- Colorado introduces 30-year tax breaks to attract hyperscale data centres.
- The state aims to boost its data centre market share with significant incentives.
What happened: Colorado’s strategic move to attract data centres
Colorado is making a significant push to attract hyperscale data centres with a proposed legislation offering 30-year tax breaks. The Colorado Data Centre Development and Grid Modernisation Act aims to make the state more competitive in attracting hyperscale facilities, having captured just 2% of national data centre investment to date. The bill, advanced by the state senate’s Transportation & Energy Committee, includes provisions offering operators 100% sales-and-use-tax exemptions for up to 30 years for sites with at least 25 full-time staff.
This move comes as Colorado, a secondary market for data centres in the US, attempts to catch up with powerhouses like Northern Virginia, Phoenix, and Dallas-Fort Worth. Several new data centre projects are underway in Colorado, including the hyperscale facility being built in Aurora by QTS Realty. The state is now attempting to woo data centre operators, having seen states like Wisconsin and Tennessee attract hundreds of millions of dollars from new sites being built by Meta and xAI.
The bill includes incentives such as income tax credits worth up to 15% on grid enhancement investments, particularly generous for projects in rural areas, along with access to enhanced utility rate structures. Operators that exceed baseline requirements can qualify for a second-tier “enhancement certification,” unlocking further benefits in exchange for deeper commitments to grid modernisation and community programmes like workforce training or local supplier development.
The bill also stipulates that the Colorado Office of Economic Development retains the right to strip operators of their incentives if they fail to meet commitments, including requiring them to repay all tax benefits received. Beyond incentives, the bill includes requirements for operators setting up shop in Colorado to be environmentally sustainable, such as employing water stewardship strategies and sourcing at least 50% of power from renewable or clean energy.
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Why it is important
Colorado’s move to offer 30-year tax breaks is a strategic attempt to attract hyperscale data centres and boost its share of the national data centre market. The state has historically lagged behind other major markets in attracting significant data centre investments. By offering substantial incentives, Colorado aims to become more competitive and attract major players in the data centre industry. The legislation not only provides financial incentives but also includes provisions for environmental sustainability and community development, ensuring that data centre projects benefit local communities. This approach is crucial for enhancing Colorado’s position as a leader in technological innovation and modernising its grid infrastructure through private investment.
