Correction: David Porter, vice president of electrification and sustainable energy strategy at EPRI, spoke generally about the challenges and opportunities of constructing data centers and coordinating with utilities. He did not speak specifically about the Southwest Virginia project.

Will Payne and Will Clear are all too aware of the skeptics.

But those doubters only fuel the duo’s vision for Southwest Virginia. The former Virginia state energy office bureaucrats turned private-sector consultants have an ambitious plan to repurpose land and backfill local taxes in communities left behind by the coal industry’s decline, and also pioneer new models for powering data centers with local clean energy.

Data Center Ridge is one piece of a nonprofit venture — Energy DELTA Lab — designed to transform 65,000 mostly contiguous acres of minelands where coal was king for decades into test sites that advance energy innovation. The project has the backing of Republican Gov. Glenn Youngkin, who announced an agreement last November establishing a framework for developing the land. 

“If I had a dollar for every time somebody asked why we’re wasting our time on this, I wouldn’t have to work,” Clear, a former chief deputy director with the state Department of Energy. “This isn’t a pipedream. What people need to understand is how long a project like this takes.” 

The first phase involves persuading tech companies to build solar-powered data centers on up to 2,000 acres of the now-defunct Bullitt Mine in Wise County. The facilities would be able to tap into underground mine water to help cool their servers. Eventually, they say, other energy sources such as wind turbines, pumped hydro storage, or small nuclear reactors could be added across the larger property.

“This is a big idea and we need someone who can share that vision,” said Payne, managing partner of Coalfield Strategies LLC. “We need developers who believe in ramped-up clean energy.” 

Glenn Davis, director of the Virginia Department of Energy, said a couple of key factors are driving the state’s interest in the lab. Many data center companies are exclusively seeking sites where they can access 100% clean energy, and new clean power generation could cushion the grid impact from the state’s booming data center sector.

“Southwest Virginia was the energy capital of the East Coast and I believe it will be again,” Davis said in an interview. “There’s a power void that needs to be filled and solar is part of that.” 

Dovetails with Youngkin energy plan

DELTA, shorthand for Discovery, Education, Learning & Technology Accelerator Lab, is just one enterprise Davis is tracking as he coordinates Youngkin’s all-of-the-above Energy Plan. 

Last fall, Youngkin said the intent is to attract private and public dollars to flesh out a portfolio that also draws wind, hydrogen, large-scale batteries, pumped-storage hydropower and eventually, perhaps, small modular nuclear reactors when and if that nascent technology matures. Any carbon-cutting realized by lab energy projects wouldn’t count toward Virginia’s landmark Clean Economy Act because the faraway area is served by a Lexington-based power company, Kentucky Utilities. The VCEA requires only the state’s largest investor-owned generators — Dominion Energy and Appalachian Power — to achieve a carbon-free grid by 2045 and 2050, respectively. 

That doesn’t bother Youngkin, Davis said.

“What’s driving the governor’s interest is jobs, businesses and an improved quality of life,” said Davis, appointed as an agency head in April 2023. “We’re excited because the opportunity for growth there is larger than any other in the state.” 

Dallas-based Energy Transfer owns the acreage, roughly 101 square miles. The lab is coordinating site development with Wise County officials and the landowner. Some of the acreage is still being mined for metallurgical coal, the type used for steelmaking and other industries. However, much of the property, including inactive Bullitt Mine, is being reclaimed. 

On paper, the dozen or so projects on the drawing board, including Data Center Ridge, could generate 1,600-plus jobs, add 1 GW of new power and induce $8.25 billion in private investments, Payne said. First, however, they have to move beyond the conversation stage. 

Payne and Clear, DELTA’s chief advisers, are counting on their matchmaking skills to revive a region often depicted as down on its heels. 

Clear grew up in Smyth County, east of Wise County. Payne recently moved to Washington County on the Virginia-Tennessee border. The Richmond native left a position as chief deputy at the state energy department in 2019 to direct InvestSWVA, an incubator invented to diversify the region’s economy and curb carbon emissions. Appalachian Grains was one of their previous energy-related joint ventures.

Tax revenues from data centers are the boost local governments need to fill the coal gap, they say. 

“Plain and simple, public safety, education, health care, municipal services and other core government sources are at risk of falling off a cliff if we do nothing,” said Clear. “We’re trying to solve this crisis.” 

