Every four years the Commonwealth is required to produce the Virginia Energy Plan. It is completed in the first year of every governor’s term. The 2026 Virginia Energy Plan (VEP) was released by Governor Abigail Spanberger’s administration on October 1, 2026. Each VEP has a 10 year horizon and serves as the Commonwealth's energy roadmap.
While it is a policy framework rather than a binding regulatory document, it explicitly sets the state's legislative agenda to handle surging electricity demand—driven primarily by data centers—while remaining on a legally mandated path to a net-zero power sector by 2050. Unfortunately, what the VEP does is choose the assumptions that would give the exact result the Administration wanted; a paper-thin justification that a rapid clean energy transition is the most cost-effective path forward. In execution in the real world, this plan is unlikely to work and the gap between modeling assumptions and physical grid limits threatens to trigger severe reliability issues and dramatic, unmodeled rate hikes for Virginia consumers.
Virginia utilized advanced capacity expansion modeling to
analyze the trade-offs of four distinct paths forward. The assumptions imbedded
in the models have a tremendous impact on the results. For example, Virginia
assumed a moderate annual growth rate which is lower than the PJM forecast. In
truth, the actual growth rate will simply be how much of the forecast load
growth from data centers gets connected.
In addition, a key factor in determining what scenario costs
the least to Virginians is the social cost or carbon and the
health impacts from burning fossil fuels. Climate modeling developed over the
past 20 years—such as the EPA framework—relies on an what now appears to be an artificially low 2% long
term discount rate to arrive at the central SCC value of $190 per metric
ton. Right now the risk free 30 year rate is 5.4%. At a 2% discount rate,
$1 million in climate damages 100 years from now is worth roughly $138,000
today. At a 5.4% discount rate, that same $1 million in future damages shrinks
to a present value of just $5,200. So, by using a low discount rate you
make carbon reductions more valuable.
The Core Challenge: Balancing Data Centers & The Grid
- Rapid Demand Growth: Virginia is facing its fastest load growth in over 80 years. Data center electricity usage now accounts for roughly one-third of the state's total energy consumption.
- The "Cost-of-Service" Shift: The plan addresses rising retail utility bills by targeting infrastructure cost attribution. It explicitly mandates that large electricity users must pay for the specific transmission and infrastructure upgrades required to support their growth, protecting residential ratepayers from subsidizing industrial buildouts.
- The Virginia Clean Economy Act (VCEA): The VCEA mandates that the Commonwealth's major electric utilities transition to 100% renewable energy by 2045 or 2050 through a combination of solar, onshore and offshore wind, energy storage, and efficiency improvements.
The VEP focuses primarily on Virginia’s electricity system
and the path to a carbon free electric power under the Virginia Clean
Economy Act (VCEA), with some additional consideration of transportation energy
use and costs. Currently, Virginia’s largest energy use is electricity
generation to power homes, businesses, and industry, with petroleum for
transportation the second largest use. In 2024, Virginia’s electricity supply
was primarily from natural gas, nuclear power, and electricity imports, with
solar and offshore wind playing a growing role
Virginia has always imported a significant share of the
electricity it uses annually. Since 2020, imports have grown to meet rising
electricity demand primarily of data centers while retiring coal capacity. Virginia
imports about 30-40% of its annual electricity use—the highest percentage in
the nation—making regional transmission capacity and PJM Interconnection (PJM)
market conditions important factors in the Commonwealth’s reliability and
electricity costs.
High-voltage transmission infrastructure serves as the bulk
delivery backbone of the Commonwealth’s electric grid, moving power from
large-scale generation facilities to local distribution networks. Virginia’s
transmission system is primarily comprised of 500 kV lines that move
electricity across Virginia, anchored by interstate connections in Northern
Virginia to PJM and in Western Virginia by two 765-kV lines operated by APCo
that connect to AEP’s regional multi-state network.
In recent years, however, rapid load growth in Northern
Virginia combined with permitting and construction delays on major regional
transmission projects has significantly constrained interstate import capacity.
PJM’s latest reliability modeling indicates that Virginia’s import demand will
exceed its physical transmission capacity by 2028.
Which brings us to transmission. The modeled pathway costs
explicitly exclude full transmission and distribution infrastructure costs-
which are socialized to all customers. The 2026 VEP calculates only new generation capacity,
energy storage, fuel, and the rest of the supply hardware. These baseline
numbers omit critical cost components of distribution. The VEP estimated costs exclude the transmission and localized distribution
infrastructure investments. They also exclude federal tax credits or the
guaranteed utility return on equity (ROE) that utilities add on top of
infrastructure investments.
