Microsoft is to build another large data centre, this time in Virginia, despite scaling back plans for an earlier facility in Iowa.

Microsoft will spend US$499 million to build a data centre in Mecklenburg County in Southern Virginia, the state's Governor Bob McDonnell announced in a statement Friday. About 50 people will work at the facility. McDonnell said Virginia beat out North Carolina and Texas for the deal.

The facility will be one of Microsoft's Generation 4 data centres, meaning it will be built primarily with containers filled with servers. Microsoft first described its Generation 4 data centres in 2008, saying the modular setup would allow for energy efficiency, cost savings and quick deployment.

The Governor's Opportunity Fund will provide a $2.1 million grant to "assist" the county with the project. Key to Microsoft's decision to choose Virginia were Mid-Atlantic Broadband Cooperative's fiber network and Dominion Virginia Power's competitively priced, clean energy supply, according to McDonnell's statement. Microsoft did not reply to a request for further details.

In 2008 Microsoft unveiled plans for a data centre in Iowa that would cost $500 million to build and employ a reported 50 to 75 people with annual salaries of $70,000. In June it said it would now spend $100 million on the facility instead, and employ 25 people with average wages of $31.04 per hour.

Microsoft has other large data centres in Chicago; San Antonio, Texas; Quincy, Washington; and Dublin, Ireland. They support what Microsoft hopes will be a growing online services business, including hosted enterprise applications and its Azure cloud development platform.