A data center in Ashburn, Virginia. Photo by Hugh Kenny, Piedmont Environmental Council.
Virginia Senate leaders did something remarkably courageous this week in writing a budget that ends the sales tax exemption for data centers. As Majority Leader Scott Surovell, D-Fairfax, pointed out, the exemption was projected to cost the state about $1.54 million when it was passed in 2008. In 2025, it cost Virginia $1.6 billion.
And that amount will escalate as the industry continues its explosive growth across Virginia. Dominion Energy told the State Corporation Commission recently that data centers have requested 70,000 megawatts of power, almost triple the utility’s current peak load. Dominion isn’t alone; Northern Virginia Electric Cooperative (NOVEC) expects its peak load to grow from 1,400 megawatts to more than 5,000 megawatts between 2025 and 2030, with more than 60 new data center buildings coming online. By 2040, NOVEC expects data center demand to reach 13,000 megawatts.
The Data Center Coalition, which represents the tech industry, warns that not all of this growth will materialize if Virginia yanks away its sales tax exemption. Instead of building here, the industry will take its business to other states.
To which Virginia residents can only respond, in unison, “Is that a threat, or a promise?”
Local communities would love to see the industry pull up stakes and move elsewhere, but the question our elected leaders are asking is whether that would actually happen. Is the industry so dependent on the sales tax exemption that the 70,000 megawatts of requested demand cited by Dominion would evaporate in its absence?
Or, as seems more likely, would the industry continue to grow here because it has nowhere else to go? Other states are reporting the same explosion in data center growth, and the same challenges in finding enough land, power and water to serve the escalating demand. In which case, Virginia threw $1.6 billion at some of America’s richest corporations last year for no reason, and it should stop the gravy train right now.
There is a tendency among government leaders to see taxes it chooses to forego as different from government spending, but economists understand that they are economically equivalent. Lost tax revenue has the same impact on a budget as spending does. That $1.6 billion is a real number, representing income Virginia could have used for spending priorities, or (as the Senate budget proposes) to issue refunds to residents.
There is also a question of fairness. The sales tax that the tech industry is excused from paying is the same state sales tax that you and I pay: 5.3%. They buy IT hardware and equipment, while you and I buy life’s necessities. If we didn’t have to pay sales taxes either, we would have more money to put back into the economy, supporting other people’s businesses and jobs.
This looks a lot like the argument that the data center industry makes for why it should continue to be excused from paying taxes that all other businesses and residents pay. Why them and not us? Yet the state requires tax revenues to fund the services it provides. If we all agree that data centers should pay their fair share, that means paying the same taxes we do.
Certainly, yanking the tax exemption away so abruptly upsets expectations — and not just for the industry. As I wrote last week, the House and Senate had already taken diverging approaches to managing data center growth. The Senate passed a bill, SB 619, requiring data centers over 90 megawatts to get permission from the SCC before they can operate. The permission would be contingent on a number of factors designed to protect both other ratepayers and Virginia’s ability to stay on course with the transition to zero-carbon energy.
The House killed a companion to the Senate bill, but it did pass other legislation, HB 897, conditioning the tax exemptions on data centers achieving high energy efficiency, using increasing amounts of zero-carbon energy, and limiting their use of diesel backup generators. For that approach to have teeth, there needs to be a tax exemption.
Other data center legislation is on track to pass, but together these bills offered the strongest guardrails. If the final budget zeroes out the tax exemption without SB 619 passing the House, the General Assembly will be left with neither stick nor carrot to improve the operations of an industry that, with or without subsidies, will almost certainly continue to grow.
That makes it critical for House and Senate budget conferees to look beyond the money. If they agree to phase out the tax exemption, they should make sure SB 619 makes it through the House and to the governor’s desk (something the House should do anyway, since the bill provides critical grid reliability safeguards).
If, however, the conferees settle on some sort of partial exemption, they should condition it on data centers meeting the requirements of HB 897.
Either way, the days of free money for America’s richest corporations should be over.
This column was originally published in the Virginia Mercury on February 25, 2026.
Delegate Rip Sullivan and Senator Lamont Bagby address activists at a lobby day held by Sierra Club and Chesapeake Climate Action Network on February 17. Photo credit Dave Parrish Photographphy.
Wednesday marked crossover at the General Assembly, the day on which bills that have passed the House move to the Senate, and vice-versa. Any legislation that didn’t clear its chamber by now is dead for the year.