Is SW Virginia the next ‘tertiary market’? 

Josh Levi, president of the Loudoun County-based Data Center Coalition, said Southwest Virginia shouldn’t be dismissed as too inaccessible or mountainous for data center development. 

Recently, the burgeoning industry began expanding into off-the-beaten path “tertiary markets,” he said. For instance, he pointed to a deal Amazon Web Service announced this year to spend $10 billion on two data center complexes in Mississippi. 

It was only a few years ago that the industry reached into secondary markets such as Columbus, Ohio, and San Antonio, Texas, after initially concentrating its investments primarily in Silicon Valley, New York-New Jersey, Dallas, Chicago, Northern Virginia, Atlanta and Phoenix. 

In Virginia alone, there’s a southward shift as more data centers pop up around Fredericksburg and Richmond. 

“What they’re doing is credible,” Levi said about Payne and Clear. “My understanding is that they have seen levels of interest from data center developers. Whether the opportunities they’re leveraging lines up with the business needs of data centers remains an open question.”   

For instance, he said, Southwest Virginia might be the right fit for backing up federal data but less so for applications such as live-streaming video or trading stocks. 

Loudoun County and surrounding Northern Virginia are home to almost 300 data centers, the biggest concentration of such campuses in the world. It’s the crossroads for roughly 70% of global internet traffic. 

Prolific construction of the mega-buildings that make cloud computing possible — combined with the accompanying need for transmission lines for electricity and water for cooling — have caused an uproar among community activists alarmed about their impact on local infrastructure and the environment.

Such large-scale growth prompted a tongue-in-cheek comment from Democratic state Sen. Danica Roem about exporting data centers from Prince William, the county she represents, to Tazewell County, just east of the proposed Data Center Ridge. 

In an interview with the Energy News Network, Roem said she would only support siting data centers in Southwest Virginia if the projects have widespread community buy-in, are powered with renewable energy and are built on reclaimed coal mines that don’t require clearcutting of forests, which serve as carbon dioxide sinks. Utility customers shouldn’t be saddled with paying for the expensive buildout of transmission infrastructure, she added. 

“I don’t want to simply shift the problems we’re having here to Southwest Virginia and create problems for the residents there,” Roem said. “If they’re building data centers there, are they going to stop digging in my district?”

Roem has joined other legislators introducing bills aimed at reining in data center growth and controlling the resources the buildings require. For instance, compared to a typical office building, the U.S. Energy Department estimates one data center needs 50 times more electricity. 

‘A lot of potential hurdles’ 

David Porter, vice president of electrification and sustainable energy strategy for the Palo Alto, Calif.-based Electric Power Research Institute, said there are numerous challenges and opportunities when it comes to coordinating data centers’ power needs with utilities.

“These data centers could be a really neat idea if they can work around a lot of potential hurdles,” Porter said. High on his checklist of potential limiting factors are access to a reliable electric grid connection, battery storage to fill gaps and “major league” fiber optic cable for communications.

He emphasized that even a modest number of data centers can’t rely on renewable energy 24/7. Backup power, typically provided by diesel-powered generators, is needed to keep the centers operating when the wind isn’t blowing and the sun isn’t shining.

As well, he said, even larger data centers in the gigawatt range generate far fewer jobs than a manufacturing center.

Payne and Clear said they are far from naïve about the difficulty of solving grid and broadband issues, which they know will take years, not months, to remedy, and that the jobs will be impactful in a region where the average annual income is $42,000.

“In Southwest Virginia, we’ve seen plenty of manufacturers pick up and leave, and that wouldn’t be the case with wind turbines and data centers.”

Their models show that one 36 MW data center, considered to be a mid-size project, would generate about 50 jobs paying $134,300 a year. In an ideal scenario, the size of Data Center Ridge would eventually expand more than 25-fold to 1,000 MW.

DELTA Lab recently collaborated with a local industrial facilities authority to offer a financial incentive for data center developers, Clear noted. It translates to Wise, Lee, Scott and Dickenson counties and the city of Norton offering a tax rate on data center equipment of 24 cents per $100 of assessed value. By far, it’s the lowest such rate in the state.

“The more persuasive argument for data centers here is about sustainability for local governments and their citizens,” Clear said. “This creates a new trajectory for tax collections for the next 50 years.”

