Among the many environmental, energy and economic concerns about the unconstrained spread of data centers in Virginia, the impact on drinking water supplies has ranked fairly low. That changed suddenly last week, with the release of a report that the administration of Gov. Abigail Spanberger seems to have tried to suppress.
In compliance with legislation passed in March of 2024, scientists at the Department of Environmental Quality (DEQ) studied the health of the largest aquifer in eastern Virginia. Their report concludes that the Potomac Aquifer can’t support any new industrial water withdrawals. That means no water-cooled data centers.
The implications for data center developers are obviously bad. But for the governor, the consequences may be worse. The administration delayed releasing the report for six months beyond its January 1st deadline. In fact, it took an open records request from the Associated Press to pry the report out of Spanberger’s office.
Spanberger wasn’t even in office on January 1, so outgoing Gov. Glen Youngkin and his DEQ director, Mike Rollband, bear responsibility for at least the initial delay.
However, Spanberger retained Rollband to continue serving during her administration. And in the months since she took office, Spanberger, like Youngkin before her, has sided with the data center industry much more often than with its critics.
Rollband himself has not commented on the delay. The Associated Press said a Spanberger spokesman “attributed delays in the report’s release to a backlog of outstanding items from the previous governor’s administration.”
The delay matters. If the report had been released by its January deadline, it might have influenced the General Assembly’s consideration of bills this year aimed at protecting Virginia’s water resources from the unchecked growth of the data center industry, or even spurred tougher measures.
The General Assembly passed legislation to require reporting on how much water data centers are using, but the House bill originally required disclosure upfront as part of the permitting process. Those tougher measures never made it into the final bill.
If legislators had had the benefit of DEQ’s report in January, would they have settled for merely collecting data after the fact?
Sens. Russet Perry, D-Loudoun, and Richard Stuart, R-KIng George, think not. On Thursday the two legislators sent Spanberger a letter asking her to convene a special session to consider new policies to rein in water use in the aquifer system.
Yet the report’s conclusions are not actually a surprise.
It’s true that, unlike the arid West, most of Virginia has enough water most of the time to meet our needs. But this is not the case for the Virginia Coastal Plain, roughly the area east of I-95 overlying the underground Potomac Aquifer. There, heavy withdrawals of groundwater have for decades exceeded the ability of rainfall to replenish supplies.
The depletion of the Potomac Aquifer has been a recognized problem for years among scientists and area leaders. Its consequences include sinking land, saltwater seeping into water wells in coastal areas and greater relative sea level rise that contributes to coastal flooding.
Most seriously, groundwater depletion threatens the ability of the region to provide water to a growing population.
The Hampton Roads region has even implemented an effort to inject treated wastewater into the aquifer to reverse (or at least limit) land subsidence. According to the DEQ report, all it would take to undermine that effort is one significant new industrial user like a gas plant or hyperscale data center – or a combination of the two.
Underlining the seriousness of this conclusion is the fact that most of Virginia is currently in a drought, one severe enough to warrant weekly meetings at DEQ. The agency’s online map shows that as of this writing, groundwater supplies in parts of the coastal plain have fallen to emergency levels.
The depletion of the aquifer has hindered development before.
Back in 2019, concerns about groundwater depletion became an issue for two gas-fired power plants proposed for Charles City County, which would have relied on groundwater from the Potomac Aquifer to produce steam and provide cooling.
At the time, DEQ proposed to grant one of the developers a temporary permit until a pipeline could be built to deliver enough river water. Following passage of the Virginia Clean Economy Act (VCEA), however, the gas plant proposals were scrapped.
Today, however, developers are proposing a new gas plant in Charles City to provide a data center with onsite generation.
Developer Point One seems to think it has figured out a way around the VCEA’s limits on new fossil fuel generation by using 35 smaller gas turbines instead of a couple of big ones, and using the electricity to supply the data center directly instead of feeding energy into the grid. Whether it has discussed its water needs with DEQ is not clear.
Polling in Virginia shows public opinion has turned sharply against data centers. Spanberger’s own popularity has also turned negative, and that might be due in part to her support for the data center industry.
A poll released in July by the L. Douglas Wilder School of Government and Public Affairs at Virginia Commonwealth University showed 72% of residents oppose the sales tax exemption for data centers that Spanberger fought to preserve.
Although Republican legislators in Virginia have historically supported the data center industry in larger numbers than Democrats, they may be seeing a political opportunity. Republican Sen. Glen Sturtevant, R-Chesterfield, sent a letter asking Spanberger for a “pause” on new data center approvals, citing the General Assembly’s failure to pass legislation he introduced to require site assessments.
That puts Sturtevant on the same side as environmental groups like the Sierra Club that now see a temporary moratorium as the only way to slow the onslaught. Virginia Sierra Club data center chair Ann Bennett told me that while the DEQ report clearly makes the case against siting data centers east of I-95, “we need to protect all state waters.”
With pressure from both the left and the right, Spanberger has the difficult job of balancing her support for data center development with her promises to protect the environment and make data centers “pay their fair share.” Her delay in releasing the DEQ report undermines her credibility at a crucial time.
A data center in Ashburn, Virginia. Photo by Hugh Kenny, Piedmont Environmental Council.
At last, there’s peace in the valley: after weeks of battle, the Democratic governor of Virginia and Democratic House and Senate leaders in Virginia’s General Assembly finally agreed on a budget.