That should mean that by this point we can predict which major policy initiatives are likely to become law. That looks to be true of the energy bills I wrote about last week, where the House and Senate are pretty well aligned. With data center legislation, though, the situation remains more fluid.
Legislators put in scores of bills addressing various problems the data center boom has brought for communities, water supplies, the electricity grid and consumers, and even the hard-core, pro-development leadership agrees on the need for fixes. They just don’t agree on what those are.
In recent days, House and Senate leaders have coalesced around a limited number of preferred solutions. The catch is, the House solutions are mostly different from the Senate solutions. The second half of the session could be lively.
One thing House and Senate leaders from both parties agree on is that they want the data center boom to continue, and they aren’t taking guff on this point from the rank-and-file, not to mention angry community members. New delegates, elected on promises to rein in Big Tech, are learning how little their campaign promises matter when the subcommittee hearing their bill has received instructions from leadership to send it to a quick death.
That said, leaders also agree on some other points. One is so obvious that you wouldn’t think it would need stating, much less legislating: If all the tweaks the General Assembly makes to the supply side of the equation don’t result in enough new power availability fast enough, the data centers must wait to connect.
Utilities, however, have raised the concern that their “duty to serve” all comers may tie their hands. As a result, last fall the Commission on Electric Utility Regulation (CEUR) crafted legislation that was introduced this year as HB 1151, from Del. Rodney Willett, D-Henrico, and SB 423, from Sen. Russet Perry, D-Loudoun. The legislation allows a utility to delay service to a customer whose demand exceeds 90 MW if needed for system reliability or to avoid exceeding existing generation or transmission capability.
Remarkably, the House bill (but not the Senate bill) has a delayed effective date of July 1, 2027, indicating that House leaders are reluctant to slow the data center buildout even to protect the reliability of the electricity supply. The leadership split is even more evident in the treatment of a stronger version of the CEUR legislation, discussed in the energy section below, that would require sign-off from the State Corporation Commission before a data center of over 90 MW can connect. While the Senate bill has passed, the House bill was killed in committee.
Another point of divergence within the legislature is on what to do about Virginia’s tax exemption for data centers, now approaching $2 billion per year. On his way out the door, Gov. Glenn Youngkin left a budget with a provision (Item 4-14 #18) extending the data center tax incentive from 2035 to 2050 with no strings attached.
Conversely, Sen. Danica Roem, D-Manassas, submitted a budget amendment canceling the incentive altogether. Roem’s approach might be the more fiscally prudent, but there’s no indication it has support of General Assembly leaders or Gov. Abigail Spanberger.
Occupying the middle ground is legislation that extracts concessions from companies that take advantage of the subsidy, as well as measures addressing the collateral effects on residents and the environment levied by so many data centers using so many resources. These will all be improvements – if they survive the coming weeks.
You will notice that many of the bills discussed below apply only to the largest data centers, “hyperacalers” that draw as much power as a city. Data centers of this size were virtually unknown a decade ago, when 30 MW was considered large. The data centers in Northern Virginia that first worried planners with their energy demand — and angered community members with their noise and pollution — averaged about 20 MW. Today, data center proposals of 1,000 MW or more are not unheard of. Tech companies are planning as if the world had unlimited resources to serve them, while the rest of us live in a world of natural resource constraints. If Speaker Don Scott and other House leaders remain resistant to controls on the spread of these grid-deforming behemoths, Virginia will face increasing crises of power availability and reliability, water shortages and escalating utility rates. Is that really what they want?
The energy problem
Using the tax exemption as leverage is the idea behind HB 897 from Del. Rip Sullivan, D-Fairfax, and SB 465 from Sen. Creigh Deeds, D-Charlottesville. Both bills condition the tax exemption on data centers achieving high energy efficiency standards, purchasing carbon-free energy, and decreasing the use of their highly-polluting diesel backup generators. Both legislators have put in similar bills for three years in a row, and last year Deeds even tried to use the budget process to get the provisions into law.
Sullivan has been working his bill hard, making concessions where he feels he needs to in hopes of getting the legislation across the line. In the form that passed the House, data centers that want the tax exemption would have to meet one of several options to demonstrate a high measure of energy efficiency.
In addition, they would have to use zero-carbon electricity for a percentage of their demand, reflecting Virginia’s renewable portfolio standard (RPS) but accelerated by 10 years. That means data centers in Dominion territory would have to reach 100% zero carbon energy by 2035; for those in Appalachian Power territory, that date would be 2040. Data centers located in the territory of a rural electric cooperative, where the RPS doesn’t apply, would have to meet the RPS requirements of Appalachian Power, again accelerated by 10 years.
