Unconstrained data center growth in Virginia will make it “very difficult” to scale the power generation and transmission infrastructure needed to power them, a new report from Virginia’s Joint Legislative Audit and Review Commission (JLARC) has warned

The report was commissioned by the JLARC in January, following the proposal of several new bills by Virginia politicians placing restrictions on data center developments in the Commonwealth.

The “Data Centers in Virginia” report outlines several findings that could significantly impact the state's data center market, which is the largest in the world, with more than 150 data centers and upwards of 5GW of load.

An independent forecast commissioned by JLARC showed that unconstrained power demand in Virginia would double within the next ten years, with the data center industry being the main driver.

As a result, at current rates, Virginia will not produce enough electricity to support unconstrained data center growth. The report projects that under an unconstrained model, average monthly energy consumption could reach more than 30,000GWh by 2040, far outstripping supply.

Subsequently, Virginia will need to add new solar, wind, and gas capacity at an unprecedented rate to power the expected spike in demand.

According to the report, “new solar facilities would have to be added at twice the annual rate they were added in 2024, and the amount of new wind generation needed would exceed the potential capabilities of all offshore wind sites that have so far been secured for future development.”

However, the report argues that building even half the unconstrained energy needed to meet demand would be difficult.

The biggest challenge would be building new natural gas plants. A new 1.5GW plant would be needed every two years for 15 consecutive years, equal to the busiest period of the last decade. This would also require scrapping the Virginia Clean Economy Act, which calls on the state to eliminate fossil fuel-derived energy by 2050.

Additionally, the report found that new power and transmission infrastructure will likely increase system costs for all customers. A typical residential customer of Dominion Energy could potentially experience cost increases of between $14 and $37 monthly by 2040 (independent of inflation) to meet the $18 billion required to scale power infrastructure.

As a result, it warned that utilities could begin delaying serving data centers until adequate generation and transmission capacity is available.

In addition, the report recommends that the state begin requiring data center operators to take direct action to address their energy impacts by promoting the development of renewable energy generation, participating in demand response programs, and managing energy efficiency.

However, this is likely only to have a marginal impact on data center demand, with no data centers so far showing a willingness to participate in state power company Dominion Energy’s demand response program, in which organizations agree to reduce their power load.

The report sets out several recommendations to address the findings.

Firstly, it advocates for establishing a separate data center customer class, changing cost allocations, and adjusting utility rates more frequently to help insulate non-data center customers from statewide cost increases.

It also recommends directing Dominion Energy to develop a plan to address the risk of infrastructure costs being stranded with existing customers and filing that plan with the State Corporation Commission.

It advises local governments to require and consider water use estimates and sound modeling studies for proposed data center developments.

Finally, It clarifies that electric utilities have the authority to delay, but not deny, service to customers when the addition of customer load cannot be supported.

Pressure group the Southern Environmental Law Center supported the concerns highlighted in a statement reflecting on the report: “If this growth comes to fruition, bills for non-data center utility customers would increase significantly, but even if the growth doesn’t come to fruition, customers could face higher bills,” said Nate Benforado, senior attorney of energy policy at SELC.

Despite the concerns published in the report, the Data Center Coalition remained bullish on the sector's growth. “While we recognize that grid planning and management is ultimately the role of utilities, regulators, and grid operators, the data center industry will continue to work collaboratively with utilities, the SCC, PJM, and other stakeholders to help ensure a reliable, affordable, cleaner, and resilient electric system," the DCC said.