Data Centers in Knoxville
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Knoxville – Cost-Effective & Resilient East Coast Hub
Knoxville is a compelling secondary market for businesses prioritizing operational resilience and lower total cost of ownership. Its strategic location, favorable tax climate, and stable power grid make it an excellent choice for disaster recovery sites and workloads that require a secure, cost-effective footprint away from primary coastal hubs.
Knoxville: At A Glance
| Factor | Rating / Data | Notes |
|---|---|---|
| Global Connectivity Grade | B | Solid regional connectivity, though direct access to top-tier international hubs is limited. |
| Direct Cloud On-Ramps | 0 – as of September 2025 | Nearest cloud hubs are in Atlanta or Ashburn; private network extensions are available. |
| Power Cost | $0.07 – $0.09/kWh (est.) | Diverse, stable grid with significant nuclear and hydro generation keeps prices competitive. |
| Disaster Risk | High (NRI Score: 79.7) | Primary risks are severe storms, though the region is well-prepared for such events. |
| Tax Incentives | Yes | Sales tax exemptions are available for qualified data center equipment and software purchases. |
| Sales Tax | 7.00% (State Rate) | Tennessee offers a competitive state sales tax rate, as of September 2025. |
Network & Connectivity Ecosystem
Knoxville provides a reliable connectivity base for serving the Southeastern and Mid-Atlantic United States.
Carrier Density & Carrier Neutrality: The Knoxville market includes 4 unique network providers, as of September 2025. The two data centers in the area offer carrier-neutral interconnection options, providing choice and redundancy.
Direct Cloud On-Ramps: Knoxville has 0 direct cloud on-ramps, serving 0 cloud regions locally as of September 2025. Secure, private connections to major cloud providers like AWS, Google Cloud, and Microsoft Azure must be established via network providers extending to primary hubs like Atlanta or Ashburn, VA.
Internet Exchange Points (IXPs): Public peering is limited within Knoxville itself. Most network peering is conducted privately between carriers or routed through major regional exchanges in Atlanta.
Bare Metal: Bare metal server options are available through providers with a presence in the Southeastern US. Companies like Hivelocity can deliver dedicated infrastructure to meet specific performance and security needs in the region.
Power Analysis
Knoxville benefits from a stable and cost-effective power grid managed by the Tennessee Valley Authority (TVA).
Average Cost Of Power: Industrial electricity rates are estimated to be between $0.07 and $0.09 per kWh, as of September 2025. This competitive pricing can significantly reduce operational expenses compared to other US markets. The power mix is dominated by reliable sources, including 48% Nuclear and roughly 20% from a combination of Hydroelectric and other renewables, as of 2023.
Power Grid Reliability: The regional power grid is well-engineered and benefits from a diverse generation portfolio. This mix enhances stability and predictability, which is critical for maintaining data center uptime.
Market Access, Business & Tax Climate
Knoxville offers a supportive business environment with strategic access to key markets and industries.
Proximity To Key Business Districts: Data centers in Knoxville are positioned to serve the University of Tennessee, the Oak Ridge National Laboratory, and numerous corporate headquarters in the energy, research, and logistics sectors. This proximity enables low-latency connectivity for data-intensive applications.
Regional Market Reach: From its central location, Knoxville can effectively serve a large portion of the US population in the Southeast, Mid-Atlantic, and Midwest with low latency. It is a strategic point for regional content delivery and application hosting.
Tax Advantage For Data Centers: Tennessee provides a significant sales tax exemption on the purchase of computer hardware, software, and other qualified equipment for data centers. This incentive directly lowers the capital investment required for building out or refreshing critical infrastructure.
Natural Disaster Risk
Knoxville has a High natural disaster risk profile, with a FEMA National Risk Index score of 79.7, as of September 2025. The primary threats are atmospheric and geological, requiring facility designs that account for these specific hazards.
Key risks include Tornado, Strong Wind, Ice Storm, Riverine Flooding, and Earthquake. While the overall score is high, the risks are well-understood regional factors. Modern data centers in the area are built to withstand these specific environmental threats, incorporating structural hardening and redundant systems to ensure operational continuity.
