Data centers have become a central part of Virginia’s economy, significantly contributing to employment, GDP, and local revenue. Governor Glenn Youngkin emphasized the industry’s importance in his State of the Commonwealth address, highlighting that data centers support 74,000 jobs, contribute $9.1 billion to Virginia’s GDP, and generate billions in local revenue. Youngkin advocates for Virginia to maintain its status as the “data center capital of the world,” while ensuring state support for the industry. Nonetheless, the rapid growth of this sector has raised concerns that need legislative attention.
Despite the economic benefits, bipartisan lawmakers have stressed the necessity for oversight to manage the industry’s growth responsibly. This bipartisan coalition presented a series of bills designed to address the unchecked expansion of data centers, focusing on various concerns highlighted in a Joint Legislative Audit and Review Commission (JLARC) report. The Virginia government is now examining ways to balance the economic advantages of data centers with their environmental responsibilities and impact on society and other utility customers.
Energy Consumption and Cost Distribution
House Bill 2101 and Senate Bill 960 direct the State Corporation Commission (SCC) to investigate if non-data center customers are subsidizing data center energy costs. If such subsidies are found, the SCC would establish new rules by January 1, 2026, to address this imbalance. Senator Russet Perry and Delegate Michael Webert highlight the strain on the energy system and the potential for residential energy bills to rise significantly due to the infrastructure expansions needed to support data centers. The proposed legislation aims to ensure that data centers, as significant energy consumers, bear an appropriate share of the costs associated with their energy use.
The proposed approach seeks to prevent unfair cost distribution among utility customers and mitigate the financial burden on residential and non-data center commercial customers. Additionally, the bill emphasizes the importance of maintaining a dynamic energy policy that can adapt to the changing demands of Virginia’s energy landscape. Lawmakers argue that targeted legislation is essential in fostering equitable energy practices, ideally positioning the state as a leader in sustainable and fair energy consumption. Their goal is to foster continued growth in the data center industry while ensuring that such growth does not disproportionately burden other consumers.
Environmental Monitoring and Reporting
House Bill 2035, sponsored by Delegate Shelly Simonds and former Delegate Kannan Srinivasan, mandates that data centers report their water and energy use quarterly to the Department of Environmental Quality (DEQ) starting in May 2026. The DEQ would then create a public website to share this information statewide. This bill aims to increase transparency and address public concerns about the environmental impact of data centers. By requiring regular reporting and public disclosure, the legislation seeks to hold data centers accountable for their environmental footprint.
This measure is intended to foster greater community awareness and engagement regarding the environmental practices of data centers operating within Virginia. Publicizing data on water and energy usage ensures that data centers operate with a higher degree of ecological responsibility. Furthermore, the requirement for data centers to report their environmental metrics facilitates improved monitoring and regulation by state agencies. Ultimately, this bill underscores a commitment to environmental stewardship and transparency, championing the well-being of local ecosystems and communities affected by data center operations.
Site Assessments and Operational Approvals
Delegate Josh Thomas introduced two key bills: HB 1601 and HB 2027. HB 1601 requires site assessments for new data centers, mandating localities to review noise impacts, effects on water, farmland, parks, historic sites, or forests before approving new facilities. This bill aims to ensure that the placement and operation of data centers do not adversely affect local communities and environments. By considering the holistic impact of data centers on the surrounding areas, the legislation promotes careful planning and mitigation measures to preserve the integrity of these locales.
HB 2027 would require high-energy facilities with electricity demands over 25 megawatts to secure a certificate of operation from the SCC if they are not operational by July 1, 2026. The SCC would approve facilities based on criteria such as minimal impact on utility rates and reliability, alignment with clean energy policies, and public interest standards. This measure intends to prevent energy crises like rolling blackouts by ensuring careful consideration of the grid capacity and utility customer burden. These bills highlight the importance of responsible site selection and operational oversight in minimizing the adverse effects of data centers.
Clean Energy and Efficiency Standards
Delegate Rip Sullivan introduced HB 2578, which ties Virginia’s sales and use tax exemption for data centers to stricter clean energy and efficiency standards. By 2030, data centers would need to source part of their power from renewable energy and invest in energy efficiency. The bill also requires that backup generators meet stricter emissions standards by 2027, addressing environmental concerns such as pollution and odors from diesel generators. This forward-looking approach aims to reduce the environmental impact of data centers and promote the adoption of cleaner, more sustainable energy practices within the industry.
The legislation directs state agencies to study alternatives to diesel power and explore reusing waste heat from data centers, with findings due by late 2025. By compelling data centers to meet higher clean energy and efficiency criteria, policymakers aim to mitigate the industry’s environmental footprint and encourage technological innovation. This strategy reflects a broader commitment to sustainability and energy transition, steering the industry towards greener practices. Furthermore, it insists on aligned state efforts to explore cutting-edge alternatives that could eventually become mainstream solutions for data center power management.
Balancing Economic Benefits and Environmental Responsibility
Data centers have become integral to Virginia’s economy, greatly boosting employment, GDP, and local revenues. Governor Glenn Youngkin, in his State of the Commonwealth address, underscored the industry’s significance, noting that data centers provide 74,000 jobs, add $9.1 billion to the state’s GDP, and yield billions in local revenue. Youngkin advocates for Virginia to remain the “data center capital of the world” while ensuring continued state support. However, the fast expansion of this sector has sparked concerns that demand legislative scrutiny.
Despite the economic advantages, lawmakers from both parties stress the need for oversight to manage the industry’s growth responsibly. This bipartisan coalition has introduced a series of bills aimed at addressing the unregulated expansion of data centers, focusing on various issues raised in a Joint Legislative Audit and Review Commission (JLARC) report. The Virginia government is now looking for ways to balance the economic benefits of data centers with their environmental impact and effects on society and utility consumers.