In 2012, the governor of Wyoming made an exciting announcement: Cheyenne, the state's capital, would be the home to a huge new Microsoft data center. Then things got complicated, in ways that happen these days when a technology company demanding clean power meets a coal-heavy power grid.
The first problem was that the data center's projected power demand, 200 megawatts, would almost double the amount of electricity needed in little Cheyenne.
The second, tougher problem was that the standard industry solution to the first problem — build a new coal-fired power plant — just wasn't going to happen. The Obama administration's Clean Power Plan had cast the future of high-emission coal power into doubt. Besides, the utility, Black Hills Energy, couldn't envision building a 40-year power plant for Microsoft, a part of the fast-moving tech business, where companies' big schemes can go poof overnight.
Then Microsoft and Black Hills struck on a novel solution that might have far-reaching implications for the relationship between utilities and electricity-hungry data centers.
Black Hills will buy power for Microsoft on the open market, and if there are any shortfalls, the utility will reach behind Microsoft's meter and tap the data center's backup generators, which are capable of producing many megawatts of power but mostly stand idle.
"We both kind of had an 'aha' moment," said Chris Kilpatrick, the director of resource planning for Black Hills. "We're building double capacity."
The plan, which got final approval from Wyoming's utilities commission in July, essentially turns the data center into a peaker plant. These plants go live only at rare times of peak demand, and utilities have struggled with how to plan and pay for them in an era when getting approval to build new fossil fuel power plants has never been harder.
It is the latest episode in a tug of war between states that like to power their grids with their own abundant coal (like Virginia, North Carolina and Wyoming) and the big tech companies (like Google, Facebook and Apple) whose huge, energy-slurping data centers are the linchpins of the modern digital era. They have made ambitious plans to power themselves with renewable energy, and have declared their intention to use their market power to force coal states to offer cleaner options (EnergyWire, May 23).
The deal also puts Wyoming — which has fewer people than Brooklyn and more coal than any other state — in the rare position of being at the cutting edge of both data-center design and energy policy.
"We're doing this not in California, not in New York," said Brian Janous, Microsoft's director of energy strategy, naming two states that are synonymous with technology and forward-thinking energy policy. "We're doing it in Wyoming."
Back that grid up
If successful, the Microsoft-Black Hills plan will prevent the building of any new power plants, aside from the generators that Microsoft will build.
Those backup generators are essential because a power outage would hobble Microsoft's internet operations. The company's cloud-computing platform, Azure, is the world's second-largest and carries out key operations for companies and governments around the world.
Now they will also be crucial to the operation of Cheyenne's grid.
The heart of the plan is a new tariff approved for Cheyenne by the Wyoming Public Service Commission (PSC) that for now has exactly one qualifying customer: Microsoft.
The tariff is intended for big industrial customers that use at least 13 MW of electricity, have a significant amount of on-site backup power, and are willing to have the power company access that power source to make up for power deficits and keep the grid reliable. (Cheyenne's two biggest existing power users, an explosives manufacturer and a petroleum refinery, sought to be included in the tariff but were rebuffed, partly because of a lack of backup power.)
The tariff will kick in when Microsoft's load exceeds 35 MW. Microsoft is tight-lipped about its precise power usage, but Janous said it will cross that threshold soon.
The data center's heavy power needs are expected to have almost no financial impact on Black Hills' 41,000 other customers in Cheyenne. Microsoft is paying for a substation and transmission line, Kilpatrick said, and the tech giant will pay Black Hills back for the power it buys.
If Black Hills is in the position of buying two blocks of power, one for Microsoft and one for Black Hills' existing customers, the existing customers will get the better price.
"This solution makes common and strategic sense for everyone involved," the Wyoming Office of Consumer Advocate wrote in the PSC's final decision.
Too many questions
The new tariff arrives as Wyoming's economy and parts of its power grid are struggling with a wrenching contraction in the coal industry.