Thirdly, data centers would not be allowed to use co-located fossil fuel generation (like onsite gas plants) other than for backup, and would have to shift away from using the highly polluting “Tier II” diesel generators that are the current industry standard. The requirements for this shift differ for existing and new data centers, but no backup generators could be used for non-emergency purposes.
A final addition to the bill requires utilities to petition the SCC for approval of a program enabling large energy customers to participate in “demand response or other voluntary programs” using the customer’s on-site solar, wind, energy storage, or zero-carbon electricity generating resources. Such a program would compensate the data center for investments in clean energy while helping the utility meet demand.
Encouraging as these provisions are, Sullivan told me that even though his bill has passed the House, negotiations on its final language will continue as it makes its way through the Senate.
Meanwhile, over in the Senate, Deeds’ bill never changed after he introduced it. The legislation provided that data centers that want to enjoy the tax exemption must use 90% renewable energy by 2028, meet high energy efficiency standards based on a single metric (power usage efficiency) and not use diesel fuel for onsite generation after 2031. The bill never got a hearing in committee, however, suggesting that Senate leadership intended its quiet death all along.
Senate leadership was apparently more pleased with SB 619 from Sen. Kannan Srinivasan, D-Loudoun, which requires SCC sign-off before a data center can become operational. Under the bill, the SCC would issue the certificate only if it finds that a high load facility (over 90 MW) will have no material adverse effect on the rates paid by other customers, and won’t affect reliability or the utility’s ability to meet environmental laws and regulations. This last condition can be met by showing that the data center will take measures “reasonably designed to offset its contribution to the utility’s peak demand,” such as using energy storage or zero-carbon energy sources.
From a ratepayer’s point of view, this is the most protective bill still alive at the General Assembly. Yet, while Srinivasan’s bill passed the Senate, a similar House bill was killed in committee, making SB 619’s fate in the House uncertain.
Other bills that apparently have the blessing of leadership in both chambers are HB 284 from Del. Michael Feggans, D-Virginia Beach, and SB 371 from Jeremy McPike, D-Prince William. The legislation directs the SCC and utilities (including the cooperatives) to develop voluntary demand flexibility programs for high energy demand customers to reduce their demand at peak times or other times the grid is strained. They can do it in one of two ways: by reducing demand at peak times themselves, or by securing peak load reductions from other customers (like residents).
Specifically mentioned in the legislation is the kind of program proposed by Electrify America last fall, in which hyperscalers could buy heat pumps, solar panels and batteries for residents as a way to free up capacity on the grid, making room for their data centers and speeding up interconnection timelines.
SB 267 from Sen. Schuyler VanValkenburg, D-Henrico, shares a theme with Feggans’ and McPike’s legislation. It directs the SCC to look for cost-savings within the existing electricity system, including potential voluntary pathways by which large customers could finance alternatives as a condition of interconnection.
HB 323 from Sullivan instructs the Department of Energy to set up a work group to study ways to use the waste heat from data centers.
SB 43 from Roem directs the Department of Energy to conduct a study and make recommendations for cost-effective demand response programs that can reduce consumption during grid emergencies while not increasing air pollution from fossil fuel generators.
SB 554 from Srinivasan allows (not requires) a locality to consider the adverse impacts on the grid of any high-energy user, together with the impacts of the new infrastructure that would be needed.
HB 591 from Del. Shelly Simonds, D-Newport News, is sort of a “best practices” policy statement for data centers, favoring their “responsible operation.” However, the bill imposes no actual requirements.
Finally, one bill addresses one multi-billion-dollar question everyone is asking and no one knows the answer to: Is the data center onslaught really as huge as it appears? HB 892 from Del. Irene Shin, D-Fairfax, directs the SCC to investigate utilities’ load forecasts (as well as compliance with the RPS).
But no one seems to be asking the question that’s top of mind for me: Why is it that with access to all the data and information in the world and the astounding computational power of artificial intelligence, Big Tech can’t solve its own energy (and water) problems?
The diesel generator problem
Pollution from diesel back-up generators at data centers is an emerging air quality threat in Northern Virginia. As I wrote a few weeks ago, researchers from Virginia Commonwealth University found that diesel pollution from Northern Virginia data centers is already impacting surrounding neighborhoods. Their report, now final, also warns that the total emissions allowed by data center permits in the region is a far greater threat.
