RICHMOND, Va. — Data centers are a booming industry in Virginia, generating $9 billion annually and creating tens of thousands of jobs. However, their rapid growth is raising concerns among some Virginians over their impact on the state’s power grid, costs, and nearby communities.
A new report released Monday at the Virginia State Capitol sheds light on the industry’s benefits and challenges.
While Virginia is the largest data center market in the world, with Northern Virginia serving as the main hub, the report highlights several issues lawmakers are grappling with.
Booming Industry, Rising Concerns
The report points to the substantial economic contributions of data centers, noting that they generate billions of dollars and thousands of jobs each year. However, most of these jobs are temporary construction positions, and the report stresses the industry's growing strain on the state’s infrastructure, particularly the power grid.
Data centers are large energy consumers, and while they pay for their own electricity, the increasing demand could require utility companies to expand their infrastructure, potentially leading to higher costs for other consumers.
"Under scenario one, we estimated a customer could be billed an additional $23 by 2030, and $37 by 2040, charges would increase by smaller amounts under scenario two," JLARC Chief Legislative Analyst Mark Gribbin said.
Environmental concerns also emerged in the report, particularly related to the centers' impact on natural and historic resources.
Local Backlash and Calls for Regulation
But perhaps most troubling to local lawmakers are the centers' effects on neighborhoods.
The report notes that while data centers often pay taxes and comply with regulations, they are frequently built near residential areas, causing friction with local communities.
In Prince William County, where residents have actively opposed data center projects, the report found that a third of the centers are located in residential zones — a number expected to grow.
"Oh, my God, they’re everywhere," Sen. Danica Roem (D - Prince William) said. "There has to be a definition that every locality adopts where data centers are considered industrial use and that they stay the hell away from our homes, parks, schools, and anywhere else where the community gathers."
The report includes policy recommendations aimed at managing the industry's growth.
One suggestion involves revisiting the sales tax exemption on equipment used by data centers, which lawmakers may adjust to slow or regulate the industry’s expansion.
Power, Water, and Environmental Strain
Another growing concern is the environmental and water impact of data centers.
Recent data shows that over 25% of all power produced in Virginia in 2023 was consumed by data centers, a figure expected to reach 46% by 2030 if current growth continues. The water usage of mid-sized data centers is equivalent to that of 1,000 households, prompting concerns about the long-term cost and sustainability of water resources.
"I don't think anyone wants to kill the industry. Nobody wants to see no data centers built, per se, we just want to see them built in the right place, at the right time and we want to understand and mitigate their impacts," Del. Ian Lovejoy (R - Prince William) said.
Despite these challenges, advocates for the industry argue that the benefits — including both direct and indirect jobs — make it a worthwhile investment.
For instance, Google’s two data centers in Loudoun County, home to around 440,000 residents, have created about 150 direct jobs. While the number of direct jobs may be relatively small, proponents say the employment created in construction, technology support, and electrical work adds significant value to the local economy.
The Associated Press contributed to this report.
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