Getting to that point required them to reach a compromise on the treatment of data centers that retained the industry’s sales tax exemption while imposing a new energy tax. In lieu of clean energy requirements, legislators adopted a couple of softball provisions on noise and water use. Virginia leaders declared victory and went home happy.
The same cannot be said of the industry’s opponents. They had embraced both the Senate’s original proposal to eliminate the tax exemption and the House’s proposal to condition the exemption on data centers meeting stringent environmental standards around energy use and diesel generator pollution.
Either result might have slowed the growth of the industry in Virginia, with the House approach pushing out mainly those companies who aren’t willing to clean up their energy use. The fact that Virginia leaders found a way to do neither predictably antagonized grassroots activists and community members.
But the data center industry also took issue with the result.
Josh Levi, President and CEO of the Data Center Coalition, called the budget provisions “a sweeping package of regulations and tax hikes intended to claw back the state’s economic development agreements.” He warned that tech companies would now “prioritize new investment in states with competitive and stable business environments.”
This response is interesting because the idea of instituting an energy tax in lieu of rolling back the sales tax exemption reportedly originated with lobbyists for the data center industry, who hoped the deal would include an extension of the sales tax exemption beyond 2035. (For Amazon, the date is 2045.) It isn’t so much the tax itself they object to, it seems, as not getting everything else they wanted.
So while Levi stomps around gnashing his teeth and instilling hope in data center opponents that the industry will indeed “prioritize new investment” in other states, Virginia leaders can feel confident that their budget deal won’t stop data center growth.
Indeed, the new energy tax is likely too low to make a difference. U.S. Energy Information Agency data shows Virginia’s commercial electricity rate is the lowest in the Southeast and more than three cents per kilowatt-hour below the national average.
Even adding Virginia’s new energy tax of just over a penny per kilowatt-hour, only North Carolina and Georgia will have lower rates anywhere in the East. (These two states are also trying to figure out how to deal with the data center onslaught, and are watching Virginia closely.)
The Data Center Coalition’s hostility to an energy tax and a couple of modest environmental guardrails is interesting for another reason. This is an industry that brags about its willingness to “pay its fair share,” its commitments to renewable energy, and its innovations to reduce its environmental impact. Why is it fighting so hard when asked to walk the talk?
Together, Amazon, Microsoft, Google and Meta accounted for half of all global clean energy purchase deals in 2025. Amazon, the largest data center operator in the world as well as in Virginia, is also the world’s biggest corporate buyer of clean energy, although not in a way that connects much of the electricity to Virginia.
Unfortunately, the race to develop artificial intelligence has become more important for these companies than preserving their good-guy status.
Google set one of the highest bars for sustainability and has pursued more innovative approaches than any of its peers, yet its carbon footprint has increased 51% since 2019. Microsoft, another climate leader, is reportedly reconsidering its clean energy pledge in the face of AI demands.
That they have fallen short is not entirely their fault. PJM, the grid operator for the region that includes Virginia, has failed to approve new generating projects fast enough to meet the sudden spike in power demand. Wind, solar and battery projects languished for years in PJM’s queue even as data centers proliferated. Now PJM wants to prioritize construction of plants that burn fossil gas ahead of cheaper, cleaner, and faster-to-build solar energy.
National policy is also working against them. As I’ve written, President Donald Trump, his cabinet appointees and his disciples in Congress have been doing everything imaginable to block new wind and solar energy from reaching the grid.
But if the tech companies tried to change these outcomes, they have been awfully quiet about it. You’d expect a company that wants to be taken seriously for its climate commitments to be active at all levels of government and in the offices of grid operators, utilities and state public utility commissions, demanding more access to clean energy.
Big Tech has instead focused its lobbying power on defeating anything that stands in the way of developing artificial intelligence. As the Data Center Coalition’s actions demonstrate, that includes Virginia’s efforts to impose clean energy requirements.
Part of the problem may be that Amazon, Google, Meta and Microsoft aren’t the only members of the Data Center Coalition. Dive deep into the map of data centers in Virginia and you will find a host of companies you probably never heard of. Many of these are colocation providers, meaning they rent data center space to other businesses. These operators talk a good game on sustainability, but the details tend to be squishy, and greenwashing is rampant.
Take Equinix, a top colocation provider in Northern Virginia. Equinix boasts it matches its electricity demand with renewable energy, but its map shows these are mostly dirt-cheap renewable energy certificates from existing wind farms in Texas and Oklahoma, which don’t send power to Virginia.
Or look at Vantage, which says its customers “can take advantage of renewable energy to reduce their carbon emissions,” using utility green power programs and voluntary purchases of renewable energy credits. That’s something anyone can do anyway, and it rarely supports new projects.
And then there’s QTS, the Blackstone company that recently threw in the towel on its scandal-plagued effort to build the Prince William Digital Gateway. QTS claims to purchase renewable energy (it doesn’t elaborate), but its most recent “annual” sustainability report, dating from 2024, shows sharply increasing CO2 emissions from its operations.
Frankly, though, it doesn’t much matter what kind of green claims a corporation makes when its actions tell a different story. In Virginia, the story is that the data center industry will fight any attempt to regulate it, whether through taxes or environmental protections.