Even as Cheyenne projects a doubling of its load because of Microsoft, the opposite is happening at the other end of the state, in the Powder River coal fields. The economy is struggling as climate worries have sent large coal producers into bankruptcy (ClimateWire, April 11).
There the local utility, the Powder River Energy Corp., has seen its profits drop by 18 percent a year, according to Alan Minier, the chairman of the PSC, in an interview.
Carbon emissions loomed large in the creation of Microsoft's new data center, but in a different way.
At the outset, Black Hills balked at the prospect of building power plants for Microsoft, partly because of two looming uncertainties: the possibility that a new regional transmission organization could shake up Wyoming's power market, and uncertainty around the Obama administration's Clean Power Plan, which has been stayed in the courts (ClimateWire, July 27).
"This is a particularly inopportune historical moment to pursue construction of new generation assets," the PSC noted in its tariff decision.
A further question mark was Microsoft itself, which is racing to keep pace in the fast-changing world of cloud computing and data centers. It doesn't have a firm timeline for building out its data center and cannot be counted on to stick around for the 40-year life span of a power plant.
"This scale of what was being required, and the potential for having the customer walk away from the thing on short notice, coupled with the volatility we were told about, meant that it would be a really bad idea to build a gas plant," Minier said.
Cracking open Wyo.
Carbon emissions, renewable energy and the bottom line all seem to have played a role in Microsoft's wooing of Cheyenne.
Backup generation is typically in the form of diesel-powered generators, which have high emissions. Janous said that this will be Microsoft's first large data center to run on generators powered by natural gas, which is plentiful and cheap in Wyoming and has a smaller carbon footprint than diesel.
It is likely that Microsoft will have to fire up these generators in service of Cheyenne's grid only rarely, possibly less than 100 hours a year, Janous said.
However, it is possible that in the future, Microsoft's generators could play a larger role on Wyoming's grid — in filling in the gaps around renewable energy sources, like solar and wind, that aren't always available.
"This type of installation is somewhat uniquely suited to provide the sort of quick responsiveness that will be necessary to integrate greater levels of renewables in the region," Janous wrote in an email, adding, "We look forward to sharing more news about renewable energy at this location in the near future."
That would dovetail with efforts that Microsoft and other data center titans to persuade coal-friendly states to go renewable.
In North Carolina, for example, Google leaned hard on Duke Energy Corp. to allow it, along with other big power customers, to buy the output of a big solar farm and use it to offset the power needs of its data center. In Virginia, Microsoft brokered a three-way deal between Dominion Virginia Power and the state government that for the first time allowed Microsoft to claim the output from a 20 MW solar plant.
Under the new tariff, the data center's generators would be called upon if no power could be found at the right price nearby. But the grids surrounding Cheyenne produce abundant excess capacity.
"That's a very clever play," said Jack Pouchet, a board member of the Green Grid, an organization that seeks greater efficiency at data centers (Microsoft is also active in the group). "Kudos to Microsoft for realizing that there's way more natural gas than we know what to do with in that area, and use it."
Why data centers fail to bring new jobs to small towns
September 19, 2016
The data center industry is booming, due in part to massive growth of cloud computing and its associated vendors. But while these data centers may bring the tech industry to more rural towns, they fail to provide many jobs or greatly enhance the local economy, experts say.
Data centers are a multi-billion dollar industry worldwide, driven by data growth for individuals and businesses, said Mehdi Paryavi, chairman of the International Data Center Authority (IDCA).
"The data center industry is at the very beginning of really defining its future," Paryavi said. "It's still not recognized as a standalone industry by itself, though it's probably one of the most lucrative industries in the world today."
Tech giants such as Microsoft, Apple, Google, and Amazon lead the industry in terms of the quantity, quality, and size of the facilities and clouds they operate, Paryavi said.
In Boydton, VA, recently profiled in the New York Times, Microsoft recently built a large data center housing thousands of computer servers.
