During the 2024 General Assembly session, Virginia legislators failed to take action to address the concerns raised by residents and environmental groups about the proliferation of data centers. Now we are starting to see the consequences of that inaction.
Throughout this year, our Virginia Data Center Reform Coalition has grown as more and more communities seek allies in the face of sprawling data center campus proposals and their insatiable energy and water demands. Virginia legislators must get a handle on this issue and make progress during the 2025 General Assembly session or the situation will only get worse.
Where We Are
Data Center Dynamics reported on Aug. 9 that because of challenges accessing energy, a growing number of data centers are entering into talks with U.S. gas companies about building pipelines for onsite power plants. On Aug. 12, The Wall Street Journal reported that artificial intelligence (AI) is about to boost electric bills and asked the question: “Who will take the heat for that?” On the same day, NOTUS, a publication of the Allbritton Journalism Institute, reported that the director of the Virginia Department of Energy, unfortunately, believes clean energy goals are the culprit for increased prices recently seen in the market.
Calls to abandon clean energy policies and build more gas generation plants are misguided and will lead to increased price volatility, new pipelines, and worsening air quality; most importantly, they do nothing to address the fundamental need to reduce the data center energy demand.
Meeting the power needs of this energy-hungry industry doesn’t stop at generation; it also includes transmission. The many new transmission lines are starting to trigger community outrage about the cost, environmental and visual impacts, and use of eminent domain to build them.
One of those lines is the Mid-Atlantic Resiliency Link (MARL line). Proposed to deliver more electricity, primarily coal-fired, from West Virginia power plants to data centers in Loudoun County, this line has generated significant community push-back from groups like PEC, elected leaders and residents. In Maryland, the Frederick News-Post reported on Aug. 1 that a forum on the Maryland Piedmont Reliability Project, another new 500kV transmission line extending nearly 70 miles through rural Maryland to deliver power to the northern Virginia data center market, was overflowing with upset residents.
A third new 500kV line is in the works for the existing transmission line corridor from Maryland down to a substation on the south side of Leesburg. From there, these lines connect to a fourth new and controversial 500kV loop around eastern Loudoun — along Virginia Route 7 and through residential areas and the Broad Run stream corridor. This loop then connects to dozens of smaller 230kV transmission lines that spoke outward to deliver power to growing data center clusters all over northern Virginia.
And yet, despite all these expensive lines, increasing ratepayer costs, and growing press coverage highlighting extreme energy and water usage, land use proposals for new data center developments continue throughout the state. Virginia — the largest data center market in the world — already has 180 million square feet of approved data center space in the pipeline. That’s equivalent to about 1,000 Walmart Super Centers in size and would likely require more energy than 20 North Anna Nuclear Generating Stations could produce.
The broken process that got us here
Once a data center is approved at the local level, the electric utility is required by law to find a way to provide reliable electricity service to the data center. The company then works with the utility to negotiate a timeline for that service delivery in confidential contracts that are used to justify new power plants, substations, transmission lines and fast-tracked in-service dates.
Virginia’s two regulated monopoly utilities, Virginia Dominion Energy and Appalachian Power Company (APCo), are guaranteed full recovery of those infrastructure costs plus a fair rate of return for its shareholders. So naturally, utilities are biased toward capital-intensive projects like transmission lines and gas power plants and not inclined to raise questions about public impact.
Under this system, information about the potential power grid impacts of a data center proposal, including energy demand, required infrastructure, required right-of-way for transmission lines, interconnection conditions, and the cost to other ratepayers, is never considered or evaluated proactively in a public process prior to local approval. Instead, they are permitted retroactively by state agencies under political pressure to rubber stamp permits and not ask questions that might slow down the development.
How to Fix It
As the 2025 General Assembly approaches, the Virginia Data Center Reform Coalition is preparing to push three main policy recommendations to start fixing this broken process.
More transparency and state oversight
This industry has been shrouded in secrecy, but to better protect the public, the state and its localities need information about energy and water usage, as well as projected emissions from on-site diesel generators. A state-level approval process must be developed that will ensure potential power grid impacts are understood and have been considered. Such a process much also ensure that impacts typically outside of local government purview are evaluated, including water supply, air quality, state clean energy goals and protection of national parks.
Tightening of the state tax credit
Virginia tax incentives have encouraged data centers to continue to locate in Virginia in spite of the high concentration already here. A revamped tax structure that incentivizes only the most sustainable data center developments would help raise the bar and provide sustainability models for future projects.
Protection of ratepayers from increasing infrastructure costs
The cost of all these transmission lines and power generation facilities is adding up. We need to ensure there is a growth-pays-for-growth structure in place, in which new infrastructure costs are fairly borne by the industry necessitating it, rather than falling to regular electricity customers like you and me.
With so many other important competing issues in front of them, our legislators need to hear from you. They need to know that this is a climate issue, an environmental issue, a good governance issue, and a ratepayer protection issue. Kicking it down the road a year, as they did in 2024, will only worsen the challenges in front of us. Action is urgently needed in the 2025 Virginia General Assembly session.
This article appeared in the 2024 fall edition of The Piedmont Environmental Council’s member newsletter, The Piedmont View. If you’d like to become a PEC member or renew your membership, please visit pecva.org/join.