Each pathway evaluates a different supply mix to achieve
net-zero power sector emissions.
|
Pathway |
Core Strategy |
Key Mechanics & Impacts |
|
Current Policies |
Baseline Compliance |
Adheres strictly to the Virginia
Clean Economy Act (VCEA) targets and state participation in the Regional
Greenhouse Gas Initiative (RGGI). |
|
Distributed Flexibility |
Demand Management & Small-Scale Gen |
Administration's Preferred Approach. Targets 10 GW
of distributed energy (e.g., rooftop solar, batteries) by 2045 and mandates a
10% demand flexibility threshold for data centers. Cuts total system costs
by roughly 10% ($37 billion) through 2050 by shaving peak demand. |
|
Distributed Flexibility + In-State Priority |
Localization |
Reduces reliance on out-of-state power imports by half,
limits utility-scale solar land footprint, and aggressively replaces it with
in-state advanced nuclear and offshore wind. |
|
Distributed Flexibility + No New Gas |
Accelerated Elimination |
Completely prohibits new gas generation infrastructure.
Relies entirely on immediate clean firm resources and intensive battery
storage. |
Key Strategies
& Structural Reforms
Utility Procurement &
Regulatory Reform: Proposes moving away from traditional cost-of-service
regulations that reward monopolies (like Dominion Energy) purely for capital
spending. Instead, it recommends performance-based utility incentives
tied directly to cost-effective ratepayer outcomes.
Clean-First Deployments:
Prioritizes dual-use land strategies, including rooftop solar, parking
canopies, brownfield redevelopments, and agrivoltaics to minimize the rural
land footprint.
Non-Combustion Bridges: To
maintain reliability during severe peak grid strain, the plan permits up to 5
GW of shorter-lived, low-emission, non-combustion natural gas resources (such
as linear generators or fuel cells) as a bridge, avoiding multi-billion dollar
commitments to long-lived fossil fuel infrastructure.
Political and Legislative Friction
The plan faces immediate pushback as the administration
prepares legislative proposals for the upcoming General Assembly session.
Legislative critics argue that the plan relies too heavily on solar
infrastructure, depends on "social costs" rather than hard utility
bill metrics to calculate affordability, and fails to adequately insulate
everyday ratepayers from grid upgrade expenses driven by tech companies.
To make any of the plan’s four pathways achievable, Virginia
and PJM must build generation at an unprecedented, historic pace. However, the
physical process of connecting new power to the grid is structurally broken. PJM’s
"interconnection queue" (the waiting list for new power projects to
get approved to plug into the grid) is severely backlogged. It currently takes
an average of 5 years for a solar or battery project to move from proposal to
operation. In addition, there is an equipment problem. There is a severe global
shortage of high-voltage transformers, circuit breakers, and specialized labor.
Lead times for critical grid transformers are currently 3 to 4 years, making
the rapid scale-up required by the "Distributed Flexibility" pathway
nearly impossible to execute.
The Solar Surge: Historically, Virginia has deployed roughly
0.6 GW of utility-scale and distributed solar per year. To meet the preferred
path, that pace must jump immediately to 2.5 GW per year—a 4.1x acceleration.
Other assumptions that challenge reality:
- Battery storage requires an even steeper logistical steepening. Moving from a negligible historical baseline (~0.05 GW/year) to the target required pace of 0.50 GW per year demands a massive 10x acceleration factor.
- Meeting these specific buildout targets under current supply chain constraints remains the plan's highest risk hurdle.
- Even distributed resources like commercial solar require massive local zoning battles. In Virginia, local county boards are increasingly passing strict setback rules and moratoria on new solar and battery storage facilities due to rural land preservation concerns.
- The plan relies on up to 5 GW of advanced non-combustion gas (like hydrogen or fuel cells) to act as a bridge. However, these technologies are not yet manufactured or deployed at the commercial utility scale. This is counting on energy technology that is yet to be developed commercially.
- SMRs are required in all the plans, but are still entirely in the planning and licensing phases in the United States. Commercial deployment is not expected until the mid-to-late 2030s at the absolute earliest. Relying on up to 17 unbuilt, unpermitted reactors to balance the grid is not realistic.
The biggest assumption is that Virginia can reliably import 30% of its annual electricity consumption from its neighbors while simultaneously choking off its own fossil-fuel generation.
Virginia does not import electricity in a vacuum; it imports
it through PJM Interconnection, the regional grid network that spans 13
states. The 2026 Energy Plan treats PJM as an infinite, clean power supply but
PJM’s own data shows the pool is drying up:
- While Virginia is electrifying and building data centers, neighboring states like Ohio, Illinois, and Pennsylvania are experiencing their own data center booms and factory electrifications.
- PJM has repeatedly warned that fossil-fuel plants are retiring faster than new clean generation can get permitted and built. PJM projects that by 2030, the region could face a reliable capacity shortfall of up to 10 GW during peak weather events.
- When neighboring states face their own supply crunches, they will restrict exports to keep their own lights on. Virginia cannot import power that does not exist.
PJM and Dominion Energy are treating it as exactly that: a theoretical paper. In the real world, they are executing a pragmatic, "all-of-the-above" strategy that relies on physical steel in the ground, conventional natural gas, large-scale transmission lines, and strict data center mandates to ensure that when a citizen or a tech company flips a switch, the power actually comes on.






