The Joint Legislative Audit and Review Commission released its long awaited report on data centers Monday, detailing the expected soaring energy demands and large economic benefits of the industry ahead of the 2025 General Assembly session.
Fredericksburg City staff this week presented an overview of a draft zoning ordinance that would provide for by right data center development.
By Morgan Sweeney
(The Center Square) — The average American’s energy bill could increase from 25% to 70% in the next 10 years without intervention from policymakers, according to a new study from Washington, D.C.-based think tank the Jack Kemp Foundation.
According to reports, America is facing an energy crisis, with demand for energy soaring due to the proliferation of AI and hyperscale data centers – which can use as much energy as almost 40,000 homes – the boom in advanced manufacturing, and the movement toward electrification.
Written by economist Ike Brannon, a senior fellow at the foundation, and economist Sam Wolf, the report explains partly why so many utilities and regional transmission organizations are having to get creative to meet demand.
“During the previous two decades, power demand in the United States scarcely grew as the U.S. shifted from a /;/manufacturing to a services economy,” the authors wrote.
However, the sharp increase in demand is eating up the spare capacity in the U.S. power grid, which helps protect against brownouts and blackouts in the case of extreme weather and temporary outages by power plants. That increase contributed to a huge spike in capacity market prices at the most recent auction held by the Mid-Atlantic regional transmission organization PJM.
Prices jumped from $29 to $270 per megawatt-day “across the PJM region” and from $29 to $444 in parts of Virginia, home to more than half of the nation’s data centers, according to the study.
Aaron Ruby, a spokesperson for Dominion Energy, a major East Coast utility company and the primary utility in Virginia, vehemently disagreed with the study’s claim that prices could rise to 70% in the next decade, saying the number was “way off” for the commonwealth.
“We just released a 15-year plan forecasting residential electric bills through 2039, and they’re only projected to grow by about 2.5% a year, which is lower than normal inflation,” Ruby wrote in an email to The Center Square. “Our residential rates are among the most affordable in the country. They’re 14% below the national average.”
But the surge in power demand from data centers is projected to be so great the study’s authors argue the center cannot hold (while acknowledging that rate setting is “inherently political” and “difficult to forecast” and that it’s “unclear who will bear the cost of these price increases”).
“In Virginia, the high regulation of price and capacity has kept the increased demand from data centers from impacting prices paid by ordinary consumers, but such insulation cannot hold much longer without risking service interruptions or brownouts,” the report reads. “As data center growth expands, price increases may need to flow through to consumers more rapidly.”
In Maryland, electricity bills “are projected to increase by somewhere between two to 24% in 2025, depending on the region,” the authors added.
Other states like Georgia, Ohio, Texas, Illinois and Arizona may come to resemble Virginia in the years ahead, according to the study.
The report’s authors suggest that policymakers craft and implement policy that will make data centers part of the solution to the disproportionate demand they place on the grid, including charging them more for the energy they use.
“To ease the burden on households and small businesses, AI companies should be required to bear the additional costs of the energy they consume. This could include charging data centers higher fees to reflect their disproportionate impact on electricity markets,” the report reads.
Brannon and Wolf also recommend that states and local governments stop subsidizing data center construction, arguing that the economic benefits aren’t worth the cost to taxpayers and that utility providers start including minimum take clauses in their contracts with data centers.
“A minimum take clause guarantees a minimum payment from a utility user—such as a data center—regardless of how much energy it purchases, which provides the utility with a modicum of revenue certainty,” the authors wrote.
The study concludes with several other recommendations, saying that “paying for grid modernization… can be accommodated within existing rate structures, but only if the data centers bear their proportionate share of these costs.”
The Prince William Board of County Supervisors approved a resolution on November 19, 2024, to transfer $484,007 from the county’s contingency fund to address litigation costs and hire additional staff to handle data center real estate assessments. The resolution passed with a 6-2 vote, with Gainesville District Supervisor Bob Weir and Coles District Supervisor Yesli Vega opposing the measure.
The funding will allocate $300,000 for outside legal counsel to manage lawsuits involving data center tax assessments and $184,007 to create two new full-time positions in the Finance Department’s Real Estate Assessments Division. The new positions will focus on the valuation and legal defense of assessments for data centers, which have rapidly become the county’s largest source of commercial tax revenue.
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On Tuesday, November 12, 2024, the Fredericksburg City Council approved a resolution to continue exploring data center development, particularly in the Celebrate Virginia South area.
The city aims to classify data-center development in the area as by-right, meaning the city council would require no public hearing before a data center could be built. The vote intensified public discourse over data centers' potential economic benefits and environmental concerns.