Water source easy, electricity not so much 

The sites they’re eyeing for data centers are atop an estimated 6 billion to 10 billion gallons of underground 55-degree mine water, which offers a less-costly method for cooling the hot air generated by hundreds of servers. 

It’s not an aquifer. Over the years, rainwater has been filtered by the limestone and sandstone as it trickled through fissures and cracks and landed in cavities created as coal deposits were removed. The pools of water are as deep as 1,000 feet below the surface. 

Four years before ushering in DELTA Lab, Payne and Clear had procured a state grant to study the water supply. Since then, they have been collaborating with engineers to devise a closed-loop water system that could chill the centers and eventually pump the water back underground to be reused after the Earth removes the heat it absorbed. 

Drilling of test wells by a geotechnical company is scheduled to begin this fall. That exploration is funded by the federal government and managed by the U.S. Department of Energy. 

In the meantime, a looming challenge is securing the flow of electricity to and from Data Center Ridge. Even if on-site solar arrays with backup battery storage are the initial power source, the project needs to have sufficient substations, transmission lines and other infrastructure to tie into the grid. That way, excess electricity can be shipped out and “imported” electrons can fill any deficits. 

Payne and Clear are talking with Kentucky Utilities — which does business in Wise and four other Virginia counties as Old Dominion Power — about upgrading and adding infrastructure. That analysis is part of a larger effort spearheaded by county officials to meet long-term energy demand in Southwest Virginia. 

One plus, Clear said, is that siting the buildout of substations and transmission lines will be less difficult on property with one landowner. However, he also knows investor-owned utilities often aren’t keen on asking ratepayers to fund infrastructure built to serve one distant customer.

Davis said his agency would likely pursue federal Energy Department money to construct transmission infrastructure. 

Data Center Ridge has the potential to boost the utility’s renewable energy portfolio, which is 1% of a generation energy mix that is heavy on coal, 84%, and natural gas, 15%. 

Although every component of their blueprint presents a separate set of obstacles, the entrepreneurs say outsiders’ perception of Appalachia is the chief hindrance. 

“Even after making our case since 2019, dispelling myths about the region is our first challenge in getting developers down here,” Payne said. “They think everybody is on meth and lives in shanties.” 

They persist to prove their doubters wrong. 

“Everything is teed up here to be executed,” Clear said. “It’s getting that first domino to drop that’s really important.” 

Promoters of clean-energy data centers in Virginia coal country unfazed by doubters is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.

The following commentary was written by Sophie Loeb, policy analyst at the Center for Progressive Reform, and Michelle Carter, director of clean energy campaigns at the North Carolina League of Conservation Voters. See our commentary guidelines for more information.

If your energy bills seem high this very hot summer, brace yourself. Without drastic measures to curb pollution, summers will be hotter and staying cooler will be more expensive. Unfortunately, the biggest strain on our future electricity bills isn’t our air conditioning, our electric cars, or even our businesses — it’s artificial intelligence (AI).

Data centers have been consuming power all over the country since the 1960s. As the Internet has rapidly been integrated into our lives, so too have data centers. Big data’s assault on North Carolina continues unabated, creating more demand on our energy system and raising our bills.

The new wave of artificial intelligence has the power to change the very nature of our society, in many ways for the worse. Data centers running AI require a constant and consistent power supply, something the utilities in the Southeast have struggled with for decades. These centers raise our bills while providing virtually no benefits to our communities.  Data centers across the nation have been given tax incentives, lower electricity rates, and have created few jobs for the amount of resources they use.

As more energy intensive industries take root, we must protect our residents from both the increases in our power needs and our monthly power bills. Unfortunately, Duke Energy’s plans to meet the growing needs of industry expose us to further financial and health risks. Duke Energy claims that their plan, which proposes the biggest methane gas build out in the nation, is needed to meet growing demand, particularly for data centers.

Duke has also warned that ratepayers’ bills will rise if they don’t build these plants, but the opposite is true. Building out solar and utility-scale battery storage instead of gas would yield $8 to $12 billion in electricity savings by 2030 and $18 to $23 billion in savings by 2050. An Environmental Defense Fund (EDF) analysis shows that, for Duke Energy Carolinas customers, increases in fuel costs account for roughly 67 percent of rate increases since 2017. The research is clear: more dirty methane gas means higher energy bills, both now and in the future.

