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Virginia’s exploding data-centre boom is swallowing power at a pace the grid can’t keep up with, forcing the state to import costly electricity and rethink its clean-energy promises. With mega-campuses demanding gigawatts, leaders warn an energy crisis is no longer coming… it’s here.
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Imagine a community with as many homes as there are in Richmond and Henrico County popping up in the woods 45 miles west of the city, and the electricity it would use.
That’s what just one of the region’s latest data centers — EdgeCore Digital’s planned $17 billion, 3.9-million-square-foot facility in Louisa County — will need.
Data center developers are already drawing a lot of power. The 451 now running in Virginia, home to the largest concentration of data centers in the world, currently use 3,583 megawatts, or enough electricity to power nearly 896,000 homes. That is 12% more than in all of Northern Virginia, testimony before the State Corporation Commission shows.
113025-rtd-metdatacenters
An energy substation is a few yards from the Loudoun Meadows housing community in Loudoun County.
And with developers lining up still more projects, pressure is surging on a state grid that already must import power from places where it costs more.
In a Nov. 21 interview with the Richmond Times-Dispatch, Gov.-elect Abigail Spanberger touched on what she terms a coming energy crisis in Virginia.
“We’re the largest net importer of energy in the country. That is not a good place for us to be,” she said.
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Gov.-elect Abigail Spanberger, speaking to Times-Dispatch reporters on Nov. 21, says a priority will be to get “a handle” on the state’s impending energy crisis.
“We’re seeing it impact energy costs for Virginians, but looking at the trajectory run four years from now, when I’m on my way out of the governorship, if I haven’t gotten a handle on the impending or almost-here energy crisis, I’ll be leaving a real crisis to the next incoming governor.”
Surging electricity demand
Dominion Energy chief executive Bob Blue told Wall Street analysts earlier this year that demand for electricity in Virginia “is accelerating in orders of magnitude, driven by, one, the number of data centers requesting to be connected onto our system; two, the size of each facility; and three, the acceleration of each facility’s ramp schedule to reach full capacity.”
Bob Blue, chairman and chief executive of Dominion Energy
Blue
There are a million watts in a megawatt, enough electricity to power 250 homes. There are a billion watts in a gigawatt.
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Blue said there were “approximately 40 gigawatts in various stages of contracting as of December 2024, which compares to around 21 gigawatts as of July 2024.”
That’s grown since Dominion earlier this year told the State Corporation Commission that data center developers were lining up with proposals for facilities that would draw 47,000 megawatts of electricity, enough to power more than 11.7 million homes.
That’s well over twice as much as its customers used during a record high summertime peak, between 5 p.m. and 6 p.m. on June 24 of this year, when the company had to buy 1,456 megawatts from other companies’ power plants on the high-priced spot market.
Before the latest rush of requests for service, Dominion’s current long-range planning model predicted it would need to deliver eight gigawatts of electricity to supply proposed data centers that had already asked for lines and substations.
Fossil fuel plants
Even then, the company said it needed to back away from the Virginia Clean Economy Act’s goal of shutting down all its fossil fuel power plants by 2045.
Those plants can generate 11,500 gigawatts of power. Two years ago, Dominion warned that rising demand for power meant it might not be able to shut those plants down. In fact, it said it needed to build two new gas-fired plants at its now-shuttered coal-fired plant by the James River, north of Chester in Chesterfield County.
Dominion’s latest update to its long-range plan calls for six more gas-fired plants. Those plants would emit carbon dioxide — 39.9 million metric tons by 2045, when the Virginia Clean Economy Act calls for no carbon emissions.
That’s made the question of where the power for data centers will come from a top concern of environmental groups.
The State Corporation Commission said last week that Dominion can go ahead with a controversial gas-fired power plant on the site of its Chesterfield power station. The $1.47 billion plant would generate 944 megawatts of electricity when up and running in 2027.
Dominion said it needs the facility because of Virginia’s soaring electricity demand. Opponents said it counters state policy in the Virginia Clean Economy Act’s mandate that by 2045 Dominion’s generating plants emit none of the greenhouse gases that cause climate change.
SCC approves Dominion gas plant in Chesterfield
Dominion Energy can go ahead with a controversial gas-fired power plant on the site of its Chesterfield power station, the State Corporation Commission said.
Spanberger said she is confident that state policymakers can strike a balance that addresses urgent energy needs without sacrificing the state’s commitment to reducing pollution linked to climate change.
“One of the things that I was struck by along the campaign trail is at times people would view it as we either abide (by) everything that was put in place a couple of years ago with the Clean Economy Act, or we just give up on all of those goals,” she said. “And I don’t think that it has to be viewed as that sort of zero-sum circumstance.”
Larger data centers
Environmental groups cite additional concerns.
“We are entering into a new and different environment that requires a new and different approach,” said Gregory Abbott, a retired SCC regulator who is now a consultant to Piedmont Environmental Council.
