Yahoo Eyes Omaha for Major Data Center

Yahoo is considering Omaha, Nebraska as the site of a major data center project, the latest in a series of moves by Yahoo to expand its infrastructure to compete with Microsoft and Google. Yahoo's interest in Omaha was first noted yesterday by TechHermit, and has been confirmed by our sources, who say the Internet portal has looked at development opportunities in several Midwestern states. Nebraska, which has stepped up its efforts to attract data center projects in recent months, has emerged as the front runner.

While Nebraska appears poised to win the deal, several details have yet to be finalized, sources say. No information is available yet on the exact site or scope of the new facility. Yahoo's most recent company-built data center in Quincy, Washington was 140,000 square feet.

Yahoo has been accelerating its data center build-out in recent weeks, leasing data center space in Santa Clara from Digital Realty Trust (DLR) and speeding deployment of its footprint in a facility in Ashburn, Va. operated by Dupont Fabros (DFT). Yahoo continues to be the focus of takeover interest from Microsoft and investor Carl Icahn, but has rejected overtures from both parties. If Yahoo is to go it alone, it will need to continue to scale its Internet infrastructure to remain competitive with Google and Microsoft, which are both investing heavily in data centers.

Omaha was recently named one of the most affordable U.S. cities to operate a data center by The Boyd Company, with an annual operating expense of $12.9 million, less than half the cost of operating a similar facility in New York. Nebraska has also been developing incentive programs to compete with its neighbor Iowa, which has won more than $1 billion in data center investment from Google and Microsoft. Google is building a $600 million data center in Council Bluffs, while Microsoft is in the late stages of site selection for a project near Des Moines.

Recognizing the increasingly competitive nature of data center site location, officials in Nebraska have worked hard to raise the state's profile and improve its outreach to the industry. Nebraska Advantage had a booth at the Data Center World trade show in Las Vegas in April, with representatives of the Nebraska Public Power District on hand to discuss power issues. The agency has crafted a section of its web site to market the state's advantages for data center development.

One of the key criteria in Yahoo's data center expansion has been energy efficiency and sustainability. The Santa Clara facility where Yahoo has leased space is being developed to qualify for LEED Gold certification, meeting the highest standards for "green" buildings. Yahoo noted that it is "committed to being an environmentally responsible business."

Christina Page, Yahoo's Director of Climate and Energy Strategy, recently discussed the company's interest in powering its data centers with energy from renewable sources rather than coal. "Not all kilowatt hours are created equal," Page said at the Data Center Energy Summit in Santa Clara on June 26.

The Nebraska Public Power District has been stepping up its development of wind power, and in April announced two new wind power projects that will generate more than 100 megawatts of capacity by next year.