"People thought when Microsoft came in it would create jobs, but that's just not the case," said E.W. Gregory, the head of the local International Brotherhood of Electrical Workers union. Instead, they brought in outside technicians to do most of the work, he added. About 25 local residents got jobs, primarily as administrative assistants or janitorial staff, Gregory said.
Hundreds of Boydton residents lost jobs in recent years, as several factories and a prison closed. Gregory said he believes Microsoft chose the town for a data center primarily because "land was cheap."
"It helps the community to a point, because restaurants, gas stations, and hotels are getting more business," Gregory said. "The people are nice and hard working, but there is no industry for them to work in."
While typical company headquarters can have between 200 and 1,000 jobs on site, the number of jobs at an average data center is usually capped at 30, according to a 2014 report from CBRE.
Large companies often select data center locations based on how much geographic area they can cover with the right kind of low latency. Recently, Amazon built large data centers in Columbus, OH, and Dulles, VA, while Microsoft has centers in Wyoming and Iowa. Google began building in Oregon, near the inexpensive hydroelectric power of the Columbia River. And Apple built a 500,000 square foot data center in Maiden, NC, in 2010, with plans to invest more than $1 billion over 10 years in the data center campus.
"The data centers have been a natural fit in the foothills of North Carolina," said Todd L. Cherry, director of the Center for Economic Research and Policy Analysis at Appalachian State University. "As the textile and furniture industries left, there was considerable electricity capacity to serve the data centers."
The underlying issue is that the state and local governments provide incentives such as tax breaks, land, infrastructure, and services, usually in a competitive bidding process with other governments trying to land the data center, Cherry said.
"The incentive packages can be quite outlandish—far exceeding any reasonable economic justification," Cherry said. "This is a form of what we call 'the winner's curse.' When governments engage in a competitive bidding process over an uncertain benefit, the one that wins is the one that overestimates the benefit."
This kind of competitive bidding to attract companies often becomes more of a political game than an economic development strategy, Cherry said. Instead of spending resources to fight for an existing company, a better economic development approach is to create new economic activity by investing in things like education, infrastructure, and research and development, Cherry said.
Paryavi said he agreed that data centers often do not generate much economic growth for residents of rural towns where they are built. "But it does provide a cleaner environment, and a more quality job profile for those qualified to take it," he said. One data center can also be an anchor for others to join. "The aggregate of those could turn your town into a digital hub," Paryavi added.
It makes financial sense for large companies to recruit local tech workers when possible, instead of paying their own staff to visit the area, Paryavi said. But, if there is a lack of local tech talent, they will have to search elsewhere, he said.
With the motto "good land, good living, good people," Shelby County, KY is home to data centers owned by Eaton Corporation, EON Energy, and Humana Insurance.
The county attracts data centers due to its proximity to major metro areas, the low cost of utilities, and the mild climate that is not prone to flooding, earthquakes, or storms, according to Shelby County Judge Executive Rob Rothenburger. In the event of a storm, the companies have several backup systems to keep data safe.
In 2011, Eaton Corporation spent $80 million to build a 55,000 square foot data center in Shelby County's town of Simpsonville, KY. An additional $80 million went toward an identical data center in Louisville, KY.
Shelby County offered Eaton Corporation several incentives, including an industrial revenue bond, to build in the area. The company also receives tax benefits through the Kentucky Enterprise Initiative Act, which allows it to recover state sales and use tax on construction costs, building fixtures, and research and development materials.
While Eaton's Simpsonville data center has only created about 15 jobs for local residents, these jobs are high paying, Rothenburger said. "They want to attract the brightest individuals from the local community, but they also brought in some internal personnel, especially at the start," Rothenburger said. As people are trained, and the internal people cycle to other areas, more jobs will open up, he added.
The average data processing, hosting, and related services salary was $38.21 per hour as of July 2016, according to the Bureau of Labor Statistics, or about $76,100 per year.
Despite the lack of new jobs, Eaton Corporation does make payments to local schools as part of its local assessment. In some ways, this is more beneficial, because the schools have more funds to improve without the student population growth that would occur if more jobs were offered in the area, Rothenburger said. The company also partnered with the city of Simpsonville to rebuild a community park and baseball field.