According to Goldman Sachs, data centers will require a $50 billion expansion in electricity generation infrastructure to meet the industry’s demand. This money to build big power plants will come directly from North Carolina consumers like you and me without proper protections from the state.

Why should residential customers, particularly those who struggle to pay their energy bills, pay for these costly plants? Who really benefits from the environmental, social, and economic burdens of artificial intelligence?

Unfortunately, protections from the pressures of data centers are nowhere to be found — for now. Duke Energy has undertaken deals with Microsoft, Google, and other major power consumers to expand renewable generation and protect our grid. Through these agreements, large customers can transition to clean energy while lessening the burden of their power demands on the rest of Duke’s consumer base.

Data centers must be subject to these same agreements — and more — to keep North Carolina ratepayers safe from massive price increases. Consumers deserve transparency and accountability with any new data center project in our state.

In lieu of data centers, North Carolina should invest in good, clean energy manufacturing jobs that promote economic development, resilience, and environmental sustainability. Already, the Inflation Reduction Act is slated to create almost 40,000 jobs by 2030. Tech companies could support these efforts with electric vehicle manufacturing plants, solar panel and battery storage manufacturing facilities, and further build the Southeast as a hub of clean energy manufacturing.

To better center people over tech companies and promote an affordable energy transition:

1. Utility commissions should require utilities to highlight explicit data on load growth from data centers so additional capacity is not passed on to residential customers.
2. Regulators should prohibit data centers from receiving subsidized industrial use rates.
3. The General Assembly should pass legislation enhancing stronger consumer protection laws for electricity ratepayers.
4. The state should form an Office of the People’s Counsel to protect customers from absorbing rate increases from industrial customers like tech companies.

As temperatures get hotter, there is no doubt our energy bills will go up. However, we must do everything we can to prevent massive projects from raising our bills even more. Investing in energy-draining artificial intelligence data centers not only increases electric rates for everyone, it takes away valuable jobs for rural communities. It’s time to invest in people over profits in North Carolina!

Commentary: Footing the power bills for AI is anything but smart is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.

Have you had a conversation with ChatGPT, experimented with Google’s email-answering generator, or used an AI-enhanced search on Bing or Facebook? All those AI-enabled activities take a lot more data processing than a regular internet search or scroll. And more data processing means more data centers — and more electricity to power them. Analysts predict these facilities, which house servers that send and store tons of data, could account for as much as 9% of U.S. energy demand by 2030.

Virginia has earned the nickname of “Data Center Alley,” as it’s home to servers that see about 70% of global internet traffic, according to the Wall Street Journal. But as more devices connect to the internet and as AI drives up data demand, data center developers are looking for new places to locate these facilities. 

With its cooler climate, abundant water, and relatively mild weather, the Midwest may serve that niche, the Energy News Network reports. And clean energy advocates say data centers could help juice renewable energy development; Microsoft, for example, has promised to build renewables in Wisconsin to help make up for the power its planned data centers will use. Former coal plants and industrial facilities also make good homes for data centers since they’re already connected to the power grid.

But data center proliferation across Virginia and the Southeast is also provides a cautionary tale for clean energy. Utilities across the region have announced plans to build new gas plants and keep coal plants open longer, often citing data centers’ energy needs as part of their reasoning.

Read more about the promise and perils of a Midwest data center boom at the Energy News Network.

More clean energy news

💸 Where climate funding goes: More than three quarters of the Inflation Reduction Act’s $34 billion of announced investments have gone to congressional districts represented by Republicans who voted against it, an analysis finds. (CNN)

⚛️ Small nuclear fires up: The U.S. Energy Department announces $900 million for small nuclear reactor development, which along with a bipartisan federal bill to reduce fees and speed permitting could boost the industry. (E&E News, The Hill) 

🚘 Benefits for EV buyers: U.S. electric vehicle buyers have received more than $1 billion in point-of-sale rebates since the Treasury Department launched the instant incentives in January, discounting an estimated quarter of the 600,000 EVs sold so far this year. (E&E News)

🌊 Whatever floats your solar panel: Covering around 10% of the world’s lakes and reservoirs with floating solar panels could generate enough electricity to power the United Kingdom four times over, and could be used to cover all power use in some small countries, scientists find. (Grist)