Levi and the Data Center Coalition insist the problem isn’t the industry’s actions, it’s that the public doesn’t appreciate all data centers have done for Virginia. Levi lamented to one reporter that the industry is “not readily understood, and it’s on us that it’s not readily understood.”
Oh, honey, we understand you perfectly well.
This article first appeared in the Virginia Mercury on July 13, 2026.
Leaders in the House of Delegates are continuing to tweak their version of a state budget, but they aren’t backing down from their fight with the Senate over data centers. What they are backing down from is their former insistence that data centers use clean energy. Instead, they propose to punt this and every other data center issue over to a commission.
Is that supposed to resolve the budget impasse? Because if that’s the idea, it sure seems like an odd way to go about it.
Recall that Senate Finance Chair Louise Lucas, D-Portsmouth, wants to terminate the sales tax exemption that data centers have exploited to the tune of $1.6 billion lost from state coffers. (The total subsidy rises to $1.9 if you include the exemption from local taxes, but what’s a few hundred million bucks among friends?)
The tax isn’t something specific to data centers. It’s the same one all the rest of us pay. The argument that there are better ways to spend the money than to give it away to the world’s richest corporations has reaffirmed Lucas as a bonafide social media star at age 82, and she is enjoying it very much.
In response to the new House budget proposal, Lucas tweeted out a tweak of her own: She now proposes to subject data centers to a nearly-equivalent fee that would generate $1.7 billion in revenue. Lucas and allies have launched a “listening tour” to build support for her approach.
But the House budget does not eliminate the exemption, leaving the two sides at an impasse.
The House is set to reconvene on June 18, and the Senate on June 22. The chambers will attempt to resolve their differences and adopt a budget before July 1 to avoid a government shutdown.
House leaders argue that data center operators relied on this tax exemption when they chose to locate in Virginia. They signed memorandums of understanding agreeing to a few minor conditions, and in return they were promised they wouldn’t have to pay sales tax on computer chips and other equipment until 2035. (In the case of Amazon and any other corporation that sinks $50 billion into data centers in Virginia, the date has been extended out to 2045.)
But the House budget proposal originally incorporated provisions drawn from legislation introduced by Del. Rip Sullivan, D-Fairfax, requiring data centers that take advantage of the tax exemption to buy increasing percentages of renewable energy, refrain from using onsite fossil fuels as their primary energy source, and begin phasing out the backup diesel generators that threaten air quality. The bill passed the House but died in the Senate around the same time Lucas decided there shouldn’t be a tax exemption at all.
The disagreement left Virginia without a budget for the new year. Now suddenly the House has issued a new proposal that has the support of Gov. Abigail Spanberger. Instead of resolving the impasse, though, it actually goes backwards on regulating data centers.
It still leaves the tax exemption intact, but now “includes explicit direction for the establishment of a Commission to thoroughly evaluate the direct and indirect costs and benefits of the data center industry.” The commission is to issue a report and recommendations for legislative and budgetary changes, which the General Assembly will then consider next year.
Are you feeling a little prickle of déjà vu? That’s because we have seen this before, and not very long ago. In December 2023, the General Assembly headed off action for all of 2024 by directing the Joint Legislative Audit and Review Commission (JLARC) to assess the impact of the industry on energy demand, state revenue, natural resources – essentially, the same things this year’s commission is supposed to look at all over again.
You remember the JLARC report. It sounded a dire warning against the consequences of “unconstrained” data center demand. The report made a stir in December of 2024 when it was issued. Statements were released, proposals were floated.
And thus warned, the General Assembly went into the 2025 session and did . . . nothing.
Doing nothing pretty much described 2026 legislative action on data centers as well. Among the few reforms House and Senate Democrats seemed to agree on were that data centers needed to buy renewable energy and storage to limit the increase in Virginia’s carbon emissions and to decrease the pollution from diesel generators. The House did this by way of Sullivan’s bill; the Senate supported a different approach. Each chamber killed the other’s bill.
That left the House budget as the only vehicle for progress this year on one of the central problems of the data center buildout. By backtracking now, House leaders and the governor show they are willing to capitulate entirely to the data center industry and its labor allies.
To be sure, a budget amendment this year that puts conditions on tax exemptions in future years would need to be followed with new legislation to lock in the requirements. And for that purpose, House and Senate members should definitely work together this summer to align their proposals, ensuring both chambers agree on the terms of the legislation before it is introduced.
A commission with that task could be useful. After all, the Commission on Electric Utility Regulation, now rebranded as the Energy Commission of Virginia, succeeded in bringing together House and Senate members around a striking number of good energy bills this year.
But a commission that is thrown together suddenly and instructed to retrace the steps of a report issued barely 18 months ago seems suspiciously like a substitute for action.
This is all too familiar. When it comes to data centers, inaction seems to be the point.
This article was originally published in the Virginia Mercury on June 16, 2026.
It’s all about the data centers. Photo by Hugh Kenny, Piedmont Environmental Council.
Man, even the Pope doesn’t like data centers.
In his new encyclical on artificial intelligence, Pope Leo XIV laid out the dangers of the mad rush to replace humans with AI. In among the concerns for the dignity and future of humanity, he took a moment to mention the environmental damage involved:
Current AI systems require enormous amounts of energy and water, significantly influencing carbon dioxide emissions, and place heavy demands on natural resources. As their complexity increases, especially in the case of large language models, the need for computing power and storage capacity grows too, which requires an extensive network of machines, cables, data centers and energy-intensive infrastructure.