"Their contribution to schools has been a tremendous asset to our community," Rothenburger said. "If we could attract more data centers, we would at this point."
Data center growth shows no signs of slowing down: The industry is expected to double by 2021, due to massive acceleration of enterprise cloud adoption, according to a recent JLL report. And data center providers continue to spread locations geographically for greater reliability and speed, the report stated.
To remain competitive, cloud providers will have to account for coming changes to the industry. A July Gartner report predicted that "by 2021, more than 90% of large data centers will revise their strategies due to major global socioeconomic and environmental trends." Digitalization, demographic and social change, urbanization, climate change, and resource scarcity are the trends driving the change, the report found. IT leaders must develop a data center strategy that takes these trends into account, or risk a weak infrastructure or a failed business.
"America is no longer leading the world in manufacturing," Paryavi said. "But we are leading with our ideas, patents, designs, and data. Nowadays our clouds are making a bigger impact than our manufacturing could ever do."
Cloud Computing Brings Sprawling Centers, but Few Jobs, to Small Towns
“A lot of this stuff is put in rural parts of the country that used to be part of a manufacturing economy” that has gone overseas, said Bill Coughran, a partner at the venture investment firm Sequoia Capital who ran much of Google’s big engineering for eight years. “Textiles and furniture created a big power grid in the south. Then those jobs went away.”
That’s been the story for Boydton, population 430, in the middle of tobacco country a few miles from the North Carolina border. The prison across from the Microsoft center closed in 2012. A nearby Burlington Industries textile plant that employed more than 2,000 shut in 2002. It was razed in 2012.
In Clarksville, the next town over, a Russell Stover candy factory closed in 2001, taking 700 jobs. Now the building is a data center for the Department of Homeland Security, operated by a small crew from Hewlett Packard Enterprise.
The South Virginia tobacco economy collapsed as Americans cut back on smoking. But in 1999, Virginia used some of the $4.1 billion it received in a settlement with cigarette makers to build high-speed fiber-optic lines throughout the region.
The broadband drew Microsoft, along with some financial perks. Mecklenburg County, which received $2.1 million from the state for the project, has given Microsoft 350 acres and offset personal property taxes by 82.5 percent, according to Wayne Carter, the county administrator.
Initially, Apple, which is building a big cloud center for consumers’ photos and music, wanted the Boydton site, but it went across the border to North Carolina, which promised tax breaks on its data center equipment. Not to be outdone, Virginia passed laws in 2009 and 2010 that exempted sales taxes on things like data center computer servers, software, power generators and chillers to cool all that equipment.
“We’ve had six years of construction work,” said Mr. Carter. That has helped the county, he said, because even temporary workers rent houses, stay in hotels and eat in local restaurants.
Microsoft did not dispute reports that it would spend $1.1 billion on the Boydton data center, and said that “on average, data centers employ tens to several dozen people,” in a mixture of corporate and contracted positions. It declined to let a reporter tour the site.
“They talked about 100 jobs, but it’s a slow process,” said Thomas C. Coleman III, the mayor of Boydton. So far, he says, the biggest impact “has been a couple of lunch tables at the Triangle gas station.”
He understates matters, but not by much. Mr. Gregory, the electrician, said his union had hundreds of applicants for work digging ditches and laying pipe, starting at $10.88 an hour. Wiring paid $28.59. Both jobs tended to last about six months, he said, with lots of attrition for the hard outdoor labor.
Working as a security guard or as someone testing the wires inside the data center offers better money, but there are not many positions. Microsoft prefers to fly in its own specialists for some work, and it doesn’t like hiring people who have worked in other big companies’ cloud-computing centers, Mr. Gregory said. (Microsoft said it did not exclude candidates based on previous experience.)
“We can provide a place to live, but all those contractors will move on to the next town where they’re building,” Mr. Coleman said. “You don’t know what you can count on.”
