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Energy, speed, and foresight won the...

Energy, speed, and foresight won the Amazon data project

By: Patrick Sullivan - April 19, 2024

  • The AWS project is evidence of a well-planned, competitive system for development in Mississippi.

While there have been some wins in places through the years, Mississippi hasn’t always excelled in the high stakes game of industrial recruitment. That changed in January, and the reasons why could be an indication of more wins to come.

In terms of good jobs and economic growth, the recently-announced data complex by Amazon Web Services (AWS) in Madison County is first rate. States compete for large, highly-coveted economic development projects in hopes of providing citizens better, higher-paying work opportunities. This $10+ billion anchor project in the IT sector brings jobs and investment unlike any project in Mississippi’s history and will pay dividends for many years in the Jackson Metro. So, what were the main reasons AWS chose here?

First, it was the cost of energy, specifically the cost of electricity. Next, time is money, so speed to market was critical in this construction-intensive project. Finally, years before the AWS decision, local site planning and preparation laid the foundation.

It all started with a simple question. On a recruiting visit at AWS headquarters in Seattle in 2020, Entergy Mississippi’s Economic Development VP Ed Gardner asked an AWS leader a question: “What are the obstacles you face when locating a facility and how can Mississippi remove them?” With the answer in hand, a team of utility, state and local economic development officials went to work.

Cost of electricity was the first issue. Data storage centers constantly require enormous amounts of electricity to operate. Thankfully for Mississippi, Entergy has had some of the lowest rates in the nation and region – in January ranking 8th lowest out of 22 comparable Southeast U.S. electric utilities in residential rates alone. Like many other large companies, AWS also demands a portion of the power at their facilities be renewable power. Fortunately, Entergy had recently announced just enough renewable power to its portfolio to meet that requirement – comprising about 15% of its capacity mix.  

Next, the hyper-competitive world of tech innovation requires AWS to move as fast as possible to construct and begin data operations. Because Mississippi’s routine electric utility regulatory process to meet the power needs would have taken too long, a creative solution was needed. Governor Reeves and his Mississippi Development Authority team worked with the Legislature and created a plan to streamline the regulatory process, allowing Entergy to begin quickly acquiring materials with long lead times for new power plants. This was critical in outsprinting other states, as demand for power plants is high globally and supply chains constrained.

This faster, more efficient regulatory process helped Mississippi win the project and did so without sacrificing safeguards for existing Mississippi electricity customers. With the streamlined process needed to compete for the project, the Mississippi Public Service Commission will still have watchdog approval of the prudency of all costs associated with the power needs of the project, and Mississippians’ elected commissioners will continue to have the final decision on all rates for Entergy customers.

Thanks to these safeguards, the project’s benefit to Entergy customers will be massive as the huge new customer is added to the system. It’s basic economies of scale, where average costs go down as scale goes up. Residential and existing business customers will get the future rate benefit of an additional large power user, who will soon be paying a large share of the ever-needed investments to maintain and expand the power grid. For many years to come, existing customers will also see the benefit in rates of newer, more efficient natural gas power plants replacing older, less-efficient units more quickly than previously planned. 

Finally, to lay the groundwork for the project, the local foresight to prepare a site paid off. Years earlier, long before Mississippi was on AWS’s radar, the Madison County Economic Development Authority invested substantial dollars in preparing a site, complete with an Entergy substation, to be ready when the day came that a major industrial project would need a turnkey-ready place for a future facility. Having the foundation already laid with the power needs and to accommodate speedy construction enabled the project. 

On top of more than 1,000 new high-pay, high-tech jobs, AWS will quickly become Mississippi’s largest taxpayer and some metro schools and counties could see their budgets nearly double. And if Columbus, Ohio, where AWS sited a similar facility is any clue, the Jackson Metro area could be on its way to becoming a technology hub thanks to its landing of AWS.

As some states and other parts of the world are facing high energy costs and the risk of energy shortages, abundant energy supply at an affordable cost can continue to be one of Mississippi’s major strengths. The AWS project is evidence of a well-planned, competitive system for development. Perhaps there’s more opportunity ahead for companies looking for reliable, affordable energy states. 

About the Author(s)
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Patrick Sullivan

Since July 2011, Patrick Sullivan has served as President of the Mississippi Energy Institute (MEI), a private, non-profit business created to support research and energy policy to foster economic growth in Mississippi. Patrick concurrently serves as President of the Southeast Oil and Gas Association, which began operating in 2020. In May 2020, Patrick was appointed by Governor Reeves as Chairman of the State Workforce Investment Board, created to be an advisory board for state workforce development strategy. Patrick also serves as Chairman of the State Longitudinal Data System. Prior to his work at the Mississippi Energy Institute, Patrick served both as Policy Advisor and as Executive Director of Recovery and Renewal for Mississippi Governor Haley Barbour. Patrick is a graduate of Mississippi State University with a Master of Agribusiness Management and resides in Madison, MS.