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Tomorrow, Tuesday, November 12, 2024, the Fredericksburg City Council is set to vote on a resolution that supports the continued exploration and attraction of data centers to the city, mainly targeting the Celebrate Virginia South area near the Fredericksburg Nationals baseball stadium. This decision follows recent adjustments in Fredericksburg’s tax policies, which align the city’s computer and peripheral tax rates with those in surrounding Stafford and Spotsylvania counties, part of Planning District 16.
According to city documents, efforts to lure data centers to Fredericksburg have been in the works for over a decade. In 2018, the council began publicly discussing the possibility of voting on amendments to the city code to designate data centers as a by-right use in specific zoning areas. Last month, the council unanimously agreed to a reduced tax rate of $1.25 per $100 of assessed value on all computer and peripheral equipment used in data centers, a move mirrored by other surrounding localities.
Economic Potential and Environmental Safeguards
According to the new resolution, data center development is expected to bring substantial economic benefits. Council member Will Macintosh, during the October 22, 2024, council meeting, highlighted these benefits, stating, “With projected new tax revenues of up to $100 million annually at full buildout, data centers offer a unique opportunity to fund essential public services, reduce real estate taxes, and support citywide initiatives in Fredericksburg.”
The resolution specifies that new data centers would collectively cover no more than 2% of Fredericksburg’s total land area, equivalent to about 5 million square feet. At this capacity, the economic impact could allow the city to reduce the real estate property rate, support recruitment and retention efforts for public safety personnel and teachers, and fund significant capital projects, such as Fire Station #3 and future school construction.
Sustainability and Environmental Standards
The council underscored its commitment to environmentally sustainable development in response to community concerns. Measures include using reclaimed “purple pipe” water for non-potable needs, on-site renewable energy generation, advanced sound mitigation technology, and state-of-the-art stormwater management to protect the nearby Rappahannock River. Council member Dr. Macintosh noted that while data center development is essential for economic growth, “it is critical that such growth reflects our values of environmental stewardship and sustainability.”
Vice Mayor Charlie Frye also mentioned during the October 22 meeting that alternative technologies, such as natural gas-driven microgrids, could reduce data centers’ environmental impact. “The Virginia Municipal League shared emerging data center technologies that could lessen the environmental footprint,” said Frye. “It’s an exciting time to explore these options, which align with our city’s climate goals.”
Looking Ahead
Suppose the resolution is passed on November 12. In that case, Fredericksburg staff will continue their due diligence, working with potential developers and aligning zoning ordinances to provide further clarity for future data center projects. City documents state that the council’s study will also focus on identifying developers with renewable energy commitments that match Fredericksburg’s sustainability targets.
With the region poised for growth in the data center sector, Fredericksburg aims to stay competitive while balancing economic benefits with environmental responsibility. “Fredericksburg is committed to fostering sustainable, thoughtful growth that aligns with our community’s priorities and positions our city for a prosperous future,” said city mayor Kerry Devine.
The proposed Bristow Campus data center project, slated for consideration by the Prince William Board of County Supervisors on November 19, 2024, has been deferred.
Gainesville District Supervisor Bob Weir noted that the applicant may have anticipated a lack of support for the project. “I think they know they don’t have the votes,” said Weir. It’s unclear when supervisors may take up the case.
The Bristow Campus development, led by Stack Infrastructure, aims to rezone agricultural land near Nokesville Road and Broad Run Creek into a Planned Business District. This rezoning would permit two high-rise office buildings and light industrial structures up to 75 feet tall.
The proposed site plan includes a 50-foot buffer to protect critical areas, 25 acres of preserved open space, and nearly 14 acres dedicated to parks and recreation. A trail along Broad Run Linear Park is also planned.
Community leaders and residents have expressed growing concern over the increasing presence of data centers in Prince William County. Kathy Kulick, Vice Chair of the HOA Round Table of Northern Virginia, highlighted the potential impacts of data centers on residential communities.
“We’re essentially a discussion and information exchange forum for residential community leaders,” said Kulick, explaining her organization’s role in helping local communities understand development projects. Data centers, according to Kulick, often bring noise, environmental concerns, and infrastructure strain. “Data center noise is real… residents don’t really realize what’s going on until one night they can’t sleep,” she said, adding that diesel generators and air quality impacts are additional concerns.
Kulick also noted that this development falls outside the Prince William County Data Center Overlay District, a designated area approved in 2017 to provide infrastructure suited for data centers. The Overlay District aims to ensure new data centers have access to adequate water and power, yet, as Kulick pointed out, “This Bristow Campus… is located outside of that area.” This deviation has raised questions about whether the county’s infrastructure can support the energy demands of the data center, prompting discussions around alternative energy sources, including small modular nuclear reactors.