Judging from public polling, most Americans share the Pope’s concerns. But guess who does like data centers? Big energy companies. And unlike the Pope, these corporations are not troubled by the moral implications of their activities. The fact that AI systems require enormous amounts of energy is not a problem, but an opportunity.
Data centers are why utility giant NextEra wants to buy Dominion Energy. Northern Virginia is home to the largest concentration of data centers on the planet, and most of it is in an area where Dominion holds a monopoly on providing power.
NextEra is already the largest utility in the U.S. by market capitalization. Acquiring Dominion would make it the third-largest U.S. energy company overall, behind only Exxon and Chevron. The two companies apparently think this level of scale confers an advantage when dealing with equally large and powerful tech companies. NextEra’s CEO, John Ketchum, reportedly told stock analysts that the combined company “can become the go-to partner for large load customers.”
Set aside for a moment the fact that most corporate mergers fail to achieve their objectives. That’s (mostly) their problem, not ours. The question for us is whether anyone other than tech companies – like, you know, us humans – would benefit.
In announcing the merger deal, the companies stressed the advantages for Virginia ratepayers, which would include $2.25 billion in bill credits over the first two years. Although that sounds promising, recall that Dominion recently filed to recover from its customers over a billion dollars in excess fuel costs, which would cut into any windfall from the merger. Beyond that, whether Virginia customers would see lower bills over the longer term remains to be seen.
It’s also worth noting that this could be just the start of industry consolidation in Virginia driven by data center demand. As recently as November, Dominion was in talks to buy the Northern Virginia Electric Cooperative (NOVEC), the utility serving the second-most number of data centers in the state. There’s been no further news about the deal since last fall, perhaps indicating when Dominion’s conversation with NextEra began. But a deal with NOVEC may still happen once the NextEra merger is resolved.
The case for NextEra
Supporters of the deal include Jigar Shah, a solar energy entrepreneur and former U.S. Energy Department official in the Biden administration who remains a hero to many in the clean energy world. In a LinkedIn post, Shah said Dominion “may be the worst-run utility in America,” one that “has been a fixer-upper for years.” He added, “Virginia’s legislature got so fed up waiting for [Dominion Energy CEO] Bob Blue to modernize the grid that it stepped in and mandated it — grid utilization, batteries, VPPs.”
In Shah’s view, NextEra brings “competence,” plus a heck of a lot of battery storage to power data centers quickly. And of course, Dominion brings the data centers.
While Shah is most impressed with the company’s batteries, other observers have pointed out that NextEra, through its subsidiary NextEra Energy Resources, is the nation’s largest owner of solar and wind projects. As of June 2025, solar and (onshore) wind made up 28 GW of a 40 GW portfolio, with another 29 GW of renewables in “backlog.”
It also appears to be a true believer in the economic case for renewable energy. In March of 2025, NextEra executives told attendees at a Houston conference, “Renewables can provide the generation needed to meet demand at the lowest cost possible now, making them an essential near-term solution for avoiding a power affordability crisis across the U.S.” But, they also added, “Meeting near- and long-term demand and capacity needs at the lowest cost possible will require ‘all of the above’ energy solutions that include renewables, battery energy storage, natural gas and nuclear energy.”
Even this year, most of the company’s planned projects are renewable. NextEra’s Q1 shareholder call detailed 4 GW worth of contracts signed that quarter, including 2.2 GW of solar, 1.3 GW of battery storage and .5 GW of wind generation.
Not so fast?
The impressive clean energy portfolio notwithstanding, a NewEra takeover doesn’t portend an end to Dominion’s infatuation with fossil gas. On the same Q1 shareholder call, executives bragged that “the U.S. Department of Commerce selected Energy Resources to build 9.5 gigawatts of new gas-fired generation to serve large load” in Texas and Pennsylvania.
Moreover, the company’s 2035 goal is to reach 30 GW by 2035, including a plan to restart a mothballed nuclear plant in Iowa and the potential for as much as 6 GW of small modular reactors, assuming “the right commercial terms and conditions with appropriate risk sharing mechanisms that limit our ultimate exposure.” Beyond that, 50% of the planned generation buildout is planned to come from gas-fired generation.
The fossil fuel investments don’t stop there. NextEra has another subsidiary that owns over 1,000 miles of gas pipelines. The company also owns gas supply companies, “making us one of the largest and most active gas suppliers serving wholesale, retail and industrial customers nationwide.” This stands in contrast to Dominion, which got out of the gas transmission and supply business several years ago when the company seemed to be pivoting to embrace the transition to zero-carbon energy.
NextEra is also no friend to rooftop solar. Its regulated utility, Florida Power and Light, wrote and lobbied for legislation to gut net metering in the state. That doesn’t make it worse than Dominion, which has repeatedly tried to hamstring third-party solar investments in Virginia, but it does mean that solar customers can’t expect a friendlier reception if the merger goes through.
Finally, it’s not clear what will happen to Virginia’s offshore wind ambitions. Dominion is completing construction of the Coastal Virginia Offshore Wind (CVOW) project this year, and has – or had – ambitions to build out additional lease areas. The company also invested in the first purpose-built offshore wind installation vessel in the U.S., part of a plan to make itself a major player in an emerging east coast industry.
