Virginia Orders Data Centers To Pay for Dedicated New Electric Infrastructure

Virginia, home of the nation's densest concentration of data centers, will require them to pay for the dedicated new power infrastructure they need in a bid to spare homeowners from rising electric bills.

The commonwealth's State Corporation Commission ordered large data center users to cover the cost of transmission infrastructure they will use exclusively.

Gov. Abigail Spanberger recently pushed for developers to offset their impact on the power grid. Across the nation, residents blame rising energy costs, in part, on a rapid build-out of the large technology developments.

That includes substations, electric lines, and other electric infrastructure "upstream" from the data center sites. The governor said in a statement the move could save Virginia ratepayers "hundreds of millions of dollars."

"We are taking real steps to address rising energy costs for Virginians," Spanberger said. "I will continue to work with the General Assembly and take action to make sure data centers pay their fair share, adhere to strict environmental standards, and listen to the concerns of local communities.”

'Data Center Alley' contends with growth

The state is home to at least 570 data centers, thanks in part to its "Data Center Alley" in Northern Virginia, which takes advantage of infrastructure that dates to the creation of the internet.

But the speed and scope of data centers have been controversial with residents. Goldman Sachs estimated that data center power demand will more than double from 2025 to 2027. But only about 50% to 60% of data center capacity will come online due to delays and cancellations, it said.

The National Association of Home Builders highlighted the data center–dense Northern Virginia suburbs as an area where data centers might be outbidding homebuilders and adding a new struggle to the housing market.

The state's DC suburbs, which account for a third of its population, have seen median prices go up 54% over the past decade, the Northern Virginia Association of Realtors found.

In a statement to Realtor.com®, the Data Center Coalition, which represents many major developers and users in the industry, said companies operate how they are authorized to do so.

They also follow local ordinances and rules. And they provided 5.5 million jobs, $204 billion in taxes, and $1.7 trillion in gross domestic product, said Nicole Riley, director of Virginia Government Affairs for the group.

"The industry is committed to working with local, state, regional, and federal regulators and policymakers, as well as Virginia residents, to promote the continued responsible development of this industry that is critical to Virginia’s 21st-century economy," Riley said.