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Robust incentives can help make the business case

Taking a Second Look at Southern California for Your Next Data Center

Guest Blogger: Tod Sword, Economic Development Consultant, Southern California Edison

The Southern California Data Center market, especially that of Los Angeles County, is one of contradictions. There are concerns about high labor costs and soaring utility rates. With an average cost of 12.74¢/kWh, the City of Los Angeles’ commercial electricity rates are 26% higher than the national average of 10.9¢/kWh.

Rental rates of $130-$160 kW/mo are almost as high as those in primary Data Center markets like Silicon Valley and the New York Tri-State area. Recent earthquakes shaking the Los Angeles area are a reminder of the importance of building a Data Center to withstand the region’s not infrequent tremblors. All of this raises a good question: Is Southern California a good place to locate a Data Center?

The short answer is…YES. For one thing, the LA area is ranked 8th in a list of top 25 tech cities, with a deep pool of tech talent. And, the State of California’s Employment Training Panel incentives are helping to grow the Data Center workforce by providing funds for vocational training. As well, the State of California’s Employment Training, an $80m grant fund, is available to further improve the skill sets of the Data Center workforce by providing funds for vocational training.

In addition, the Data Center market is maturing and wholesale inventory is growing – up 16 MW between 2017 and 2018. It’s easier than ever for Data Centers owners and operators to choose a location for their Data Center with Southern California Edison’s newly released GIS Power Site Search tool. It shows available sites in southern California and includes information about physical space, power, and fiber at the sites, plus the distance to CoreSite’s One Wilshire Data Center.

Southern California Edison is working to make it easier for Data Centers to do business in the region, too. They’ve adding renewable sources into the generation mix without raising rates and have an Economic Development rate program. For companies with a minimum load of 150 kW or more, the Energy Discount program offers 12% on energy bills over five years.

Despite a few factors that scare people away from Southern California, it is a rich, attractive environment for Data Centers with a deep talent pool, available inventory, and economic incentives that make the difference.

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