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Is a New Data Center the Secret to Lower Costs for Des Moines Businesses?

A concise look at how a new Des Moines data center could slash costs for local businesses while weighing water use, grid stability, and limited tax incentives.

Wen zhangAug 29, 20263 minute read
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What a Data Center Could Mean for Your Bottom Line

Des Moines has quietly become a data‑center hotspot. With 51 facilities covering almost 10 million sq ft and 1,247 MW of power capacity, the city ranks 9th in the nation for data‑center volumehttps://baxtel.com/data-center/des-moines. For a local SME, that translates into a shortcut to cheaper cloud services, but the promise comes with hidden community costs.

The Upside (pros): Cost, Tax, and Green Power

  • generationhttps://iuc.iowa.gov/regulated-industries/electric/iowas-electric-profile. That renewable surplus keeps electricity prices among the lowest in the Midwest, a direct saving for data‑intensive workloads.

  • State sales‑tax refund – New data‑center projects can claim a 50 % refund on qualifying purchases (capped at 5 % of the sales price) for the first five yearshttps://revenue.iowa.gov/taxes/tax-guidance/sales-use-excise-tax/data-centers. For a $10 M equipment spend, that’s up to $250 k back.

  • Skilled workforce – Des Moines’ tech talent pipeline, fed by a growing cybersecurity job market, means lower recruiting costs and faster implementation.

  • Renewable credibility – The wind‑heavy mix lets a data center market its carbon‑light footprint, an attractive badge for eco‑conscious customers.

The Downside (cons): Water, Grid Strain, and Incentive Timing

  • Water appetite – Microsoft’s West Des Moines campuses used 68.5 million gallons in 2024, representing 2.62 % of the city’s total water usehttps://www.wpr.org/news/microsoft-data-center-iowa-wisconsin-expect. A new facility could add a comparable load, raising utility bills for neighboring businesses.

  • Grid stability – While wind is abundant, its variability can trigger rate adjustments if utilities must purchase supplemental generation during low‑wind periodshttps://aureon.com/blog/des-moines-data-center-solutions.

  • Incentive window – The property‑tax exemption starts in 2027 and the sales‑tax refund is limited to 10‑15 years. Companies that wait too long may miss the most lucrative break‑points.

  • No new state incentives – Since February 2026, Iowa has not introduced fresh data‑center‑specific programshttps://servercountry.org/policy/iowa, meaning the current package is the best you’ll get for the foreseeable future.

Bottom‑Line Decision Matrix

Factor

Benefit for SMEs

Risk / Cost

Power cost

$/kWh among the lowest in the U.S. (wind‑driven)

Potential rate hikes during low wind periods

Tax breaks

Up to 50 % sales‑tax refund for 5 years

Expires 2027 (property) and 10‑15 yr (sales)

Water use

None directly for most businesses

68.5 M gal/year for a large campus can strain city supply

Workforce

Local talent reduces hiring lag

Competition for skilled staff may drive wages up

If the immediate savings on electricity and tax refunds outweigh the long‑term water and rate‑risk exposure, a new data center can be a strategic lever for growth.

Sources