Data center site selection: criteria and checklist for a wholesale search

Start with the workload

Before comparing markets, decide how much geography the workload allows. It sets the radius of the search.

Power: availability, timing and cost

For a wholesale requirement, power is the first filter and usually the last one standing. Four questions matter, in this order.

1. How many megawatts are available, and in what form? Energized today, committed by the utility with a date, or still in a study. These are different products, often quoted at similar prices.
2. When? Large-load connections in constrained regions now take years. A market with cheaper rent and a later power date can cost more than it saves.
3. On what terms? Utilities are adding large-load tariffs with long contract terms, minimum demand charges and collateral requirements. Those obligations flow into your lease, directly or through your landlord.
4. At what cost? Energy price per kWh, demand charges and the facility's efficiency. Over a ten-year term, power can rival rent.

The numbers behind those questions:

• Time to power. New large loads wait an average of 5.0 years for power in the Americas (Cushman & Wakefield, May 2026). Dominion Energy says loads under 50 MW can often be served from existing distribution within one to two years of first planning, while larger loads likely need new transmission and a substation (Dominion Energy). Size and timing are linked: splitting a requirement across sites can be faster than waiting for one big connection.
• Terms. Large-load rules are set utility by utility. Dominion Energy's Rate Schedule GS-5 for Virginia loads of 25 MW or more takes effect January 1, 2027, with 14-year terms, minimum demand charges and collateral of $1.5 million per MW (Virginia SCC, November 2025). AEP Ohio's data center tariff has applied since July 2025 (AEP Ohio), and Georgia Power's rule for loads of 100 MW or more allows 15-year contracts and minimum bills (Georgia PSC, January 2025). In Texas, Senate Bill 6 requires new large loads on transmission-voltage service to be curtailable during rotating outages (Texas Legislature). See the summary in our AI capacity guide and the state-by-state detail in our comparison of 20 states.
• Cost. CBRE's first-half 2026 market data shows power rates from $0.06 to $0.07 per kWh in Phoenix and $0.07 to $0.085 in Dallas-Fort Worth, up to $0.16 to $0.271 in Silicon Valley (CBRE, H1 2026). Virginia added a temporary tax of $0.011 per kWh on data center electricity from July 1, 2026 through June 30, 2028 (Virginia budget Item 3-5.24).

Connectivity and latency

• Diverse fiber routes into the building and out of the market, from more than one carrier, on physically separate paths.
• Distance to cloud regions and interconnection hubs for hybrid architectures, measured as round-trip latency rather than miles.
• Cloud on-ramps and internet exchanges on campus or nearby, and the cost of the cross-connects to reach them.
• Dark fiber availability when you need to link multiple sites yourself.

Land, zoning and community acceptance

Where you build, or where your landlord builds, now carries political risk that used to be rare. Counties that welcomed data centers for the tax base are adding conditions on noise, setbacks, water use, building design and generator emissions. Some have removed by-right approval for data centers altogether.

• Is the site zoned for data center use by right, or does it need a special exception or rezoning?
• Are there pending ordinances, moratoria or legal challenges in the county?
• How close are homes, schools and protected land? Noise and generator limits follow proximity.
• Is there room for the substation, generator yard and expansion phases on the parcel?

The shift is measurable:

• Loudoun County, the heart of Northern Virginia's market, ended by-right approval on March 18, 2025. Data centers now need a special exception, and the rural two-thirds of the county bars them (Loudoun County).
• Prince William County's Digital Gateway, planned for 2,100 acres, lost its rezonings in court for defective notice, and the Court of Appeals upheld that ruling in March 2026 (Prince William County).
• Opposition is widespread. Data Center Watch tracked at least 75 projects worth about $130 billion disrupted by local opposition in the first quarter of 2026, and at least 45 worth $68 billion in the second (Data Center Watch).
• States are acting too. New York halted new data centers above 50 MW in July 2026, according to CBRE's H1 2026 report, and moratorium bills were introduced in 14 states in the first quarter of 2026 (Data Center Watch).

