Data center growth could outpace power generation
Virginia's electric grid, primarily managed by Dominion Energy, is struggling to meet the escalating power demands from the state's nearly 650 data centers, especially in Northern Virginia. This strain has led to near-crisis situations and prompted regulatory actions from the State Corporation Commission, as well as calls for a moratorium on new data center construction from environmental groups.
Virginia's rapidly expanding data center industry, particularly in Loudoun County and Northern Virginia's "Data Center Alley," is placing unprecedented strain on the state's electricity grid. Fortune 500 utility Dominion Energy, which powers roughly 650 data centers across the commonwealth, recorded record demand during a scorching July Fourth holiday weekend, leading the regional grid operator PJM to issue warnings and direct utilities to prepare for potential power cuts to data centers. The U.S. Department of Energy even issued an emergency order allowing data centers to use fossil fuels for backup power to maintain grid stability.
Former FERC chairman Mark Christie highlighted the precariousness of the grid, stating the "crisis was right across the street," as Dominion has committed to 51 gigawatts of power contracts for data centers, tripling its commitments from three years prior. This immense demand, capable of powering "70 San Franciscos," far outpaces current generation capacity and planned expansion, which takes years for permitting and construction. A Harvard University study concluded that data centers "are depleting available grid capacity faster than it can be physically replaced," increasing vulnerability to shortages.
In response to rising costs and grid pressures, the Virginia State Corporation Commission (SCC) ordered Dominion to draft a policy within 90 days, requiring data centers and other large-load customers to pay for "direct connect" infrastructure. Environmental and social justice advocates, including Clean Virginia and the Piedmont Environmental Council, are vocally opposing continued data center development and calling for a moratorium, citing concerns over fossil fuel reliance, global warming, and increased costs for consumers. However, Christie and others note the unlikelihood of a full moratorium, emphasizing the need for a coordinated approach among stakeholders to balance economic growth with grid reliability and consumer protection.