Nobody is surprised to hear that power and cooling are huge costs for running a data center. Twelve percent of the cost for running a data center is power according to Gartner. Another 18% is eaten up by power distribution and cooling according to James Hamilton from Amazon Web Services. Clearly, reducing the expenses required to power and cool a data center is critical to shrinking the cost of running the data center.
The standard approach is to look for a site that offers cheap electricity since electricity is key for the big expenses of power and cooling. Locating in an area with hydroelectric power is prudent since hydroelectric is among the cheapest power. Microsoft and Yahoo went this route in Quincy, WA, and put their data centers there. A company that is particularly creative might even build a data center where there is cool weather. Yahoo went this route when it built its chicken coop data centers in Lockport, NY, to take advantage of hydroelectric power from Niagara Falls, and to take advantage of passive cooling through innovative design that took advantage of the cool climate and strong winds.