Google wants to build its 4th data center in Oregon, for at least $200M

Google is looking to build a fourth data center along the Columbia River in The Dalles, Ore. The tech giant yesterday submitted a proposal for a 15-year tax exemption in connection with the proposed data center expansion.

Local officials will vote on the proposal next week, Nolan Young, The Dalles’ city manager, told VentureBeat in an email. The minimum cost of the project under the proposed agreement is $200 million, Young wrote. Google expects the total cost to be higher, with at least 50 employees staffing the new data center, according to a summary of the agreement.

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The Dalles was where Google first built its own data center to run its infrastructure. This would be the third expansion of that site. Google has also been building out more data center infrastructure elsewhere in the world, including in Iowa and the Atlanta area.

“Although there are a lot of factors to work out before making a final decision, we’re excited about exploring the possibility of expanding our operations,” Darcy Nothnagle, head of external affairs for Google’s Western region, told VentureBeat in an email.

Facebook, Intuit, and other companies with consumer-facing web services also maintain their own data center infrastructure. Like some other web companies, Google relies on its own compute, storage, and networking hardware inside its data centers. And operating these facilities in itself provides strengths to Google — to such a degree that Google kept that aspect of its operations a secret. Then, in 2006, the New York Times reported the existence of the data center site in The Dalles.

“It was very important … to not have our competitors know what we were doing,” Urs Hölzle, senior vice president for technical infrastructure at Google, told reporters in a briefing at company headquarters recently.

Because Google controls so many layers of its infrastructure, the company can run everything very efficiently, which helps explain why Google can drive down prices in the public cloud market, among other things. The company has achieved surprisingly high levels of server utilization. “We have clusters that run at 80-90 percent,” Hölzle said during the briefing. Overall server utilization was around 12-18 percent in 2006-2012, while hyperscale cloud providers (Google could be included in that category) can achieve 40-70 percent utilization, according to a 2014 paper from the National Resources Defense Council.

As Google develops greater and greater supplies of highly efficient servers, the company can continue to challenge vendors such as Amazon Web Services in the public cloud and other markets. So while expansions like this might not seem very significant to many consumers, they can count for a lot in the long term.

Google would not provide specific estimates on how much it would spend on this potential expansion in The Dalles, but the company has already spent $1.2 billion there.