Data Centers in Chattanooga
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Chattanooga, Tennessee – Cost-Effective Hub for Regional Workloads
Chattanooga offers a compelling alternative to primary data center markets like Atlanta, providing a strategic location for businesses focused on regional application delivery and disaster recovery. The market's primary advantages are its favorable power costs and attractive tax incentives, which lower the total cost of ownership for significant hardware deployments. It is an ideal fit for companies that need reliable infrastructure to serve the Southeastern United States without the higher expenses of a major metropolitan hub.
Chattanooga: At A Glance
| Factor | Rating / Data | Notes |
|---|---|---|
| Global Connectivity Grade | B | Solid connectivity for a secondary market, suitable for most business applications. |
| Direct Cloud On-Ramps | 0 – as of September 2025 | Nearest cloud access hub is Atlanta; private network extensions are available. |
| Power Cost | $0.07 – $0.09/kWh | Industrial power costs are competitive, supported by a diverse generation mix. |
| Disaster Risk | High (79.70 NRI Score) | The region has notable exposure to severe weather, requiring resilient infrastructure. |
| Tax Incentives | Yes | DC-specific sales tax exemptions are available for qualified equipment purchases. |
| Sales Tax | 7.00% (State Rate) | This state-level sales tax applies; local taxes may increase the total rate. |
Network & Connectivity Ecosystem
Chattanooga is a developing connectivity market capable of supporting regional enterprise needs. While not as dense as a primary hub, its ecosystem provides reliable access for production and secondary workloads.
Carrier Density & Carrier Neutrality The market is served by over 4 carriers as of September 2025. Data centers in the area provide access to regional and national networks, with carrier-neutral facilities offering the most flexibility for building resilient network architectures.
Direct Cloud On-Ramps There are no direct public cloud on-ramps within Chattanooga as of September 2025. Businesses connect to major cloud providers like AWS, Google Cloud, and Microsoft Azure through private network extensions to the nearest primary hub in Atlanta.
Internet Exchange Points (IXPs) Public peering is limited in Chattanooga. Most network interconnection occurs through private peering arrangements within local data centers or by connecting to the major internet exchanges in Atlanta.
Bare Metal Bare metal server capacity is available from providers serving regional markets. Companies like Hivelocity can provide dedicated server solutions for workloads that require direct hardware access and consistent performance.
Power Analysis
Chattanooga benefits from a stable and cost-effective power grid managed by the Tennessee Valley Authority (TVA), a significant advantage for power-intensive operations.
Average Cost Of Power Industrial electricity rates typically range from $0.07 to $0.09/kWh as of September 2025. This competitive pricing can substantially reduce operational expenditures for data center customers. The regional power mix is dominated by nuclear (48%), natural gas (~29%), and hydroelectric (~10%) generation as of 2023.
Power Grid Reliability The power grid supporting Chattanooga is well-engineered and reliable. Data centers in the market are typically fed by redundant power sources and multiple substations to ensure high levels of uptime for critical infrastructure.
Market Access, Business & Tax Climate
Chattanooga’s business environment and strategic location make it an effective base for serving the broader Southeastern U.S.
Proximity To Key Business Districts Data centers in Chattanooga are situated to serve the city's growing logistics, manufacturing, and healthcare sectors. Their location provides low-latency connectivity to local enterprise and commercial districts.
Regional Market Reach Positioned strategically near the borders of Georgia and Alabama, Chattanooga is an excellent digital hub for reaching customers throughout the Southeast. It serves as a valuable secondary site for disaster recovery plans anchored in Atlanta.
Tax Advantage For Data Centers Tennessee provides significant tax incentives for data center operators and tenants. A key benefit is the sales tax exemption on the purchase of computer hardware and software, which directly lowers capital expenses for new deployments and technology refreshes.
Natural Disaster Risk
Chattanooga has a High natural disaster risk profile, with a FEMA National Risk Index score of 79.70 as of September 2025. This requires that facilities are built to modern resiliency standards.
The primary environmental risks for infrastructure in the region include tornadoes, strong winds, hail, riverine flooding, ice storms, and lightning. While less frequent, the area also has exposure to earthquakes and the secondary effects of hurricanes moving inland.