Two more things happened this winter. First, after earning blistering criticism from residents for allowing data centers to run their dirty “Tier II” emergency generators in non-emergency situations, Virginia’s Department of Environmental Quality (DEQ) quietly moved to require cleaner generators for all uses, as a Dec. 29 memo shows.
While that is good news, DEQ does not propose to restrict those cleaner “Tier IV” generators to emergency use. The risk is growing that data centers might run diesel generators for long periods to support the grid, causing air quality problems.
In fact, exactly that possibility arose in late January, when grid operator PJM received authorization from the U.S. Department of Energy to order Northern Virginia data centers to run their emergency generators in support of the grid over a few days of extreme cold.
That makes DEQ’s move to require Tier IV-equivalent generators seem both prescient and insufficient.
Of the House bills still alive, the strongest language on diesel generators is in Sullivan’s HB 897, discussed above. Since that bill only affects data centers that wish to take Virginia’s tax exemption, it is in a sense voluntary, though it’s hard to imagine a data center foregoing so much free money. The bill is also prospective, with a time lag and a phased-in approach.
As Virginia Mercury reporter Shannon Hecht wrote this week, other bills addressing generators have not fared well.
HB507 from Del. John McAuliff, D-Fauquier, started out as an aggressive bill to reduce the use of diesel generators by prohibiting them from being used for non-emergency purposes, requiring the ones that are used to be Tier IV or the equivalent, and making data centers use energy storage as their primary backup power source. The bill also called for air monitoring. Strong-arming from the House leadership has led to a substitute that does nothing more than codify DEQ’s new guidance requiring new generators to achieve Tier IV controls.
HB 1502, from Del. Elizabeth Guzman, D-Prince William, directs DEQ to perform a statewide study of pollution from standby generators used by any kind of commercial facility, identifying the type and amounts of pollutants. It also started out as a stronger bill, but a study seems to be as far as House leadership is willing to go to address air pollution concerns.
Only one surviving Senate bill addresses diesel generators, and it is remarkably weak. Roem’s SB 336 began as a bill to reverse DEQ guidance expanding the definition of an “emergency” for the purpose of allowing a data center to use its uncontrolled Tier II diesel backup generators.
Now the bill has morphed into a directive to the SCC to merely evaluate the impact of requiring data centers to limit the use of Tier II generators and of requiring that they replace 20% of their Tier II generators each year to bring them up to Tier IV standards. The SCC will also look at what other states are doing, and how diesel generators are regulated for other users within Virginia.
The water problem
HB 496 from Guzman originally required data center operators to submit expected water use estimates to localities for both special exception and by-right permits, including average daily use, maximum daily use, and total maximum annual use. The applicant would not be allowed to use nondisclosure or confidentiality agreements to keep the information secret.
It was first killed in committee, but then brought back from the dead and amended with language drafted by data center lobbyists. In its latest iteration, it allows localities, as part of a zoning ordinance (thus excluding by-right development), to require data centers to submit annual (but not daily) water consumption estimates, and to consider water consumption from public resources in its rezoning and special use permit decisions. The information would be publicly accessible in the applications.
In the Senate, Srinivasan’s SB 553 requires water providers to report on water volumes provided to data centers they serve.
The cost-shift problem
SB 253, from Sen. Louise Lucas, D- Portsmouth, started out as an initiative to increase the amount of funds Dominion and APCo must spend on low-income energy assistance and weatherization. Along the way it has become a vehicle for a plan to make data centers pay more of the energy and distribution costs Dominion incurs.
However, Lucas also includes a giveaway to Dominion for its program putting lines underground, which will increase residential bills over the next 20 years. Lucas has added the name Fair and Affordable Electric Rates and Reliability Act to her bill, and says it will save the average resident $5.50 per month.
Sadly, even if Lucas’s bill passes the House, the average resident is not likely to notice this savings among the rate increases Dominion has secured in the past year. In addition to charging ratepayers for undergrounding lines, the SCC recently granted Dominion’s request to raise rates and collect more in profit. On top of that, the soaring cost of fossil gas led the SCC to approve a higher “fuel factor” for Dominion customers, calculated to cost the average resident almost $9 per month.
Still, the fact that the data centers opposed Lucas’ bill in committee indicates that the industry’s perfect record for extracting subsidies from Virginia taxpayers and ratepayers year after year may have suffered a tiny injury, perhaps even on the order of a pinkie sprain. But the session isn’t over yet.