The Bristow Campus project mirrors other controversial data center developments in Prince William County, including the recently approved Devlin Technology Park. This project, backed by Stanley Martin Homes, has faced ongoing legal challenges from residents of the Bristow area, who formed the group Defend Devlin. These residents, represented by attorney Donna Gallant, are appealing a previous court dismissal of their case, hoping to prevent data centers from being constructed near Chris Yung Elementary School and several neighborhoods.
If approved, Bristow Campus would be part of a larger trend bringing data centers to residential areas, despite objections. Prince William County residents, particularly in the western region, are facing the possibility of high-rise data centers encroaching on neighborhoods, schools, and parks, potentially altering the character of these communities.
The HOA Round Table of Northern Virginia is working to alert residents across multiple counties, including Loudoun, Fairfax, and Fauquier, about potential developments. In addition to noise and environmental concerns, Kulick raised the issue of rising utility costs for residents, as extensive infrastructure upgrades would be necessary to support the Bristow Campus and similar developments.
Bristow residents may soon have another massive data center campus as their new neighbor.
Despite community objections over environmental and infrastructure concerns, the Prince William County Planning Commission has approved a plan to rezone 58 acres in Bristow for a large-scale data center campus. The project, known as Bristow Campus, is slated to move forward to the Prince William Board of County Supervisors, who will make a final decision on November 19, 2024.
- As proposed, the Bristow Campus data center project involves the construction of two three-story data center buildings, each spanning 450,000 square feet, totaling 900,000 square feet of data center space.
- Additionally, the development includes a substation to support the facility's power requirements.
The proposed development, led by Stack Infrastructure, would rezone agricultural land to a Planned Business District to construct two high-rise office buildings up to 75 feet tall and light industrial structures on Nokesville Road near Broad Run Creek. With site improvements, including a 50-foot perimeter buffer along critical areas, the applicant has committed to preserving 25 acres of open space and dedicating almost 14 acres to the county for parks and recreation, adding a potential trail connection along Broad Run Linear Park.
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Prince William Board of County Supervisors Chair, at-large Deshundra Jefferson, is on the mend after having had surgery for Crohn’s disease. This chronic inflammatory bowel condition has affected her health over the past two years.
Now two weeks post-surgery, Jefferson reports feeling “pretty good” and looks forward to resuming her duties full-time, including attending Zoom meetings and tackling a backlog of emails next week. Despite her temporary absence, Jefferson is grateful for her colleagues, especially Supervisor Boddye, who stepped up in her absence, as well as her staff, friends, and supportive 16-year-old son. “These things are kind of frightening until you actually go through them,” she shared, noting the relief of finally addressing symptoms that had worsened over the past few months.
Jefferson’s journey with Crohn’s disease began with a diagnosis in the summer of 2022, followed by a period of remission in 2023, during which she felt “great” and could nearly forget she had the disease. However, her condition resurfaced with abdominal cramping and digestive issues, leading doctors to recommend surgery. “The only way to fix that was to have a colon resection,” Jefferson explained, adding, “When I was feeling good, I wasn’t going to the doctors as often as I should, and that’s a lesson.”
Crohn’s disease, often hereditary, is marked by inflammation of the gastrointestinal tract, causing symptoms like severe abdominal pain, cramping, and fatigue. The condition has no cure, but treatments like medication and surgery can help manage symptoms.
Jefferson now hopes her experience will encourage others to “listen to your body” and seek medical advice as needed. “I didn’t know how many people were impacted by Crohn’s,” she said, surprised by the community’s response and support.
With her health gradually improving, Jefferson is eager to return to significant county matters, focusing on housing affordability and responsible data center growth. She has advocated shifting the county’s focus from traditional affordable housing to “attainable housing” to support police, fire, rescue, and other essential service workers find homes near their workplaces. “It was affordable to live here; it’s not anymore, and it’s hurting our growth,” she said. She emphasized the need for workforce housing options that promote homeownership, a goal that initially drew her to Prince William County.
Jefferson also aims to address the future of data centers in Prince William, which has generated extensive community debate. Her priority is to hold a work session to evaluate the Data Center Overlay Zone, which encompasses areas with sufficient water and power resources required for server farms. “We need a more holistic view of data center growth within our county,” Jefferson noted, suggesting the possibility of removing specific parcels from the overlay to relieve districts disproportionately affected by the industry’s expansion.
Nearly a year into her four-year term, Jefferson, a full-time supervisor, remains committed to creating a balanced and sustainable future for Prince William County. Driven by her commitment to community issues, she ousted former Chair At-large Ann Wheeler in the June 2023 Democratic Primary.