All that, of course, happened before rising interest rates led to the cancellation of offshore wind projects in several northeastern states, followed by Trump bringing the industry to a screeching halt through executive orders and a campaign of harassment.
Nonetheless, Virginia has a history of supporting offshore wind development through both Republican and Democratic administrations. Nor is it giving up now, as shown by the General Assembly’s bipartisan passage this year of legislationfurthering the development of an offshore wind workforce.
NextEra has a reputation for offshore wind skepticism, raising suspicions that the other lease areas Dominion bought won’t get developed if the merger goes through.
Are we ready for this?
The merger plan has other detractors. The Energy and Policy Institute, a frequent critic of energy companies, cautionedthat “A megamonopoly of this size, with the kind of money to buy political influence that NextEra will have, will be nearly impossible to regulate.”
Clean Virginia, an organization formed to counter the influence of Dominion, also warned that handing monopoly power to NextEra is risky for Virginians, given the Florida company’s record of corporate malfeasance.
Indeed, NextEra’s brand of hard-ball politics makes Dominion’s power plays look tame. NextEra has starred in a number of corruption scandals, including allegations of spying on journalists, offering jobs to public officials as a way to buy influence, and funding so-called ghost candidates to run as spoilers in hopes of defeating political candidates the utility saw as unfriendly to its interests.
According to Clean Virginia, NextEra even filed a defamation suit against a woman for posting a video that changed the company’s name to “NextError” and “NextTerror.”
(Okay, that was a rookie mistake on the woman’s part: she should have chosen one or the other and then plastered it everywhere. Had she done her research on effective parody, she might have found the work of Blue Virginia’s Lowell Feld, who altered Dominion’s logo to include a smokestack and added the tagline, “Global Warming Starts Here.” Dominion had the good sense not to make an issue of it in public, though I’m sure that if you went through their files you would find a memo from a top executive demanding a lawsuit and a response from a company lawyer patiently explaining the First Amendment.)
Here in Virginia, Dominion’s outsized role in policy making has been made possible by its ability to rain cash on lawmakers. In Florida, NextEra has been at least somewhat constrained by state campaign finance laws, which cap contributions at $3,000 per candidate.
The company will absolutely love Virginia’s laws allowing unlimited corporate campaign contributions. According to the Virginia Public Access Project (VPAP), Dominion made over $28 million in campaign contributions in 2025 alone. What might Virginia candidates be able to collect from a company three times Dominion’s size?
Virginia also permits its lawmakers to hold a financial interest in the companies they govern, and several legislators do own shares in Dominion. The current leader is Republican senator Bill DeSteph, whose latest conflict of interest disclosure shows he owns at least $250,000 in Dominion stock (the top reporting category). NextEra’s purchase of Dominion comes with a bonus in stock value for Dominion shareholders.
Decisions, decisions
So is this a company we want throwing its weight around in Richmond?
Fortunately, NextEra and Dominion aren’t the only ones who get a say. The merger will have to be approved by the Federal Energy Regulatory Commission (easy-peasy in this administration), the Nuclear Regulatory Commission (ditto) and regulators in the affected states, including Virginia’s State Corporation Commission.
Virginia’s Attorney General, Jay Jones, will represent the interests of ratepayers in the SCC proceedings. Jones refused to accept campaign donations from Dominion in last year’s election, so he carries some credibility as an unbiased advocate. So far, Jones has promised to “scrutinize” the deal, but hasn’t said whether he supports or opposes it.
Complicating matters, one of the SCC’s three commissioners, Kelsey Bagot, formerly worked for NextEra. When Bagot was appointed in 2024, it was with the understanding that she would recuse herself from matters involving NextEra. Given how much of the SCC’s work involves Dominion, the merger with NextEra would make Bagot’s recusal promise hard to live up to.
Although the governor and General Assembly don’t have a formal role here, it will be hard for the merger to go through if serious opposition arises from these quarters. Senate Majority Leader Scott Surovell, D-Fairfax, confirmed to me in a text that the General Assembly’s Energy Commission (formerly known as the Commission on Electric Utility Regulation) will hold hearings in June.
Is this merger good or bad for residential customers?
One thing is abundantly clear: NextEra and Dominion are focused on data centers, not residential ratepayers. We are little insects under the feet of hyenas stalking wildebeest. NextEra makes the right noises about embracing large-load tariffs to ensure data centers “pay their fair share,” because that’s what political leaders want to hear. But what they care about is all those gigawatts of power they will build and make money from.
Being ignored can sometimes be a good thing. Better yet would be a result where residents are treated as part of the solution to the energy crunch. That’s the direction Virginia’s General Assembly is trying to go with many of the bills passed this year that expand opportunities for residents and businesses to invest in solar and storage, buy the output of shared solar projects and participate in virtual power plants.
It would also be nice if the energy giants committed to doing their part to further Virginia’s carbon-cutting mandate. We’ve seen nothing so far to reassure us on this point. As far as I can tell, NextEra’s record of building renewable energy and storage didn’t result from any moral commitment to confront the climate crisis, but from a judgment about how to build the most gigawatts fastest and at least cost, in order to make the highest profits.