A different cost allocation bill also made its way through the Senate. Perry’s SB 339 requires the SCC to initiate proceedings to determine whether non-data center customers of Dominion and APCo are subsidizing data center customers under the current cost allocation for transmission, distribution and generation projects. The SCC is empowered to change the cost allocation formula as it deems appropriate. However, the companion House bill from Del. Michelle Maldondo, D-Manassas, was tabled (killed) in a subcommittee, making the prospects for Perry’s bill uncertain in the House.
The House also killed a blunter instrument from McAuliff (HB 503), which prohibited a utility from recovering costs for serving data centers over 100 MW except from data centers.
The transmission problem
Local governments issue permits for data centers to be built, but it’s the utility that has to build distribution lines and substations to connect data centers to the grid. Enough data centers drawing enough power can even trigger the need for new interstate high-voltage transmission lines such as one Dominion Energy plans to build to bring more power from the Ohio River valley to Northern Virginia data centers.
Yet residents don’t want transmission lines running through their neighborhoods or parks, and they don’t want to pay for lines that are needed only for data centers.
Under Virginia law, residents have little choice in either matter. Utilities can use eminent domain to seize land from unwilling sellers for new lines, and current cost allocation rules make residents shoulder more than 50% of the cost of Dominion’s transmission projects.
The Perry and Lucas bills discussed above address the cost allocation problem for transmission as well as generation. But having decided to encourage an unlimited number of new data centers into the state, legislators can’t very well stop new transmission lines. (And, I feel compelled to add, Dominion’s choice to build massive interstate transmission lines carrying fossil-fuel power is the natural result of Virginia counties rejecting solar projects that would have been located near existing distribution lines.)
A couple of House bills do try to limit the pain. HB 889 from Shin establishes an order of preference for transmission line siting, with existing utility corridors in first place, then highway corridors, and new corridors last.
HB 1491 from J.J. Singh, D-Loudoun, directs the SCC not to approve a new transmission line if it would be close to residences or schools unless no other feasible alternative exists, or if it would conflict with open space and environmental protection.
SB 827 from Srinivasan and HB 1487 from Singh is narrowly targeted but interesting as a possible model for putting lines underground. Burying wires is much more expensive than stringing them on poles, but it is also more popular with communities. The legislation authorizes the SCC to approve up to four applications for undergrounding of high-voltage lines, if the local government foots the bill for half the added cost.
Of the four projects, one is specified in the bill with a description that fits the 8.3 mile Golden-Mars transmission project serving data centers in Loudoun County.
The there-goes-the-neighborhood problem
Only one initiative addresses the constant, loud hum from data centers’ air conditioning systems that drives the neighbors batty.
HB153 from Del. Josh Thomas, D-Prince William, calls for a locality to require a high energy use facility (HEUF, defined as 100 MW or more) to perform a site assessment examining its sound profile as part of any rezoning, special exception or special use permit.
The locality may (not must) also require the site assessment to include the HEUF’s effect on other resources at the site or contiguous to it, including ground and surface water, forest and parks. The locality must also get from the electric utility a form describing substations and transmission required to serve the facility.
However, none of these requirements apply to an already-approved data center that seeks to expand its operations by less than an additional 100 MW, meaning an existing small facility could be turned into an enormous one without the additional review.
In the Senate, a companion bill was rolled into Roem’s SB 94, which was a very different bill until, late in the process, it was amended to look like HB 153 – with one difference. Roem’s bill adds a provision that beginning July 1, 2027, if a locality has adopted a zoning ordinance, data centers can only be placed on land zoned industrial unless the land is part of a larger development and will share the energy connection of the adjacent parcel.
This legislation won’t satisfy community members who today feel under siege from the onslaught of data center development. But as General Assembly leaders are making clear, the onslaught will continue.
A version of this article was originally published on February 20, 2026 in the Virginia Mercury.
Update, February 23: Clearly I’m a lousy prognosticator. After dismissing the possibility of the General Assembly rolling back the tax exemption for data centers, I now have to report that the budget the Senate adopted proposes to do just that, ending the exemption in 2027. The House budget does no such thing, however, so get your popcorn ready to watch the action. Sullivan’s HB897, which relies on the tax exemption as the carrot to achieve its goals, may now be in jeopardy in the Senate. If the House prevails in keeping the exemption intact, it could achieve Sullivan’s purpose by putting the conditions into the budget. Or it could do something else entirely. . .
Two themes have emerged in the first half of the General Assembly session this year. First, legislators have no intention of stopping the data center boom, even temporarily. And second, their preference for dealing with the skyrocketing energy demand is to piece together a lot of small and medium-sized initiatives in hopes they all add up to enough to meet the moment. If it doesn’t work, that’s a problem for next year.