⏳ What’s the holdup? Supply chain and interconnection delays are stalling large renewable energy projects across the Midwest, despite new efforts in Minnesota, Illinois and Michigan to speed up permitting. (Inside Climate News)

🏠 Use ‘em or lose ‘em: Inflation Reduction Act funding for home energy rebates will likely remain mostly unspent until after the November election; Trump allies have indicated he would revamp the program and jeopardize the funding if he is elected. (E&E News)

🛣️ Lining up grid wins: An organization pushing to build transmission lines along highways recently scored a legislative win in Minnesota, and now looks to expand the policy to other states. (Canary Media)

🔋 FERC fills up: The U.S. Senate confirms three nominees to the Federal Energy Regulatory Commission, filling the five-member board as it prepares to guide the nation’s grid buildout. (E&E News)

🛢️ Ten years later: Federal regulators approve the long-delayed Mountain Valley Pipeline to enter service after a decade of regulatory, legal and on-the-ground battles. (Roanoke Times)

📢 We want to hear from you! Send us your questions, comments, and story tips by replying to this email.

💸 Support our work: The Energy News Network is powered by support from readers like you. If you like Energy News Weekly, share it with a friend! Or give today and help us keep our news open and accessible for all.

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The coming AI boom could keep coal and gas alive is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.

Southeastern Wisconsin and the Chicago area are emerging as major players in the national data center explosion, most notably with Microsoft’s $3.3 billion planned data complex near Racine, Wisconsin.

Clean energy advocates in the region say data centers pose both a risk and an opportunity, as they can put major stress on the grid, prolong the lives of coal plants and spark new natural gas plants, but also facilitate significant renewable energy investment. Wisconsin utility We Energies, for example, cited demand from data centers in its recent requests to the Public Service Commission for 1,300 MW of new gas generation. Microsoft, meanwhile, has promised to build renewables in the state while also likely creating demand for new or continued fossil fuel energy.

The organization Data Center Map shows more than a hundred data centers in the Chicago area and a handful in Southeastern Wisconsin, often located on the site of former coal plants or industrial operations. A data center is underway on the site of the shuttered State Line coal plant just across the border from Chicago in Indiana. The data center developer T5 recently announced plans for four to six data centers totaling 480 MW of capacity and costing as much as $6 billion in the Illinois town of Grayslake near the Wisconsin border, adding to data centers it already runs in the region.  

Virginia has long been known as “Data Center Alley,” with about 70% of global internet traffic passing through its servers, according to the Wall Street Journal. Dominion Energy said that because of data centers, its electricity demand in Virginia could quadruple and represent 40% of total demand in the state over the next 15 years. Georgia and Tennessee have also seen much data center construction and speculation. Utilities like TVA, Duke and Dominion have announced plans to build more gas plants and keep coal plants open longer in that region, along with building renewables.

Meanwhile, some experts say the Great Lakes region is an increasingly promising spot for data centers because of its cooler climate that reduces energy demand and the availability of water.

“There is no better place” for data centers than the Upper Midwest, said Josh Riedy, who helped design North Dakota’s first tier-three data center, referring to a data center with high reliability — on a scale of one to four tiers — that includes multiple power sources. Riedy also founded Thread, a grid maintenance software company that he’s marketing as especially helpful to serve data center demand.

“The Upper Midwest can export data around the globe,” Riedy said. We’re starting to see the tide turn, it’s just natural.”

Growing load

Projections abound regarding the way data centers — including those processing cryptocurrency and running AI applications — will increase energy demand nationally and end an era of stagnant load growth.

Last year, the Federal Energy Regulatory Commission predicted 4.7% load growth over the next five years, up from 2.6% previously estimated for five-year growth. Data centers “supercharged by the rise of artificial intelligence” will require between 9 and 13 more GW of electricity over the next five years, according to seven case studies analyzed in a December 2023 report by the Clean Grid Initiative, which does not include data center estimates for MISO or CAISO (California) regional transmission organizations. A McKinsey & Company report predicted 35 GW of total demand from data centers by 2030.  