The big cloud networks are immensely profitable for the few companies who can operate these global systems. The biggest three cloud companies estimate that the global market in business computing is worth $1 trillion or more, and they are rushing to expand globally. In interviews, all said they spend more than $2 billion annually on this.
“It’s phenomenal how rapidly they are growing,” said Erik Brynjolfsson, a professor at the Massachusetts Institute of Technology who has written extensively on the impact of new technologies. “It is the key enabler of all kinds of technology advances, starting with the things companies do now, but lots cheaper, including outsourcing tech jobs.”
In a recent article, Mr. Brynjolfsson noted a report by the United States Council of Economic Advisers that said more than 80 percent of jobs paying $20 an hour or less could be automated. The report urged sweeping policy changes, like ending some licensing regulations for careers like hairdressing, or wage subsidies for low-paid workers, to adapt to the new economic infrastructure. For towns like Boydton, he said, “people are going to have to move to new places.”
That is hard to imagine in places where local roots go so deep. Conversations here usually start with people explaining where they are from, and what their families did here for generations. “Boydton is the quintessential quaint courthouse town,” said Leigh Lambert, the town librarian. “People from here love it. It feels like it’s always with you.”
Ms. Lambert grew up nearby, tried New York, and returned to work next to the court, which is adorned with a statue of a Confederate soldier. Microsoft initially came to a couple of town meetings, and it seemed to offer a way Boydton could come back. “Now they’re off by themselves,” she said. “We hear they have a really nice Starbucks machine.”
Tax Incentives for Data Center Development Attract New Scrutiny
A debate is stirring about whether public officials that give construction authorization for the properties are shortchanging their communities when they strike property tax incentive deals.
Sep 19, 2016
Property tax incentives for data centers are a modern iteration of similar deals struck for city and state-sponsored financing of stadiums and sports/entertainment arena projects.
Investors interested in data storage properties will inevitably encounter the debates about tax incentives as they weigh opportunities in the sector. They might also have to weigh how much of the alternative asset class belongs in their portfolios, because while communities strive to claim the prestige of negotiating deals with the major data center users the luster quickly wears off.
Once construction is complete, each data center is operated with minimal personnel, usually 45 employees to maintain the equipment and provide the highest levels of security. The low staffing and slim ongoing economic returns do little to offset the hundreds of millions of dollars awarded in tax incentives in some cases, observers say. Not even school grants and free Wi-Fi service on city properties can shift the balance, critics note.
In the data center industry, construction costs are measured per megawatt of power needed to support the power draw for IT equipment and cooling of the data center. A 100,000-sq.-ft. project might require about five megawatts of power, with costs ranging from $6.5 million to $9 million per megawatt, plus the shell cost for the large data center REITs, according to Alan Howard, an analyst at Wired Real Estate Group, a data center advisory and brokerage firm headquartered in Las Vegas.
The location of the project, and the need for power and cooling redundancy back-ups in case of a power outage, ultimately drive the pricing, Howard says.
“These are the basics, but data centers are complex long-term fixed asset investments with many variables that can drive costs,” he notes. “The risk profile is high and investors need to be aware of how those variables impact pricing and ROIC.”
Currently, the towns of West Jordan, Utah and the Village of Los Lunas, N.M., which are competing to attract a new Facebook data center, have landed in the middle of the debate. In both cases, millions of dollars in property tax incentives are on the table. The Associated Press reported that West Jordan offered a package with $240 million in incentives, which it rescinded after facing public resistance. Negotiations have since restarted, although the value of the current incentives are not clear.
Separately, Los Lunas was considering exempting a proposed Facebook data center from property taxes for 30 years. After that, the community would collect yearly payments of $50,000, with annual increases that would be capped when payments reached $500,000, the Associated Press reported.
A lot of incentives are in the balance for the Facebook data center, especially for Los Lunas. Earlier in August, the community had approved several agreements with Facebook’s subsidiary Greater Kudu, LLC for water capacity guarantees worth $10 million, according to local press reports. Data centers also require water for cooling purposes.
