts from hurricanes and major earthquakes, making it a viable disaster recovery site for coastal operations.