It’s not just that more data center developers are lining up to propose projects, but that the projects are bigger and bigger. New data centers demand far more energy than existing centers use.
Data centers Ashburn
High-voltage transmission lines provide electricity to data centers in Loudoun County’s Ashburn community in 2023.
Early on, as firms like Amazon and Google pioneered cloud computing services, Virginia’s handful of data centers drew an average of about 16 megawatts, but by last year, the average was about 70 megawatts.
These days, firms are talking about data center campuses drawing thousands of megawatts, as EdgeCore plans in Louisa and as Tract has proposed with its stalled 2,400-megawatt project in Hanover County.
“There is unprecedented demand for the digital services that have become central to our daily lives and modern economy,” said Aaron Tinjum, director of energy policy for the Data Center Coalition. “Everything from the way we work and learn, to how we buy groceries, bank, and even access medical care, now occurs online.
“With an average of 21 connected devices per household in the U.S., the role of data centers is expected to grow, as consumers and businesses generate twice as much data in the next five years as they did in the past decade,” while projected growth of artificial intelligence is adding to the demand for new centers, he said.
Infrastructure costs
The coalition, a trade association of firms in the data center business, says data centers are paying their fair share of the cost of connecting them to the grid; Dominion and the Joint Legislative Audit and Review Commission, the legislature’s watchdog agency, say so, too.
Those costs aren’t trivial. Dominion says the new 7-mile-long high-voltage lines and substations needed to serve a 900-megawatt campus in western Chesterfield County’s proposed Upper Magnolia Green technology park would cost $121 million that Google plans to build eventually.
But Abbott, the consultant to the Piedmont Environmental Council, noted that the consultant JLARC hired to study the question of cost-shifting only interviewed electric companies and large-use, hyperscale data center customers, without touching base with any advocates for other ratepayers.
He also said data centers pay the same rate as industrial firms, few of which use as much and most of which don’t need a constant amount of power 24 hours a day.
James Wilson, representing the nonprofit environmental group Appalachian Voices, told the SCC: “To serve all of the data center requests would entail enormous investments in transmission and generation that could be shifted to other customers, or could be stranded if the loads do not materialize at the times and in the locations currently requested.”
Whether or not that happens, warned Devi Glick, a senior principal with the Massachusetts-based energy economics firm Synapse Energy Economics, “With increasing data center load and limited market supply options, Dominion is relying on its aging legacy fossil fuel units to fill capacity needs.
“These units are not economic, and the associated costs will be passed on to ratepayers absent action from the commission.”
Separate rate class
While Dominion says all its customers, including data centers, pay their fair share, it proposed a new approach for data centers to make sure its other customers don’t end up paying for the cost of substations, power lines and generating plants needed to supply these large customers.
The State Corporation Commission approved this last week, but noted that it was not sure data centers and other big energy users were not subsidized by Dominion’s other customers.
Under Dominion’s new rates, data centers and other high-energy users would be required to make a 14-year commitment to pay for the amount of power they request, even if they end up using less.
The 14-year contract would require these customers to pay a minimum of 85% of the cost of power lines and related safety equipment — substations, transformers and other devices — needed to serve their facilities and 60% of the cost of power generation needed to serve them. They would pay that minimum even if they use less power than they contracted for.
Rappahannock Electric Cooperative wants to try a similar approach. It serves a rural territory that stretches from the Middle Peninsula’s Essex County west to the far northwestern corner of the state and includes parts of Hanover, Goochland, Louisa and Caroline counties.
Rappahannock would bill data centers and other big users a monthly charge based on how much capacity — wires and substations — are needed to safely deliver power; this portion of the bill is based on how many megavolt-amperes, a measure of the total power in an electric circuit, are required to serve a facility.
Data centers also would pay the cooperative an upfront sum equal to the installed cost of the equipment, and must put up collateral to guarantee that they pay their bills.
PJM
PJM operates the regional high-voltage grid that stretches from New Jersey to Illinois and south to North Carolina.
The cooperative would buy the electricity a data center uses on the wholesale market run by the PJM Interconnection and would charge the data center for that. PJM operates the regional high-voltage grid that stretches from New Jersey to Illinois and south to North Carolina.
No more cheap power
The safety net created when Virginia went into PJM in 2004 — the ability to buy cheap power from Pennsylvania and West Virginia — isn’t there anymore.
In PJM’s last annual auction for backup power, the price for backup power to be delivered in Dominion’s zone rose to $444.24 per megawatt-day this summer. That’s up from $34.13 two years ago.
Mark Christie (copy)
Christie
“You have to build the generation to provide them with power, because we can’t keep thinking that Pennsylvania is going to ship us all their cheap coal power,” said Mark Christie, former chair of the Federal Energy Regulatory Commission, who was a longtime member of the State Corporation Commission.
“It’s gone, it’s shut down, and we’re gonna have to build it in Virginia,” he said. “That’s going to lead to some very tough policy questions, particularly about who’s going to pay for it.”
Credits: TCA, LLC.