Water and climate

Evaporative cooling can use significant water, and water use is now a common objection at public hearings. Closed-loop and air-cooled designs use far less water but more power in hot weather. Ask what cooling design the facility uses, its expected water use, the source of that water, and whether the local utility has committed supply for the full build-out. For liquid-cooled AI deployments, confirm the facility water loop and heat rejection are sized for your racks.

Natural hazard and climate risk

Screen each shortlisted county for flood, hurricane, tornado, earthquake, wildfire and extreme heat. FEMA's National Risk Index gives a free county-level starting point. Then check the specific parcel: FEMA flood zone, elevation, access roads that stay open in a storm, and how long fuel deliveries can be sustained during an extended outage.

Taxes and incentives

Sales and use tax on servers and electrical equipment is one of the largest line items in a multi-year deployment, and many states exempt it for qualifying data centers. Property tax abatements, personal property tax treatment of equipment, and utility rate incentives also vary widely.

The National Conference of State Legislatures counts 38 states with dedicated data center incentives (NCSL, updated April 2026):

• Sales and use tax exemption on equipment, 36 states: Alabama, Arizona, Arkansas, Connecticut, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New York, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Virginia, Washington, West Virginia, Wisconsin and Wyoming. NCSL notes that Nevada's is a reduced rate rather than a full exemption, and that sources differ on Nebraska's.
• Other tools: Montana has no sales tax and offers a reduced property tax rate. New Jersey offers a tax credit on capital investment.
• Electricity exempt too: NCSL listed 14 states in April 2026: Arkansas, Connecticut, Florida, Indiana, Iowa, Massachusetts, Minnesota, Missouri, Nevada, North Carolina, Oklahoma, South Carolina, Tennessee (a reduced rate) and Texas. Three need a caveat. North Carolina repealed its data center electricity exemption for bills from August 6, 2026 (NC Department of Revenue, July 2026). Oklahoma exempts electricity only for web search portals, not most data centers (Oklahoma Commerce, October 2024). Nevada exempts electricity for every customer, so it is not a data center incentive (NRS 372.295).
• No dedicated incentive: Alaska, California, Colorado, Delaware, Hawaii, Maine, New Hampshire, New Mexico, Oregon, Rhode Island, South Dakota, Vermont and the District of Columbia.

Programs are changing fast, and several are closed to new projects. Arizona's 2026 tax law bars new data center certifications from July 1, 2026 through June 30, 2029, while centers certified earlier keep their relief (Arizona Laws 2026, Chapter 140). Illinois stopped processing new applications on July 1, 2026 under a governor's directive, and existing agreements are honored (Illinois DCEO). Ohio's governor paused new data center exemption requests in May 2026 while lawmakers study the issue (Office of the Governor, May 2026). Virginia added a temporary tax of $0.011 per kWh on data center electricity from July 1, 2026 through June 30, 2028 (Virginia budget Item 3-5.24). Our comparison of 20 states tracks the current status, power prices and local moratoriums.

Two cautions. Incentives usually require minimum investment and jobs, and sometimes a minimum facility size, so a smaller tenant in a multi-tenant building may or may not qualify on its own. And programs change, so confirm the current statute and any sunset date before relying on it.

Labor, construction and supply chain

For new capacity, the delivery date depends on local construction labor and on long-lead electrical equipment such as large transformers, switchgear and generators. Ask which equipment the developer has already reserved or ordered. A developer holding equipment slots is worth more than one with a better rendering.

Expansion and exit

• Is there land and power for your next phase on the same campus, reserved in writing?
• How many other operators are in the market? A market with one landlord gives you no alternative at renewal.
• Can you get out, or move, without stranding network and cloud connections?

The site selection checklist

Use this to score each shortlisted market or facility. The evidence column is what to ask for. A claim without the evidence is a claim, not a fact.

Frequently asked questions