We’ve seen nothing so far to reassure us that the energy giants are committed to doing their part to further Virginia’s carbon-cutting mandate. Regulated utilities enjoy monopolies, after all. In return, they are expected to serve the public good.
That’s a point Dominion often misses. The question on the minds of Virginians now is whether we can expect better from NextEra.
Flush with success after the SCC ignored legal deficiencies and approved the company’s plan for a large gas peaker plant in Chesterfield, Dominion Energy is pushing its luck with a proposal for a massively bigger gas combined-cycle plant.
The 3,000 MW facility slated for Cumberland County would be Dominion’s biggest fossil fuel plant ever, the size of three nuclear reactors. And unlike the Chesterfield plant, which is designed to run only intermittently, Dominion expects the new one to run most of the time.
With Chesterfield, Dominion argued that a peaker plant was needed for reliability. You know the refrain: the sun doesn’t always shine, the offshore wind won’t always blow, batteries might run out of juice. That argument doesn’t fly for a combined-cycle plant, but the company still waves the banner of reliability. For Cumberland, though, it just says growing demand means it needs the power.
The demand part is true. Every time Dominion revises its projections for future demand, the number goes higher. The obvious reason is the data center boom, though Dominion generally avoids saying so. It cites electric vehicles, building electrification and new manufacturing, trying to create a “we’re all in this together” vibe.
But energy efficiency has largely kept pace with those kinds of higher usage. When the SCC pushed Dominion to separate data center demand from total demand, it became clear that residents and non-data center businesses aren’t the drivers. We are just the ones paying the consequences.
Why should we residents be stuck with 30 years of paying for a honking-big, fracked-gas-burning, climate-change-driving monstrosity whose sole purpose is to feed the tech companies’ competitive drive for the most advanced chatbots?
Indeed, there are all kinds of reasons why the SCC should say no, including the unfairness, high cost, illegality and – to use a technical term – stupidity of building another plant to burn fossil fuels.
The new plant proposal uses different technology from the Chesterfield project but comes with similar problems.
Both carry the weight of environmental injustice. Just last year Cumberland County approved construction of a mega-landfill over strong opposition from the rural, historically Black community. Residents had hoped the county would instead lean into its rich history to promote “tourism not trash.”Layering on a massive gas plant in an area that is already about to be burdened with one of the largest landfill projects in the state surely raises issues of equity and fairness.
The SCC showed little interest in those problems in the Chesterfield case, and may well ignore them in Cumberland. If so, maybe it will be more persuaded by the economic argument.
Only a couple of years ago, developers had mostly stopped investing in new gas generation for the simple reason that combined-cycle plants are expensive to build and can’t compete against cheaper renewables on a dollars-per-megawatt-hour basis.
(By contrast, peaker plants are cheap to build but inefficient and much more expensive to run, so they only get fired up for short periods when demand peaks and power prices are at their highest. That’s a role batteries increasingly fill at less cost.)
As recently as 2024, only 4% of new electric generation in the U.S. came from fossil fuels; almost all the rest came from solar, batteries and wind. This was partly because federal tax incentives made wind and solar more attractive in the Biden era, but the data shows that even without subsidies, renewable energy remains the most cost-competitive form of generation.
A couple of things have changed since then. The onslaught of power-hungry data centers overwhelmed the ability of electric grids to keep generation in balance with demand. At the same time, the Trump administration erected one barrier after another to the wind and solar projects that would most quickly and cheaply bring the balance back. Instead, it is aggressively supporting fossil fuels and weakening pollution limits.
For a utility needing more power at any cost, suddenly gas plants are back on the table. But for the people who have to live with them and pay for them, a gas plant will be an ongoing liability.
Wind and solar exploded in popularity not just because they don’t pollute the air, but also because they have no fuel cost. You build them once, and you know your power price for the next 25-30 years. Fossil gas, on the other hand, carries a price beyond the capital cost of building the plant, but you don’t know what that price will be. Even with a robust domestic supply, gas prices gyrate wildly.
When Dominion proposes building a gas plant, it makes a guess about what the price will be in the future. There is no penalty for the company in guessing too low. If prices go up unexpectedly, it’s the ratepayers who foot the bill. The SCC can’t tell Dominion to eat the extra cost; by law, fuel costs are passed directly through to consumers.
Indeed, this spring, for the second time just this decade, Dominion told the SCC it needs to raise bills to cover past fuel costs that were higher than it planned. In this case, it wants collect from us more than a billion dollars. Paying off the full amount over one year would add $22 to the monthly electricity bill of the average residential customer.
This “average” customer is said to use 1,000 kWh per month. Those of us with heat pumps use much more than that in the winter months, so $22 can become a multiple of that. This amount will appear on top of the fuel charges that already make up about 25% of generation charges on residential bills.
But given the pain a hike of this magnitude would cause to residents, not to mention the outrage that would result, Dominion proposes instead to spread the cost out over several years. This is what it did in 2023 to recoup $1.2 billion in excess fuel costs racked up in 2021-22. According to the “deferred fuel charge” on my bill, we are still paying off that debt.
Fool us once, fool us twice, and are you really willing to go along with Dominion’s claim that fossil gas will be an inexpensive, reliable and desirable fuel source over the next 30 years while we pay off this project, with interest?
