Perspectives on Business and Economics, Vol. 40

37 operate, making it the most important factor (How Much Does It Cost…? 2020). Second is an effective method of cooling server rooms. Third is access to fiber-optic cables to transmit large amounts of data. Fourth is a large amount of land that can be secured; and, finally, technicians to keep the many computers running day and night. Alaska is in a unique position to provide all five needs with the right investments in key areas. Alaska and Data Centers The five conditions needed for data centers to thrive in Alaska are complex and require context to best understand. Understanding how these conditions interconnect is essential to developing the necessary policies and investment projects that foster an environment able to support creating data centers. Energy Costs Alaska has some of the most expensive energy of any area of the US, making it one of the worst places to open a data center. The reason for such high costs is the fragmentation of the Alaska energy system as well as the distance to transport fossil fuels, a vital resource for the state (Electricity Rates in the United States, 2021). These high prices of electricity likely are due to lack of investment in renewable electricity in addition to the lead time required to fund and develop large renewable energy projects (see article by Franolic in this volume). In 2010, the Alaska legislature enacted a nonbinding goal of 50% of the state’s electricity to be generated from renewable and alternative energy sources by 2025 (U.S. Energy Information Administration, 2021). To help achieve this ambitious goal, the legislature established the Alaska Renewable Energy Fund to expand investment in renewables and energy storage, in a state dependent on fossil fuels. Data center electricity demands contribute to large quantities of CO2 emissions throughout the world, with estimates hovering around 900 trillion kilograms. Researchers have developed strategies to reduce CO2 emissions and optimize the electrical input needed for data centers (Rong et al., 2016). However, as growth in the industry increases, especially as artificial intelligence and machine learning software become more widespread, electricity needs, hence CO2 emissions, will rise, furthering the drive to expand renewable energy sources for electric generation. Alaska has a goal of generating 50% of its electric power from renewable energy sources by 2025. The U.S. Energy Information Administration predicts that all of Alaska’s energy needs could be generated through wind and wave energy, without considering other renewables (2021). Furthermore, with varying wind patterns occurring over the entire state, energy could come from anywhere the wind is blowing if methods to transport the energy are developed. Alaska begins to look more like a “battery” than a place to drill oil when these other sources are considered. The Aleutian Islands are considered part of the Ring of Fire, named for the geothermal energy found underneath. If tapped, data centers could use renewable energy to generate the needed electricity, while reducing the CO2 emissions (Aleutian Pribilof Islands Association, 2021). Hydropower, which at present generates a substantial proportion of the state’s electricity, certainly can be expanded or used to store energy in times of surplus. Contrary to popular belief, solar cells perform well in arctic conditions due to the reflection of the sun off the snow, as long as panels are not directly covered (Alaska Energy Authority, 2021). What seems to be a challenge, however, is a lack of capital investment for replacing traditional fossil fuel generation resources with renewable sources that can provide energy security for the long term. Some of this can be due to a lack of the ability to distribute the power. In places where capital investment has occurred, such as Kodiak, a small town whose power is provided through wind and hydroelectricity, excess energy created from renewables cannot be added into the grid, because these areas are not connected to it. Alaska has the natural resources to generate reliable energy, although requiring large capital investment to make it happen. If Alaska can reduce the cost of electricity, the state will begin to see large data providers open centers. Cooling Costs One of the largest costs associated with operating a data center is the cost to keep the