NY Approves Power for Yahoo Data Center

New York State officials say a $150 million Yahoo data center is bound for the Buffalo area after the New York Power Authority approved a deal to supply the Internet company with 15 megawatts of power. But the company says it has made no commitments, and industry sources say other states are still in the hunt.

Gov. David Paterson said the decision must be approved by Yahoo's board, but that he "expects to secure Yahoo!’s commitment to invest in Western New York rather than in competing sites in other states." The governor's office said the new facility is expected to be located in either Niagara or Genesee Counties, and would create 125 jobs paying approximately $65,000.

But sources in the data center industry suggest Yahoo's decision is not a done deal. Yahoo has scouted sites in at least two other locations. Although Virginia officials say the state's recent approval of tax incentives for data centers was not designed to attract a specific deal, the measure offers tax exemptions for projects of at least $150 million - exactly the size of the Yahoo development.  

"We are continuously evaluating new ways to best support our business needs and we are in a dialogue with various state officials about our potential options," Yahoo said in a statement to the Buffalo News. "New York State Officials and the Governor's office have been very supportive in helping us evaluate our options in New York State, and we're pleased to learn of the New York Power Authority's vote."  

Today's announcement by the NYPA followed six weeks of negotiations between Yahoo and the utility, which has been blamed for several recent failed deals to bring major employers to western New York.  

The NYPA has approved 10 megawatts of low-cost hydropower for a first phase of construction, which could begin this fall and be completed in January 2011. A second phase, expected for the spring of 2012, would receive an additional five of power.

“This proposal to Yahoo demonstrates the New York Power Authority’s commitment to supporting the revitalization of the Western New York and upstate economy," said NYPA Chairman Michael Townsend. "Yahoo’s choice of New York over other states could be the catalyst that sparks an economic recovery for the region.”

Local officials in Western New York told the Buffalo News that Yahoo is considering a Niagara County site in Cambria, which was previously the destination for a proposed $139 million HSBC data center project that was canceled last year. The Genesee County site is said to be in Pembroke on Route 77 near Exit 48A of the New York State Thruway.