And then there’s the fact that building a gigantic new plant to burn fracked gas is politically stupid. Global warming doesn’t factor into the Trump administration’s energy “planning,” such as it is, but climate action was a priority for the previous administration and is going to be one for future administrations. Global warming isn’t going away; it’s getting worse, and wishing away reality is not a long-term strategy.
Moreover, future leaders will have to deal with the fact that clinging to an extraction economy has left the U.S. behind our geopolitical rivals on implementing advanced technologies like solar (where China dominates), offshore wind (China again), electric vehicles (there again, China) and storage (do I even need to say China?).
I’d rather bet the U.S. won’t continue down this path of self-destruction. If and when our leaders course-correct, attention will revert back to building out our supply of clean energy, with greater urgency to make up for lost time. That’s where Virginia’s focus should be.
The General Assembly meant for the Virginia Clean Economy Act and our participation in the Regional Greenhouse Gas Initiative to future-proof our power supply and deter Dominion from sinking its customers’ money into ill-conceived fossil fuel plants.
“Reliability” isn’t supposed to be a get-out-of-jail-free card. Dominion has to meet energy efficiency targets, satisfy environmental justice requirements and prove that there aren’t cost-effective clean energy options available. It can’t do it.
Of course, Dominion didn’t meet those conditions when it proposed the Chesterfield peaker plant, and the SCC approved it anyway. But we have to stop digging our carbon hole sometime. Let it be now.
A version of this article appeared in the Virginia Mercury on May 20. 2026.
Cattle graze at the Christiana Solar Farm,. Photo courtesy of Silicon Ranch.
The conventional wisdom was wrong. And having helped spread the conventional wisdom, I was wrong, too. Mea culpa. It turns out sheep aren’t the only animals capable of handling the job of vegetation management on solar sites.
Farmers are finding that cattle also thrive among solar panels – and they will get their chance to prove it in Virginia.
What’s that, you say? You didn’t know there was a conventional wisdom on this topic, maybe because you really haven’t given much thought at all to solar grazing, so while you have nothing but respect for cattle, sheep and other ruminants, this strikes you as perhaps a bit, shall we say, niche?
Oh, but it’s not. Persuading cattle farmers that it’s in their interest to embrace solar is the key to unlocking low-cost energy supplies in Virginia and ending the rural war on solar.
Not that there’s anything wrong with sheep! In fact, sheep deliver such perfect synergy with solar that including them at solar farms is no longer novel.
The sheep thrive with the forage and shade, and in return they eat the vegetation that would otherwise grow up around the solar panels. Their grazing largely replaces labor-intensive (and polluting) mowers and herbicides while improving soil quality. Thanks to this symbiotic relationship, farmers have managed to keep their land and even grow their operations at farms across the U.S.
The advantages on all sides are so well understood within the solar industry that it’s common these days for new utility-scale projects in Virginia to include plans for grazing. Developers and utilities including Dominion Energy tout the local benefits of their partnerships with sheep farmers and beekeepers.
Yet there are more than 15 times as many cattle as sheep in Virginia, many of them in small herds on family farms.
The market for beef is vastly bigger than the market for lamb, so persuading farmers they should diversify into sheep as well as solar is a tall order. But if cattle prove as compatible with solar as sheep are, there will be vastly more opportunities for both farmers and the solar industry. Given the dire economic situation facing small farms in Virginia today, “cattle-voltaics” could offer a lifeline for rural communities.
Solar site owners and farmers have proceeded cautiously with cattle, fearing the animals might damage expensive solar infrastructure – or themselves – given their great weight and propensity for rubbing their heads on things. And being much taller than sheep, they don’t fit as well under solar panels, which at some times of the day will tilt close to the ground to take maximum advantage of the sun’s rays. Making the supports taller and stronger adds cost. Hence the preference for sheep.
That’s all wrong, according to Josh Bennett, an executive with Colorado-based Huwa Enterprises who spoke at the Virginia Solar Summit in Richmond last month. Since 2023, Huwa has been helping farmers and ranchers integrate cattle with solar in Colorado and elsewhere, and Bennett is now intent on spreading the word that it works.
At a 2000-acre solar farm in Indiana, he said, Huwa “hardened” the site for the cattle but did not raise the panels or change their tilt. According to Bennett they had “zero problems” with the cattle, all yearlings of a docile breed that stand about four and a half feet tall. Contrary to expectations, the cattle have shown no interest in using the steel poles as scratching posts.
Elsewhere, Tennessee-based Silicon Ranch, which includes sheep grazing on 15,000 acres across its 15-state solar portfolio, recently launched a technology that it calls CattleTracker.
The software automatically tilts solar panels to horizontal when cattle are present, allowing the animals to graze underneath. When the cattle are moved to other parts of the site, the panels return to their optimum tilt. Silicon Ranch has been testing the approach at its 3.5-MW solar farm in Rutherford County, Tennessee since 2023, while delivering the power to a local electric cooperative.
Here in Virginia, Marcus and Jess Gray see great potential in solar cattle. The husband-and-wife owners of Gray’s Lambscaping are among the half dozen or so Virginia sheep graziers who contract with owners of large solar farms for vegetation management.
The American Solar Grazing Association featured the Grays, along with beekeeper Allison Wickham of Charlottesville-based Siller Pollinator Company, in a terrific video that was shown at the Solar Summit to great applause from the home team.