Large technology firms like Facebook, as well as power companies and financial services firms, tend to build their own data centers, Howard notes. Sometimes the companies lease space from public data center REITs, including CyrusOne and DuPont-Fabros Technologies.
The relative paucity of ongoing economic benefits to a community is also stoking criticism of the deals. But that’s not likely to stop public officials from providing the incentives to data center developers and users.
“We have a long history of inter-community competition for capital and jobs,” Swenson says. “It has positioned political leaders to behave in whatever way possible … to take credit for any kind of capital or development in their region."
Facebook timeline: How fractures in Utah’s front drove the data center to New Mexico
Sep 17 2016
On the outskirts of West Jordan, just outside of Copperton and at the base of the Oquirrh Mountains, is a sprawling, dusty field where Vicky Jones' family has been dryland farming since just after the end of World War II.
It was on this relatively barren land that West Jordan officials envisioned a massive, 1,700-acre technology park, anchored by six vast warehouses that could house untold terabytes of Facebook user data, shuttling friend requests and status updates and birthday photos from across the globe.
The allure of landing the world's largest social media company would undoubtedly act as a magnet, officials believed, attracting other high-tech companies to the site and revolutionizing West Jordan from a bedroom community to a cutting-edge technology hub.
And they were willing to give up the farm — not just Jones' farm — to fulfill the goal.
But after months of fractious and at times volatile negotiations and jockeying, the dream was dashed last week when Facebook chose the small New Mexico town of Los Lunas to build its new center.
The demise of the deal brought accusations of political grandstanding, mostly directed at Salt Lake County Mayor Ben McAdams, who derided the deal as giving $200 million from Utah taxpayers to a company worth more than $360 billion.
"This was a bad deal and I stand by my decision to reject it," McAdams said in an interview.
West Jordan Mayor Kim Rolfe blamed McAdams and the county for the failure. The project, he said, would have meant hundreds of millions of dollars for the local economy and thousands of construction and engineering jobs, millions of new dollars for schools and potentially could have lured other tech businesses to the area.
"It is unfortunate that this $1 billion-plus investment in our community was jeopardized by political theatrics," Rolfe said.
While West Jordan and the state entered into non-disclosure agreements, Salt Lake County never signed such a deal, and The Salt Lake Tribune obtained hundreds of pages of emails and documents charting the evolution and ultimate demise of the deal.
Project Discus — It started simply enough • On Jan. 14, just before the Martin Luther King holiday, cities across the Wasatch Front received a notice from the Economic Development Corporation of Utah — a quasi-governmental agency.
"EDCUtah has been engaged by a consultant for a California-based (Fortune 250) company that is searching for a new enterprise data center location in North America," the notice read.
Code-named "Project Discus," the company sought between 120 and 150 acres within 30 miles of an airport and 40 minutes from a metropolitan area. There would be a capital investment of $250 million and the creation of a rather paltry 30 to 50 jobs.
At least four areas were identified as potential targets — West Valley City, a parcel straddling the border of Riverton and Herriman, West Jordan, and a fourth site, presumably South Jordan.
It didn't take long for all but West Jordan to fall away, deterred by the incentive package Project Discus was seeking.
Documents show Facebook was looking for a deal similar to what it got in Iowa: complete exemption from sales tax and property tax in exchange for annual payments starting at $50,000 a year and climbing to $150,000 — for total tax breaks worth over $300 million.
It was too rich for West Valley, said City Manager Wayne Pyle. "We were definitely serious about pursuing it, but in our return-on-investment analysis" it didn't pass muster, Pyle said. "A data center, kind of in itself, is pretty limited overall in what it's going to bring in, so we really didn't incentivize that much."
West Jordan, though, went all-in, quickly ting aside a 1,694 Economic Development Area (EDA) on March 31. The rush let the city sneak in under the deadline of a new law requiring the set-aside of 10 percent of the value of the development for affordable housing.
