Tech Companies Flock to Iowa

by Natalie Walters

Cupertino, Calif-based Apple (AAPL – Get Report) announced on Thursday that it planned to build two new data centers in an unlikely city: Waukee, Iowa.

Apple CEO Tim Cook said at an event on Thursday in Waukee that the 2000-acre, $1.4 billion building project will run 100% on renewable energy. Construction will begin on the project in early 2018 and should be completed in 2020. Surprisingly, Apple is the fourth tech giant to build a data center in Iowa, following Google, owned by Alphabet (GOOGL – Get Report) , Facebook (FB – Get Report) , and Microsoft (MSFT – Get Report) . So, why Iowa?

At the event on Thursday, Cook cited Iowa’s “world-class power grid,” as well as the state’s efforts to develop creative computer programmers. “At Apple, we admire what you guys have accomplished and we want to be a part of it,” Cook told the Iowa crowd.

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The midwestern state is the prime location for renewable energy projects. Iowa passed one of the first Renewable Portfolio Standards (RPS) in the country in 1983. The state is also ranked first in the U.S. for wind energy with 36% of its electricity coming from wind power, meaning Iowa can provide the renewable energy Apple and other tech giants need more than other states.

Fellow Silicon Valley giants Google and Facebook have deals with Iowa that let them run their data centers completely on renewable energy. Together, the two companies buy 548 MW of wind energy from MidAmerican, a subsidiary of Berkshire Hathaway (BRK.A – Get Report) , (BRK.B – Get Report) .

Iowa was also ranked number nine overall on CNBC’s “Top States for Business” list based on 60 measurements of competitiveness and ranked number two for the “Cost of Doing Business.” Apple is certainly getting a good deal to build in The Hawkeye State. The company is getting a $208 million tax break to build the two data centers that will create at least 50 jobs.

“Apple’s significant investment and commitment to grow in Iowa is a clear vote of confidence in our state,” Gov. Kim Reynolds said in the announcement. “This announcement further solidifies Iowa as a hub where innovation and technology flourish and demonstrates this is a place where world-class companies can thrive.”