USA – IOWA Trends and Developments Contributed by: David M. Erickson, Christopher S. Talcott, Amy S. Montgomery and Shannon M.H. Hasse, Dentons Davis Brown PC
Iowa Data Centres: Putting Down Roots and Weathering Storms in the Silicon Prairie As the digital economy grows due in large part to the exponential data processing demands fuelled by AI, data centre developers are under mounting pressure to select development sites with access to robust infrastructure, vast amounts of energy, water, and sufficient room for growth, all at a reasonable cost. In recent years, technology industry leaders such as Apple, Google, Meta (formerly known as Facebook) and Microsoft have invested bil - lions of dollars in developing data centres in the State of Iowa, leading to some referring to the state as “silicon prairie” , as an homage to the heart of the United States’ technology sector in the San Francisco Bay Area of California known as the Silicon Valley. Thanks in part to Iowa’s his - torical support for wind energy production and its status as a nationwide leader in wind energy production, developers often find that the state has an ample supply of renewable energy at an affordable price, a reliable power grid, along with sufficient telecommunications infrastruc - ture, and overall lower costs of doing business. Furthermore, since nearly 90% of Iowa’s total land area constitutes undeveloped farmland, the state is ripe for data centre development. With ample energy, water and land resources, Iowa presents an ideal landscape for data centre development. For years, this development has been supported by state and local incentives designed to attract technology companies and other industries and encourage them to locate facilities in Iowa. Nevertheless, inherent tensions exist between the preservation of Iowa’s abun - dant natural resources and the development of Iowa’s prized agricultural land. Thus, while state and local leaders continue to create and pro - mote incentives designed to attract develop -
ment within the state, these same leaders are facing mounting pressure from their constituents to protect the state’s valuable natural resources. As a result, while the silicon prairie remains ripe for development and state and local govern - ments continue to support development within the state, data centre developers may face addi - tional challenges related to local government approval and availability of incentives. The con - fluence of these developmental considerations and challenges is explored below. Site Selection With the exponential growth of the digital econo - my, the demand for land upon which to develop data centres is at an all-time high. Robust infra - structure, energy access, water capacity and sufficient room for growth are essential factors for data centre site selection, but the analysis does not stop there. Data centres have traditionally been built on large tracts of rural land, as it is usually less expensive and necessary power sources are often more available than in urban areas. This is typically the case for most large-scale data centres con - structed in Iowa due to the abundance of rural property within close proximity to urban areas and the proliferation of renewable energy avail - able within the state. Furthermore, rural property can often be more easily rezoned from agricul - tural use to the necessary industrial (or other) zoning designation, to allow for the construction and operation of a data centre, relative to prop - erty that is zoned as commercial or residential. Additionally, Iowa has a low disaster risk for nat - ural disasters such as earthquakes, hurricanes, wildfires and mudslides, though it does carry a risk of other destructive natural disasters such as tornadoes, derechos and flooding in some locations. Nevertheless, some developers aim to avoid these relatively limited geographical scope
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