"We beat it by about 12 hours," said West Jordan City Manager Mark Palesh.
On the radar • By that time, other states were already well down the road of courting Project Discus. New Mexico officials first met with company executives in June 2015 and by that August, Gov. Susanna Martinez led a team to northern California to make the pitch for Los Lunas to Facebook.
The village is home to about 15,000 people, situated 25 miles south of Albuquerque and sits along the Rio Grande River. It doesn't have the fiber optic thoroughfares that West Jordan offered and is in a drier climate — an issue for a facility that will ultimately demand up to 4.8 million gallons of water per day.
But Los Lunas had two distinct advantages: It wanted the project badly and a united group of city and state officials were eager to make its case.
The city and state agreed to a far more generous of incentives than was ever considered by West Jordan. New Mexico has reportedly agreed to charge no taxes for 30 years and take $50,000 a year from the company, with the annual payments escalating in later phases of the project.
The state has thrown in $10 million in additional tax rebates and the city has agreed to borrow $30 billion to build up the state's renewable energy resources.
Fractures form • As New Mexico officials were pushing hard to woo Facebook, Salt Lake County economic-development staff members were becoming increasingly concerned about the terms West Jordan was considering.
Emails show the county and Jordan School District were extremely reluctant to go along with Facebook's request to make payments instead of reducing tax payments. The two government agencies wanted a more traditional deal — giving the company a 75 percent property tax break initially, climbing to 100 percent in the latter phases of the project.
On June 21, McAdams — through his director of economic development, Stuart Clason — pushed the city to include the affordable-housing money in the deal and for the county to receive a portion of the $3.6 million administrative fee, but was met with stern opposition from the city.
In an email to Erin Laney with EDCUtah, Palesh lays into Clason.
"When I read this missive from Stewart [sic], I about came out of my chair. There will be NO Affordable Housing Set-Aside, and any Administrative Fee will be to the City EDA, NOT the County," Palesh wrote. "If Stewart [sic] wants to nix this deal, he is doing a great job."
In a separate email, a Facebook official reiterated that the affordable housing set-aside, which would carve millions out of the tax break, was not an option.
"I hate to put things in doomsday terms, but this potential modification would be bad," the Project Discus representative wrote.
(One likely fallout of McAdams' push is that Sens. Wayne Harper and Curt Bramble — vocal supporters of Project Discus — are planning legislation to repeal the affordable housing set-aside in the upcoming legislative session.)
Relations began to deteriorate further with spats over meeting schedules and locations and apparent threats from Palesh to cut the county out of the discussions entirely. But with Jordan School District and several other taxing entities on board, all West Jordan had to do was win over the State School Board. In that event, Salt Lake County's opposition would be meaningless.
Gov. Gary Herbert weighs in • After Pioneer Day, perhaps sensing the deal was in trouble, Gov. Gary Herbert got involved, contacting McAdams to encourage him to support the deal. McAdams expressed the same concerns, in part because the terms were still difficult to pin down.
Projections on jobs ranged from 100 to as many as 300. Promised salaries were anywhere from $50,000 to $90,000. The acreage of the EDA remained at nearly 1,700 — almost 10 percent of the entire city of West Jordan — but Facebook wanted just 230 acres.
"Information about the deal wasn't forthcoming," McAdams said in an interview. "The terms weren't made available until the 11th hour and when we became aware of them, they were not acceptable and clearly not a good deal for taxpayers."
On Aug. 1, Herbert summoned the city, county and other parties to his office to try to hash out a deal, but the county was unswayed."The Project Discus proposal still leaves me questioning whether the economics do right by the taxpayers we are both elected to represent," the mayor wrote Herbert in an Aug. 4 letter.
Palesh said McAdams' public criticism of the deal did not go unnoticed by Facebook.
"A couple times Facebook came and said, 'Our corporate image is worth millions to us,'" he said. "Mayor McAdams trashed their name so badly that that [entered] into their final decision."