I’ll write about data center legislation in my next column; for now, let’s look at some of the bills that are aimed at increasing the ability of Virginia utilities to serve the data centers – and incidentally, the rest of us.
Everybody seems to have ideas for how Virginia can generate more energy, use it better, or make the grid (and our utilities) operate more efficiently. Many of these ideas aren’t new, but the pressure of rising electricity rates means the stakes are higher than ever, and bills are often advancing with bipartisan support.
Notice how many different legislators are named as the sponsors of these bills. This is not just the usual in-crowd of energy wonks crafting measures. This year, everyone has ideas, and a remarkable number of these ideas are getting traction.
Making the most of the wires you’ve got
The first priority is to maximize use of the existing grid, allowing it to handle more power without building new transmission.
Bills addressing the grid take many forms, including targeting new generation for places on the grid where there is spare room already, using demand-response programs to shift demand from peak hours to off-peak, improving energy efficiency and tapping into distributed resources at homes and businesses to supplement what utilities can do.
House Bill 114 from Del. Lee Ware, R-Powhatan, and Senate Bill 267 from Sen. Schuyler VanValkenburg, D-Henrico, task the SCC with studying alternatives to new generation. Possibilities to be studied include “capacity uprates for zero-carbon electric generating resources and energy storage resources and transmission upgrades including grid enhancing technologies and high-performance conductors.”
Intriguingly, the legislation also directs the SCC to analyze pathways for large load customers to voluntarily finance the grid upgrades “as a condition of accelerated interconnection.” Ware’s bill has already passed the House unanimously and is now in Senate Commerce and Labor, which is expected to hear the identical Senate version this week.
Similarly, HB 434 from Del. Destiny LeVere Bolling, D-Henrico, requires the SCC to set a “grid utilization standard” for Dominion Energy and Appalachian Power Company, which the utilities are then required to meet. The bill passed the House unanimously. SB 621 from Sen. Kannan Srinivasan, D-Loudoun, is similar.
Last year the General Assembly passed legislation establishing a pilot program for a “virtual power plant” (VPP), a way to aggregate distributed generation and storage resources to help utilities shift some electricity demand away from peak times. VPPS have emerged as a way to tap into customer-sited resources for the benefit of the grid without the utility having to invest in a similar amount of generation – or the transmission to go with it.
Last year’s program was only for Dominion. This year bills expanding programs to APCo and interested electric cooperatives appear likely to pass both chambers without problems.
HB 1065, introduced by Del. Phil Hernandez, D-Norfolk, known as the FAST Act, directs Dominion Energy and Appalachian Power to examine the points on the grid where solar facilities are interconnected in order to figure out where there is room to add more capacity.
The idea is that the utilities ought to be able to add solar generation and storage where there is this surplus interconnection capacity instead of having to make new investments in grid capacity. The legislation then requires the utilities to issue requests for proposals for appropriate projects, under the supervision of an independent auditor.
HB 1065 has passed out of the Labor and Commerce committee. Its Senate companion, SB 508 from VanValkenburg, will be heard in Senate Commerce and Labor this week.
Energy efficiency programs remain one of the best tools for lowering energy consumption, freeing up room on the grid for new customers. Most legislation this year is aimed at serving low-income residents.
These include HB 2 from Mark Sickles, D-Fairfax, which has already passed the House, and its companion, SB 72 from Srinivasan. The bills require Dominion and APCo to increase their efforts to serve qualifying households. HB 1393 from Bolling and SB 327 from VanValkenburg require these utilities to develop a program for spending on energy upgrades.
Other bills in the House and Senate establish a task force designed to remove barriers for low-income residents to access energy efficiency and weatherization programs.
And lest we not forget, low-income energy efficiency programs receive 50% of the auction proceeds from participation in the Regional Greenhouse Gas Initiative.
When Gov. Glenn Youngkin yanked Virginia out of RGGI, hundreds of millions of dollars for these programs were lost. HB 397 from Del. Charniele Herring, D-Alexandria, and SB 802 from Sen. Mamie Locke, D-Hampton, reiterate the requirement that the state participate in RGGI. Herring’s bill has passed the House, and Locke’s bill is set to pass the Senate this week.
Outside the Capitol, Attorney General Jay Jones recently announced hestopped the state’s appeal of a court ruling that found former Gov. Glenn Youngkin unlawfully removed Virginia from RGGI.