Load growth sparked by data centers comes on top of a shift from fossil fuels to electric heating, cooling and transportation. A 2022 report commissioned by Clean Wisconsin and RENEW Wisconsin found load growth could increase to 166% of 2022 levels with building and vehicle electrification needed to meet the state’s goals of net-zero emissions by 2050.

“Everything from data centers to manufacturing to AI to cryptocurrency,” said Sam Dunaiski, executive director of RENEW Wisconsin. “These all could be triggers for new load, and it all could be coming to Wisconsin, though it’s not unique to Wisconsin. Things like solar and battery manufacturing are coming online that ironically need new load growth too. We think the best way to meet that new load both environmentally and economically is through renewables and transmission to go along with it. This is a great opportunity for a low-cost renewable energy boom in the state.”

Along with the generation demand, Riedy noted, come needs for grid updates and resiliency, which can ultimately help the grid as a whole.

“If you’ve built and designed a data center, you know the nature of them is in many ways fundamentally different than most energized structures,” Riedy said. “Walmart, for example, is going to consume power, but it will have peaks, and constant power is important but not in the way it is to a data center. With crypto mining or AI model training, you see machines running at near peak performance around the clock. That’s producing a type of strain on the grid that has few comparisons.”

Microsoft and more

Microsoft’s energy plans — like many details about the massive data project — are not yet clear, and the company’s ambitious climate goals give advocates hope that the company will finance much new renewable generation either on-site or through power purchase agreements. The company has announced it will build a 250 MW solar array in Wisconsin.

But Microsoft will likely also purchase power from We Energies, fueling advocates’ worries about new natural gas generation and rate increases for regular customers.

The data center will be located on the sprawling site between Milwaukee and Chicago that was previously slated for an enormous LCD screen factory by the company Foxconn. That plan was repeatedly scaled back and then scrapped in the face of economic issues and local opposition.

Citizens Utility Board executive director Tom Content noted that “under state law passed for Foxconn, Microsoft is eligible for discounted market-based electricity rates. They would pay basically for the transmission and distribution, but a portion of their rates would just be set at wholesale market rate,” rather than the retail amount customers usually pay.  

In February, a subsidiary of We Energies filed a plan with the Wisconsin Public Service Commission for an estimated $304 million in grid upgrades related to the Microsoft project. Public auditors filed a letter with the commission noting exemptions that allow less oversight because the project is in a special technology zone.

The Microsoft plan was touted by President Joe Biden as an example of reinvigorated Midwestern investment, but it has faced concerns about its energy and water use. Meanwhile Microsoft has faced setbacks globally in reaching its climate goals, in part because of the massive energy demand of artificial intelligence applications.

Cost concerns  

Advocates said utilities may use data centers to justify more investment that earns them a rate of return, even when it is not necessarily needed.

“We are concerned that there could be an overinflation of expected demand in order to capitalize on this trend and build more gas as a last-ditch effort,” said Ciaran Gallagher, energy and air manager for Clean Wisconsin.

“There’s a little bit of a sky-is-falling scenario here,” Dunaiski agreed. “In the early 2000s we saw this with load growth [projections] particularly around the internet. People thought the internet would cause our electricity generation needs to explode. They increased, but there were improvements that came with it — infrastructure getting more efficient, and software.”

That precedent raises questions about the rush to build out gas power to accommodate projected demand.

“Gas isn’t coal, but we shouldn’t be striving for the second worst option, for the environment or for our pocket books,” Dunaiski continued. “If we build these gas plants, customers will be paying for them for the next 20, 30 years.”

Gallagher noted that the EPA’s new rules for gas plants make new gas investments even more questionable.

“All the gas plants proposed in Wisconsin and across the country in relation to this demand from data centers will have to comply with these standards, and by 2032 either run not very often or reduce greenhouse gas emissions by 90% through carbon capture and sequestration or  low-carbon hydrogen,” Gallagher said. “That prompts the question: Is it worth the price tag to build these gas plants that could become stranded assets or have to spend additional money to comply with these rules?”

Using existing renewables or zero-emissions nuclear energy to power data centers can impact customers too. Content noted that this strategy “accomplishes the decarbonization goals for the tech companies and the reliability needs for the data center. But then you’re taking the fully depreciated, mostly paid-off asset on utilities’ books and having it serve one or two customers, and then the utilities will have to backfill that with a combination of natural gas, solar, storage, wind or future nuclear to serve the rest of the customers.”