Val Hale, director of the Governor's Office of Economic Development, also was apparently up by McAdams' refusal to budge. According to an email between county staff members, Hale threatened to steer all future economic development projects to Utah County.
Business recruiting is competitive and "companies locate where their investment and employees are welcome," Hale said in a statement. His conversations with McAdams were intended to make sure the county was committed to "maintaining an environment that is attractive to business growth," he added.
But Hale said GOED is working on several important projects with Salt Lake County.
'Zombie' deal • The State School Board typically follows the lead of the local school board — and in this case Jordan School District was behind the project. But state school-board members were uneasy with the size of the incentive and searched for some middle ground. On Aug. 23, it approved the package, but with a $100 million cap on the first phase of the project — a largely cosmetic limit meant to ease the board's heartburn.
In a stunning turn, West Jordan announced the deal was dead, congratulating Los Lunas on winning the site, apparently without first consulting Facebook.
The declaration of death was premature — McAdams called it a "zombie" deal — and West Jordan quickly backtracked, announcing less than 12 hours later that it was too good of an opportunity for Utah to pass up, "so we have been working throughout the night and will continue through the day to keep the project alive."
But Palesh said that there was little ongoing contact with Facebook.
"We never entered into any more negotiations after that point. I think that was wishful thinking on the part of some elected officials," Palesh said.
The last, best offer that Facebook would get was on the table. And the company walked away, announcing last Wednesday it had chosen Los Lunas.
"It was ours to lose," said Palesh, "and basically by one vote we gave it to New Mexico."
The company plans to break ground on the facility later this year and the data center should go online late next year.
And, for now at least, Vicky Jones' field in West Jordan will remain empty.
Apple, Amazon Unveil Major Renewable Energy Projects to Power Cloud Data Centers
September 20, 2016
The current surge of data center construction projects by Internet and cloud giants is accompanied by a surge in investment in renewable energy generation capacity to compensate for much of the energy the future data centers will consume. The latest examples are recent renewable energy projects by Apple and Amazon.
On Monday, Apple announced completion of a 50MW solar farm in Arizona, which will offset energy consumption by the company’s new data center in Mesa, Arizona, currently under construction.
Last week, Amazon announced construction of a 253MW wind farm in Texas, also meant to offset grid electricity that powers its massive cloud.
The photovoltaic plant in Arizona is the fifth large-scale solar array the company has built for its data centers. Three solar arrays accompany its data center campus in North Carolina, and one accompanies its data centers in Nevada. Apple also has contracted for the output of 130MW of capacity from a solar project in Central California.
Earlier this year, Apple created an energy company called Apple Energy as a subsidiary, which gives it more flexibility to buy and sell energy on the wholesale electricity market.
The future Amazon Wind Farm Texas will be the cloud giant’s fifth and largest renewable energy project to date. It has also announced wind and solar projects in Indiana, North Carolina, Ohio, and Virginia, which will generate energy for the utility grids supplying existing and future Amazon data centers, the company said in a statement.
The project in Scurry County, Texas, will include more than 100 wind turbines. Each turbine’s rotor diameter will be twice as long as the wingspan of a Boeing 747.
Almost with no exceptions, these long-term commitments by cloud giants help renewable energy developers secure the financing necessary to get the projects going, so the current data center construction boom has greatly boosted the amount of renewable generation capacity on the grid.
Apple’s Central California agreement, for example, was instrumental in making the project possible, according to Joe Kishkill, chief commercial officer at First Solar, the developer behind the California Flats project.
Many hyperscale data center operators of Apple’s caliber use third-party data center providers in addition to building and operating their own server farms. Some of the biggest data center providers, such as Equinix, Digital Realty Trust, and Switch, have invested in renewable energy as they compete for these customers’ business.
A recent survey by Data Center Knowledge found that colocation data center customers are increasingly interested in data center services powered by renewable energy. Download full survey results here: Renewable Energy and Data Center Services in 2016