Everything’s better with storage
Batteries and other forms of energy storage have emerged as a panacea of sorts for correcting the mismatch of generation and demand at various times of the day. Too much nuclear at night when no one needs that much power? Store it. Too much solar during the day? Okay, for now that’s a trick question. Solar still makes up less than 10% of our electricity. But you get the point.
That’s why one of this year’s most consequential pieces of legislation is HB 895 from Del. Rip Sullivan, D-Fairfax, and SB 448 from Sen. Lamont Bagby, D-Henrico. The bill hugely expands the VCEA’s targets for utility investments in energy storage, and includes new provisions for long-term storage of more than 10 hours in duration. Sullivan’s bill has gone to House Appropriations after passing out of Labor and Commerce, while Bagby’s has been referred from Commerce and Labor to the Finance committee.
A related bill from Sullivan, HB893, requires Dominion to assess the use of its energy storage resources through a power flow model. I would explain that if I understood it. The bill has reached the House floor.
A little energy here, a little there, and next thing you know you’ve got megawatts
Six years ago, a bill known as Solar Freedom caught on for its promise of removing barriers that were holding back rooftop solar. Most of its provisions became part of the Virginia Clean Economy Act. Loosening restrictions on customer investments in distributed generation led to significant increases in small solar facilities at homes and businesses as well as on public buildings, particularly schools.
This year, the loss of federal tax incentives for solar, coupled with a sense of urgency to add every possible kilowatt to a grid under strain, has prompted legislators to look for more ways, large and small, to unlock private investment in solar and storage.
Solar Freedom was successful in eliminating the dreaded “standby” charges assessed by Appalachian Power, while limiting Dominion’s ability to collect them for residential systems over 15 kW. This year, HB 1255 from Del. Irene Shin, D-Fairfax, aims to raise that to 20 kW. The bill has passed House Labor and Commerce and moves to the House floor.
Solar Freedom and the VCEA also made it easier for commercial and government customers to finance solar acquisition through power purchase agreements (PPAs); however, residents have not been allowed to use PPAs, with the exception of low-income customers. The prohibition made no sense then, and it is a genuine barrier now that residents can no longer access federal tax credits for solar through direct ownership of the panels.
HB 628 from Del. Katrina Callsen, D-Albermarle, resolves that problem along with increasing the percentage of the state’s renewable portfolio standard that must be met with distributed generation projects of under one megawatt. The legislation passed the House unanimously. Its Senate companion is expected to be heard this week.
Plug-in solar, also known as balcony solar, captured the public’s imagination this fall as a simple, low-cost way for residents to access solar without the hassle of permits and interconnection agreements. Several bills in the House were rolled into one piece of legislation carried by Fairfax Democrat Del. Paul Krizek and Senate Majority Leader Scott Surovell, D-Fairfax. The House version has already passed the chamber unanimously, while the Senate version will be heard in committee this week.
Another idea popular with the public is putting solar canopies over parking lots. HB 1234 from Del. Briana Sewell, D-Prince William, would allow localities to require certain commercial developers to install solar on as much as 50% of a surface parking lot with more than 100 spaces. The bill has been reported from committee and will head now to the House floor. A Senate companion, SB26 from Sen. Jennifer Carroll Foy, D-Prince William, will be heard this week in committee.
HB 590 from Del. Phil Hernandez, D-Norfolk, and SB 382 from Surovell, streamline residential solar permitting in an effort to reduce delays and “soft costs” that drive up the cost of distributed solar.
Finally, Lt. Gov. Ghazala Hashmi is expected to head up a task force to seek further ways to promote distributed solar and generation if a bill from Del. Dan Helmer, D-Fairfax, and VanValkenburg succeeds.
Making it easier to build stuff, big and little
A related group of bills shares the goal of making it easier to get energy and storage projects sited, permitted or over the finish line.
Two bills expand the existing shared solar programs available in Dominion and APCo territories. HB 807 from Sullivan and SB 254 from Surovell expand the Dominion program by an additional 525 MW, with a provision for more after that.
Sullivan and Surovell are also the patrons of House and Senate bills expanding the smaller APCo program by 100 MW in two stages, again with provision for more later. Both of Sullivan’s bills have now passed the House unanimously, while Surovell awaits action in Senate Commerce and Labor.
HB 891 from Del. Irene Shin, D-Fairfax, and SB 443 from Sen. Jeremy McPike, D-Prince William, will make it easier to site battery storage at solar facilities by removing the second round of permitting. The bills have passed both the House and Senate.