“It’s on everybody’s mind how we’re going to tackle this in a way that ensures we don’t say no to economic development, but don’t make energy costs unaffordable,” said Content, noting that data centers have been a major topic of discussion among the National Association of State Utility Consumer Advocates – including at the organization’s conference in Madison in June.  

“Different states are trying different approaches,” Content said. “There’s talk of changing the way utility costs are divided up — currently among residential, industrial and commercial — and dividing it up four ways, with data centers becoming their own entity. Tech companies are pouring a lot of money into the development of these things. They have the wherewithal to contribute mightily to these projects.”

Renewable opportunities

Gallagher emphasized that renewable advocates are not opposed to data centers.

“We think data centers and the economic development that they can bring are not at odds with environmental protection and climate mitigation,” she said. “This can be a low-carbon industry but only if new additional renewables are built to supply all or most of their demands. We think that’s viable if renewables are cost-competitive with gas, and pairing renewables with storage can provide the type of reliability these data centers need.”

Riedy sees renewables and gas as a necessary mix to fuel data centers. While renewables’ intermittency might be seen as a barrier, he said renewables actually could have a unique role to play in energizing data centers – especially in the Midwest.

“In the heat of the day you’re delivering, so having alternate [energy] sources to peak-shave and normalize the cost of energizing that equipment is very important,” Riedy said. “It’s leading to a change in thinking around where to place data centers, that speaks to Wisconsin, the Dakotas. 

“The old way of doing things was generate power in one place, and transmit it for thousands of miles. What data centers are understanding with their insatiable and constant need for power is they are more logically placed by power generation so you can buy that off-peak power, to maintain that load consistently. Since solar and wind overproduce [at certain times], if you can harness that imbalance it’s somewhat of a win-win.”

Data centers offer energy peril and promise, with the Midwest increasingly in the crosshairs is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.

Virginia’s participation in an East Coast greenhouse gas emissions pact is pivotal to curbing the climate impact of its thriving data center industry.

Globally, northern Virginia has become one of the largest data center hubs over the last decade-plus. Offering generous tax incentives has attracted tech giants eager to construct massive server farms with proximity to crucial digital infrastructure. An estimated 70% of the world’s internet traffic moves through the suburbs of Washington, D.C., daily.

That burgeoning has propelled a surge in electricity use. In 2020, the sector consumed close to 12,000 gigawatt-hours in Dominion Energy’s territory — roughly one-sixth of the investor-owned utility’s total retail sales that same year.

And yet, the state’s carbon emissions from power plants have fallen 12% annually during the last two years.

William Shobe, an environmental policy professor at the University of Virginia, is among those crediting the 11-state Regional Greenhouse Gas Initiative. Known as RGGI, the initiative is a voluntary carbon cap-and-invest venture designed to tamp down heat-trapping gases emitted by the utility sector. Virginia’s downward emissions trend will halt without that cap in place, Shobe said.

Even as electricity-hungry data centers multiply across the state, RGGI’s binding carbon cap keeps emissions in check. Basically, the amount of fossil fuels a utility is allowed to burn shrinks each year as the cap is lowered. 

It’s a crucial dynamic to understand, Shobe said, as Republican Gov. Glenn Youngkin has vowed to extract Virginia from the market-based climate initiative.

“As a planetary citizen, I’m happy with that [cap],” said Shobe, who directs the Energy Transition Initiative at the University of Virginia’s Weldon Cooper Center for Public Service. “If the state relaxes RGGI, then data centers have climate consequences that we need to worry about.”

He’s hopeful that legislators won’t follow Youngkin’s lead on RGGI during the session that opened last Wednesday. Republicans control the House of Delegates while Democrats have a majority in the Senate.

Shobe also argues that continuing to build data centers in Virginia can be a net positive for climate change — assuming data centers will be built somewhere and the state stays committed to the regional greenhouse gas program. That construction trend shows no signs of abating in Virginia for at least the next 10 years.

“As long as we are a member of RGGI, then we should encourage data centers here rather than Ohio, Indiana or someplace else without a cap on carbon dioxide emissions,” Shobe said. 

Shobe played a significant role in designing the mechanisms behind RGGI, which debuted in 2009. In a nutshell, each member state limits emissions from fossil fuel power plants, issues carbon dioxide allowances and sets up participation in auctions for those allowances.

