Data Centers in Knoxville
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Knoxville, Tennessee – Reliable Power for Regional Deployments
Executive Summary
Knoxville is a strong choice for organizations requiring a cost-effective data center presence in the Southeastern United States. Its combination of favorable tax incentives and a reliable, nuclear-heavy power grid makes it well-suited for disaster recovery sites and regional application delivery. This ensures uptime while effectively managing operational expenses.
Knoxville, Tennessee: At A Glance
| Factor | Rating / Data | Notes |
|---|---|---|
| Global Connectivity Grade | B | Solid regional connectivity, but not a primary international hub. |
| Direct Cloud On-Ramps | 0 – as of September 2025 | Nearest major on-ramp hub is Atlanta. Private connectivity options are available. |
| Power Cost | $0.07 – $0.09/kWh (est.) as of 2023 | Competitive rates due to a diverse and stable power generation mix. |
| Disaster Risk | High (79.70 score) as of September 2025 | Main risks are atmospheric (hail, wind, tornado) and geological (earthquake). |
| Tax Incentives | Yes | Includes sales tax exemptions on qualified data center equipment purchases. |
| Sales Tax | 7.00% (State) as of Midyear 2025 | Tennessee state-level sales tax. Local taxes may also apply. |
Network & Connectivity Ecosystem
Carrier Density & Carrier Neutrality: The market provides access to over 4 carriers as of September 2025. Customers can find carrier-neutral facilities offering colocation and interconnection services to build resilient network architectures.
Direct Cloud On-Ramps: As of September 2025, there are no direct public cloud on-ramps within Knoxville. Businesses connect to major cloud providers via the primary hub in Atlanta, accessible through dedicated private network extensions or wavelength services.
Internet Exchange Points (IXPs): Public peering is limited within Knoxville. Most network peering is conducted privately between carriers or through the major IXPs located in Atlanta.
Bare Metal: Bare metal services are available from multiple providers in the region, including specialists like Hivelocity. These offerings provide dedicated compute for performance-sensitive and security-conscious workloads.
Power Analysis
Average Cost Of Power: Industrial electricity rates are competitive, estimated between $0.07 and $0.09 per kWh as of 2023. The power mix is dominated by Nuclear (48%) and Natural Gas (~29%), a combination that helps maintain stable and predictable energy costs. Lower power expenses directly contribute to a lower total cost of ownership for colocation deployments.
Power Grid Reliability: The electrical grid, managed by the Tennessee Valley Authority (TVA), is well-engineered and supports the region with reliable power. Data centers in the area typically leverage redundant feeds from multiple substations to ensure maximum uptime.
Market Access, Business & Tax Climate
Proximity To Key Business Districts: Data centers in Knoxville provide low-latency access to the city's key institutions, including the University of Tennessee and the Oak Ridge National Laboratory. This supports research, energy, and public sector workloads.
Regional Market Reach: Knoxville serves as a strategic point for reaching markets across Tennessee, Kentucky, North Carolina, and Georgia. It offers a solid location for edge computing and content delivery aimed at serving the broader Appalachian region.
Tax Advantage For Data Centers: Tennessee offers significant tax advantages, including a sales tax exemption on the purchase of qualified data center equipment. This incentive directly reduces the capital expenditure required for building out or refreshing IT infrastructure.
Natural Disaster Risk
According to FEMA's National Risk Index, the Knoxville area has a High disaster risk profile, with a score of 79.70 as of September 2025. The primary threats are atmospheric and geological, including tornadoes, strong winds, hail, ice storms, and riverine flooding. The region also has a recognized earthquake risk due to its proximity to the New Madrid Seismic Zone.