As I’ve written before, getting solar projects approved at the local level has increasingly been a challenge in rural parts of Virginia. A bill I especially liked, allowing farmers to install solar by right, failed in subcommittee. However, legislation setting standards for projects and requiring localities to consider them on their merits (in lieu of blanket bans) has already passed both the House and Senate.
A few legislators have proposed grant programs to help customers, and in some cases utilities, pay for solar and storage. All of these face an uphill battle in the money committees; if successful, they will have to fight for a slice of the budget pie.
HB 1089 from Del. Michael Webert, R-Fauquier, and SB 415 from Sen. Mark Peake, R-Lynchburg, increase the subsidy for an existing program incentivizing solar on brownfields and coal mine sites. HB 1133 from Del. David Reid, D-Loudoun, and SB 834 from Sen. Michael Jones, D-Richmond, establish a new grant program for solar and, especially, batteries. (Update: Reid’s bill perished, but Jones’ has reached the Senate floor.)
HB 683 from Herring and SB 659 from Sen. Christie New Craig, R-Chesapeake, create a grant fund to help pay the interconnection costs for solar on schools and other public bodies. Herring’s has passed the House. New Craig’s has reached the Senate floor.
Meanwhile, HB 1444 from Del. Alfonso Lopez, D-Arlington, and SB 225from Surovell create a green bank to provide financing for clean energy projects.
Looking towards the future
Lawmakers are thinking long term about offshore wind energy. Sure, it feels like the industry has stalled out in the face of President Trump’s visceral loathing, but the general feeling is that the hostility will disappear in three years when its source does. Meanwhile, the East Coast is desperate for new energy sources close to load centers that don’t require new transmission lines on land. Offshore wind still fits the bill.
That may be why offshore wind continues to earn bipartisan support in Virginia. HB 67 from Del. Michael Feggans, D-Virginia Beach, was among the earliest bills to pass both chambers this session, with support from members of both parties. Both HB67 and SB 25 from Sen. Jennifer Carroll Foy, D-Prince William, would organize an offshore wind workforce effort.
(We will have some catching up to do. While U.S. states struggle to complete the 5 GW of offshore wind currently under construction in the face of Trump’s attacks, the rest of the world has kept building. China’s offshore wind capacity has grown to more than 40 gigawatts, and its advances in the technology have made it cost-competitive there.)
If all else fails, throw a Hail Mary
Legislators still like to think big, when “big” is comfortably off in the future, where potential problems don’t loom as large. Many of them have their sights set on small modular nuclear reactors (SMRs). If all goes well, they hope, this technology will provide many gigawatts of carbon-free energy on a 24/7 basis, paid for by tech companies. If things don’t go well, a few overpriced projects would provide a nice boondoggle for Dominion and APCo at ratepayer expense. What’s not to like?
Currently the VCEA treats nuclear as a middle-tier resource, neither incentivized like renewable energy nor discouraged like fossil fuels. Some legislators from both parties want to elevate new nuclear to the same status as renewable energy, proposing a system of “zero emission credits” (ZECs) that both utilities and customers like data centers could purchase in lieu of renewable energy credits (RECs).
Though the House Labor and Commerce committee does not seem inclined to take up Republican bills to make nuclear qualify for the renewable portfolio standard, other pro-nuclear bills are moving forward.
HB 369, from Reid, allows certain corporate customers to buy ZECs from Virginia sources and avoid their share of a utility’s renewable energy costs. The bill has made it to the House floor and is likely to pass this week.
In the Senate, the nuclear bill most likely to pass is SB 598, from Sen. Creigh Deeds, D-Charlottesville.
Deeds’ bill puts ZECs on an equal footing with RECs beginning in 2035. The legislation also speeds up the timeline for Dominion to purchase renewable energy in the near term and increases the percentage of it that must be built by third parties. From 2035 to 2045, Dominion and APCo are instructed to seek permission from the SCC to build or buy zero-carbon energy – 1600 MW for APCo and 5,000 MW for Dominion. Again, half of that would be developed by third parties.
The bill also allows the SCC to reduce the targets if load growth doesn’t justify them. Oddly, however, the SCC is not empowered to cancel the targets for reasons like questionable safety, lousy economics or commercial non-viability, a remarkable oversight given the less-than-stellar track record of the SMRs under development. The bill will be heard in Senate Commerce and Labor this week.
This article was originally published in the Virginia Mercury on February 10, 2026. It has been updated to include one bill I left out and to reflect recent action at the General Assembly.
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