In 2020, Virginia became the first Southern state to join RGGI, after ample back-and-forth bickering. Advocates have hailed the program for its climate benefits and the upward of $450 million the allowance auction has so far yielded for statewide flood resiliency projects, energy efficiency upgrades, and home repairs for low-income residents statewide.

Youngkin has been itching to extract Virginia from RGGI since he took office a year ago. In early December, the state’s Air Pollution Control Board voted 4-1 to accelerate that exit. 

Attorneys with environmental organizations maintain that the Youngkin administration lacks the authority to leave the compact. That decision, RGGI proponents say, is in the hands of the General Assembly. A legislative effort to derail RGGI failed last year.

The air board’s initial vote to leave RGGI will trigger a 60-day comment period this winter. Shobe and his colleagues are prepared to weigh in with insights that the board will review before voting again on the proposal.

Shobe published an electricity use forecast in April 2021 predicting that data centers will be the driving force behind a 38% increase in electricity sales between 2020 and 2035. That equals an average increase in electricity use of around 44,000 gigawatt-hours per year.

“Whether we think this is a good thing or not, data centers are growing very fast,” Shobe said. “Unfortunately, they use a lot of energy. How we provide that energy is what will make a difference.”

Shobe noted that residential electricity sales are close to flatlining due to slower population growth and improved energy efficiency. Likewise, commercial and industrial demand have fallen for several years.

For the most part, large technology companies have pledged to power their facilities with renewable energy. However, it’s unclear whether or how they are following through on those commitments.

Thus far, Virginia’s solar expansion is on pace with a legislative mandate to decarbonize the grid by 2050, Shobe said. But the state can’t afford a solar stumble if it’s going to feed the needs of voracious data centers.

Some in the environmental community doubt that server farms will be able to live up to their vows to harness 100% of their energy from clean sources. Rooftop solar can’t cover those needs because the average solar array on a data center would only offset about 2.2% of its annual electricity consumption, according to calculations by solar developers.

That means operators resort to power purchase agreements, which allow them to go solar even if the utility-scale arrays they invest in are located miles away or in other states and might not be generating when data centers are consuming power.

Some are leery of those pacts. But Shobe defends the agreements as “perfectly fine ways” to contain greenhouse gases.

“If a data center has a solar farm built somewhere else to cover emissions, why wouldn’t you want to credit them for that?” he said, adding that his university does just that with two off-campus arrays. “From the point of view of resolving global warming, it doesn’t matter where it is built.

“As long as it’s on the same planet, it has the same effect on emissions.”

Shobe suggested that in the big picture, a third-party monitoring organization — along the lines of a Good Housekeeping seal of approval — should be tasked with holding data centers accountable for clean energy pledges.

“Enforcement is a tricky problem,” he said. “What it boils down to is, are people holding true to their promises?”

Boosting in-state solar capacity is far preferable to importing electricity because that might be sourced from states without a carbon emissions cap, Shobe said. 

“The question is how fast we can add renewable energy,” especially over the next five or six years, he said. “We are going to have to be more aggressive and do it faster if we are going to be a center for data center construction.”

In the meantime, the air board’s vote and the start of Virginia’s new, two-month legislative session has ushered in fresh fears that the state’s progress could be stymied. Shobe said he and other RGGI champions will meet with lawmakers to tout the climate value of sticking with the cap-and-invest program.

Withdrawing from RGGI would halt the flow of auction allowances. Instead, in mid-December, Youngkin proposed replacing that with $200 million in taxpayer dollars dedicated to a Resilient Virginia Revolving Fund.

That shift away from the RGGI model signals a lack of commitment to tackling climate change, Shobe said, because it removes not only environmental certainty but also the incentive for utilities to pivot from high- to low-emitting generation.

In Virginia, he emphasized, the original reason for joining RGGI was about having a cost-effective tool for reducing emissions. Producing revenue was an afterthought. 

“If what the governor is hoping is that we will give up on achieving carbon dioxide reductions, that’s another matter,” Shobe said. “If we’re serious about reducing carbon emissions, we need to be thinking ahead and asking ourselves what our energy portfolio is going to look like.”

In Virginia, carbon emissions drop as data centers boom, thanks to RGGI pact is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.