Seven years after locating its Braeburn Capital asset management subsidiary in Reno, Nevada (largely for tax purposes), Apple is planning an expansion of its footprint in the area for reasons beyond favorable tax rates.
Among the top factors that attracted Apple's attention to Reno were access to low cost power with solar and other renewable options; availability of high speed fibre optic conduits; limited risk of natural or man made disasters; and lower overall costs combined with, of course, tax incentives.
While Apple's Braeburn group was attracted by the state's lack of a corporate income tax, that factor is far less important to the location of Apple's data centers, which don't directly generate substantial revenues. Instead, low property and sales taxes were important.
The State of Nevada, Washoe County and the City of Reno collectively approved a series of tax abatements for Apple last summer, paving the way for Apple to begin construction. The incentives run for more than a decade, and portions of the tax reductions can be extended through 2042.
However, Reno isn't the only location in the US with low property and sales taxes, or economic conditions what will prompt state and local governments to offer tax incentives to attract the investment of a company like Apple.
Nebraska, Oregon and Wyoming have already adopted tax mitigation legislation specifically to attract data centers. Texas and Utah both offer greater tax incentive packages than Nevada does. But taxes aren't the only thing data center builders like Apple evaluate in picking a site.
A study that looked at a variety of competing data center construction and operational cost factors at a series of different potential sites performed by Nevada indicated that, even with tax incentives, Reno couldn't beat the overall cost advantages of a site in Oregon. Fortunately for Nevada, Apple wants to build multiple sites; the company is now building massive data centers in both Oregon and Nevada.
Reno Technology Park
The new site, located just past a freeway scenic overlook east of Reno (view shown above), offers lots of relatively cheap land and has access to massive amounts of electrical power, thanks in part to a power plant (shown below) located adjacent the site.
Next to the plant is a solar field that's so large it appears to be a freeway in the panorama below, until you zoom in at greater detail (shown with inset detail below). There are also eight high capacity transmission lines to other power stations, which link to hydroelectric power plants in nearby states.
In addition to the existing, redundant power sources, the site also provides expansion room for additional solar and wind energy installations (the pano below depicts an area north of the freeway designated for solar field expansion), and has assess to high speed fibre optic data lines through a variety of carriers.
The cost of power in northern Nevada has been falling, and is now available in surplus, meaning that a data center located there can be guaranteed access to large amounts of affordable energy and can sign long term contracts to maintain a consistent supply of power at predictable prices.
A report by the Reno Gazette Journal cited site selection consultant Dennis Donovan as saying that data center clients "don't just want low cost electric power, but it also has to be reliable. THey also look at the source of that power and make sure that there is enough to support extra capacity without costs increasing dramatically it it's needed in the future."
Apple's third major US data center
After initiating plans to develop Reno Technology Park, Unique Infrastructure Group immediately began efforts to recruit potential data center clients to its new site, including Apple. As it turns out, the Reno site will be Apple's third major US data center.
Apple began with an initial data center site located in Maiden, North Carolina, which was first announced in July 2009 and became "fully operational" in late 2010.
That site went online just several months before Steve Jobs outlined Apple's plans for iCloud at its Worldwide Developer Conference in the summer of 2011. As a major new initiative, iCloud (and related iTunes services such as Match, as well as Apple's other cloud centric services that would follow it. including Siri and Maps) has a voracious appetite for data center capacity.
Apple recently began building a second data center site in Prineville, Oregon, near existing data center facilities operated by Facebook and in the same region as a data center built by Amazon.
Last summer, Apple announced it would also be building its third major data center at Reno Technology Park, investing over a billion dollars to make the project happen.
"We hope to build Apple's next data center in Reno to support Apple's iTunes Store, App Store, and incredibly popular iCloud services," the company's Kristin Huguet stated at the time.
The site itself is about a fifteen minute drive from Reno/Sparks (above, entering from with east with a view of the mountains near Lake Tahoe, the site of the first Winter Olympics to be held in the United States), neighboring cities that will also see additional expansion by Apple related to its operations of the new data center. Those plans will be detailed in a subsequent report.