by James A. Bacon
Data centers have become such big business in Virginia that the industry has formed its own trade association, the Data Center Coalition, Unsurprisingly, that group is headquartered in Leesburg, smack dab in the middle of the largest cluster of data centers in the United States if not the world.
You know the industry is really big here in Virginia when a coalition of environmental and conservation groups — the Virginia Data Center Reform Coalition — has mobilized to constrain it.
The Reform Coalition (VDCRC) urges lawmakers to implement “common-sense regulatory and rate-making reforms” addressing the impact of data centers on the electrical grid, water resources, air quality, and land conservation efforts.
“Utilities are legally obligated to serve these data centers, no matter how much energy they require or the impact to the transmission grid. Virginia ratepayers are currently subsidizing this buildout for some of the largest and wealthiest companies in the world – which is patently unfair,” states the VDCRC website.
Data centers account for tens of billions of dollars of investment in Virginia and comprise one of the Commonwealth’s few economic-development success stories. They generate more than $1 billion in state and local tax revenues yearly, and, though they require few employees to operate, they support more than 12,000 jobs that pay significantly higher than the state average.
But server farms suck up huge volumes of electricity, and because of their geographic concentration in Northern Virginia, they require significant upgrades to Dominion Energy’s transmission grid. And nobody but nobody likes living near high-voltage electric lines, especially in the bucolic northern Virginia piedmont where property values vary in direct proportion to the quality of the scenic views.
Earlier this year, members of the VDCRC filed a lawsuit to block a proposed data center in Prince William County. “Even though Virginia has the largest data center market in the world, our regulatory oversight is behind other large markets in Europe and Asia that have also experienced data center demand exceeding available resources,” said Julie Bolthouse, land use director for the Piedmont Environmental Council, according to the Bay Journal. “We need to catch up.”
A big reason environmentalists are getting agitated about the rise of the industry is that it jeopardizes the conceit that it is possible to create a “net-zero” electric grid in Dominion’s service territory by 2045. While Dominion continues to build more solar- and wind-generating power, renewable energy output fluctuates, and electricity output cannot be relied upon to match demand fluctuations from power centers. Electricity shortfalls can lead to overheating, damage to servers, and interruption of service. Consequently, Dominion says it will need to maintain natural gas-generating capacity to accommodate variability in demand.
One environmentalist response, cited in Inside Climate News, is to dispute Dominion’s load forecasts. The forecasting history of Virginia environmentalists, however, has been abominable in recent years, consistently falling short of actual power consumption. Still, net-zero advocates persist in spinning hypothetical scenarios in which declining demand conforms to their fantasy that is possible to eliminate fossil fuels from Virginia’s electric grid within 20 years. As the Artificial Intelligence revolution takes off, electricity consumption will surge. AI requires massive data-processing power; data-processing power requires data centers; and data centers require electricity. It really is that simple.
It is perfectly fine to examine data centers’ impact on water resources and land use, as the Reform Coalition argues. But a desire to tweak the state code should not serve as a pretext for throttling growth of Virginia’s data center sector, as it appears some groups would like to do.
Even if you accept the proposition that climate change is an existential crisis and net-zero is a worthwhile goal, shutting down gas-fired power plants in Virginia won’t serve anything useful.
If data-center developers can’t get enough juice in Virginia, they will build somewhere else and displace electricity demand to states and communities more willing to supply it. Virginia could conceivably achieve net zero, but shifting economic activity from one state to a different one does nothing to reduce global CO2 emissions or hold back climate change.
The economics of Artificial Intelligence and the data centers that make it work are too powerful to halt. Virginia can benefit from the mega-trend by scrapping the net-zero delusion until new technologies make it economically feasible, or it can suppress a powerful source of capital investment, tax generation and job creation. Ironically, data centers supporting AI may be the very tool America needs to develop new technologies and improve the economics of zero-carbon energy sources in the long run. Let’s not destroy the thing that ultimately could create the very thing we want.
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