Data Centers and Electricity Demand in Virginia

In 2020, electricity sales in Virginia were 115,585 GWh. According to the University of Virginia Energy Transformation Initiative, “Electricity demand in Virginia can be expected to grow fairly rapidly between now and 2035. It will likely continue to grow even more quickly between 2035 and 2050 as the state accelerates its efforts to eliminate carbon emissions from the economy. Most of the shorter-term growth comes from increased sales to data centers in Virginia. In the longer-run, electric vehicles will become an increasingly important contributor to growth in electricity sales.”

Most electricity use sectors in Virginia are not growing, nor is their electric demand. Commercial and industrial demand for electricity in Virginia have both been falling for several years, and the University of Virginia expects this trend to continue for some time. Residential electricity sales are growing very slowly due to slower population growth and improved energy efficiency in homes. The one growing sector of electricity demand in Virginia is data centers, and wow is that growing. Virginia is the data center capital of the nation resulting in electricity use growing faster here than in most other states.

In their forecasts, the University of Virginia’s mid-range estimate for electricity demand to increase 30% (32,800 GWh) by 2035. This forecasted increase does not include any increased electric vehicle sales but rather is entirely due to increased data center power usage. This level of energy demand requires the building of more electrical generation and transmission within the Commonwealth to supply the additional power to data centers. We do not have a spare 30% of the total power demand hanging around. The building of new power generation plants cost more per kilowatt hour than the power produced by the legacy generation we have and will result in our electric bills increasing. Ironically, data centers pay less per kilowatt hour than residential users. 

In Prince William County alone there will be a nine fold increase in data centers when those under development are completed and those proposed are built. Because of data centers in Northern Virginia, growth in electricity demand in Virginia will explode in the short term. Between 2035 and 2050 as the state accelerates its efforts to eliminate carbon emissions from the economy and electrifies the transportation sector demand for electricity will continue to grow. As we electrify everything, and decarbonize the grid, the reliability of the grid comes into question and a larger grid requires more storage to ensure reliability from renewable sources. Data centers require power 24/7 even when the wind does not blow or the sun does not shine. I know from my experience with my solar panels that the production of power varies from month to month and year to year.

Dominion Energy plans to build the 2,640- megawatt Coastal Virginia Offshore Wind (CVOW) commercial project, the largest planned offshore wind farm in the United States. The project will have 176 wind turbines. According to the news release the purchased turbines will be the world’s largest offshore wind turbines in operation — are set to be fully operational in late 2026 and produce up to 14.7 megawatts of power apiece, producing in total up to 2.6 Gigawatts of power.

As reported last week by Sarah Vogelsong in the Virginia Mercury news: “The project is both a key component of Dominion’s plans to decarbonize its fleet by midcentury in line with the Virginia Clean Economy Act and, with an estimated price tag of $9.65 billion, the most expensive endeavor the utility has undertaken to date. If approved by regulators, the average residential customer, defined as someone who uses 1,000 kilowatts of power every month, would see their monthly bill initially rise by $1.45. SCC staff have estimated that figure could rise to $14.21 by the time the project enters operation in2027.”

Though this project was intended as a key component in the plans to decarbonize our grid we can use the costs to look at what data centers cost us. Using the European Union estimates of power production, the Coastal Virginia Offshore Wind project should produce around 5,300 GWh of power a year. It does seem a little low and could be more if the wind blows steady at a usable speed at the coastal Virginia location. If to be conservative  in cost estimates we increase that number to 10,000 GWh of power a year and use the SCC estimate of the monthly increase in electrical bills, then the data centers will cost the average Virginian residential customer an additional $42.63 per month (or $511/ year) on top of the costs we will have to pay to decarbonize our grid under the Virginia Clean Economy Act. The cost of more data centers is beginning to look to high.