For the Grays, solar cattle are the obvious next step in integrating solar into Virginia’s farm culture. At the Solar Summit, Marcus Gray described how he is raising Dexter cattle, a breed that is smaller and more docile than some others, with plans to graze them under solar panels. However, Gray did not provide a target date or site to graze what he calls his “inverter cattle.”
Virginia leaders recognize the importance of further developing agrivoltaics as a way to support both farming and energy production.
The General Assembly passed a bill this session defining agrivoltaics, and the administration of Gov. Abigail Spanberger plans to form a working group to promote it. In addition to grazing and beekeeping, agrivoltaics can include raising crops between rows of panels, a practice that is mostly still in the research stage in Virginia.
The administration’s working group should look for ways to encourage all of these practices, but if it only does one thing, it should create a demonstration program to help farmers understand how to integrate solar and cattle grazing into their operations. Virginia has a huge stake in making solar appealing to rural communities. We need to save our family farms, and we need the low-cost energy that solar provides.
The potential of agrivoltaics is huge, but until farmers see solar as a valuable opportunity for themselves and their families, Virginia will struggle to produce enough electricity to meet our growing demand.
This article was originally published in the Virginia Mercury on May 8, 2026.
One of the things I like about involving myself in Virginia policy-making is the feeling that it’s possible for an ordinary citizen to participate. Sure, you’re a little fish in a big pond, but legislators will meet with you, and even listen if you propose a bill or suggest changes to legislation. That’s unlike trying to be heard at the federal level, where folks without money and connections typically have no entrée.
But sometimes, even in Virginia, you do what you can and then you just have to wait to see what the big fish do. Some things, my friends, are out of our hands.
That’s the situation now with the Virginia budget, which is hung up on the question of whether to end the data center sales tax exemption and thereby liberate $1.6 billion for other priorities, as the Senate budget provides, or continue the exemption while conditioning it on data centers meeting energy efficiency and clean energy targets, as the House budget provides.
Gov. Abigail Spanberger is caught in the middle of a battle being fought by formidable generals on both sides and from her own party. Spanberger’s pro-business instincts naturally align her with the House approach, which would also bolster her environmental bona fides if the deal includes the clean energy conditions. But mainly, I suspect, she just wants this fight over with.
Can Spanberger negotiate a resolution that keeps the promises made to operators of existing data centers, caps the exemption for future development and imposes clean energy requirements on all of them, while providing at least some savings?
It’s a big challenge, and we little fish don’t have much of a role here. Yet a lot rides on the outcome, not just for data centers but for those of us who care about livable communities, climate and clean air. (Which ought to be everyone, but somehow isn’t.)
Apart from whatever happens with the budget, this was a good year for clean energy but a surprisingly poor year for data center legislation. A Democratic trifecta, concerns about rising utility rates and public sentiment mostly opposed to data center sprawl were not enough to pass bills mandating limits on water use, stricter pollution controls and stronger siting standards.
On the other hand, it was another good year for Dominion Energy. Witness what happened when the governor proposed amendments to Louise Lucas’s Senate Bill 253 and Destiny LeVere Bolling’s House Bill 1393. As passed by the General Assembly, the legislation expanded Dominion’s ability to stick ratepayers with the cost of an expensive program for putting distribution lines underground. Spanberger proposed limits on that program’s ratepayer impacts, but then she went further. In a whole new paragraph, she proposed to cap Dominion’s return on equity at 9.3% (down from the current 9.8%), with excess profits to be returned to ratepayers.
This would have saved millions of dollars for ratepayers, but the General Assembly turned down the changes, supporting Dominion’s ability to charge ratepayers for its undergrounding program and protecting its profitability. The amendments were rejected by voice vote, because who wants to go on record with something like that?
However, legislators did accept other amendments from the governor requiring the SCC to exercise stricter scrutiny of costs associated with data centers to ensure they are not borne by other ratepayers, including residents. Lucas had put something like this in her bill, but legislators recognized that the governor’s language was better.
With some amendments agreed to and others rejected, SB253 and HB1393 are now back with the governor, who will have to either accept the General Assembly’s version or veto them outright.
Other data center bills
Apart from SB 253/HB 1393 and the proposed budget amendments, only a few new laws will impact data center development. Most important among these is one allowing utilities to delay providing service to customers when necessary for grid reliability or to avoid exceeding capacity constraints. Other legislation requires utilities to developdemand flexibility programs for data centers, but such programs would be voluntary.
In an effort to limit the potential for overbuilding infrastructure, Dominion will now be required to provide information allowing the SCC to investigate the utility’s electric load forecasting. The General Assembly accepted an amendment from the governor increasing access to information used in making forecasts.
Residents impacted by data center development won very little in the way of protections. Localities will now have to require data centers to conduct site assessments before they can get special use permits or in rezoning. The Department of Environmental Quality will be prohibited from issuing air permits for diesel generators that don’t meet a Tier 4 equivalent standard for pollution controls, and beginning July 1, 2027, data centers will be required to report their water use. In addition, the Department of Energy will lead efforts to find ways to use the waste heat from data centers.
Renewable energy and storage
The General Assembly passed contentious solar siting legislation that raises standards while requiring localities that reject projects to report their reasons to the SCC. The governor’s minor amendments were accepted; they include a cross-reference to other legislation defining agrivoltaics.
The governor signed legislation significantly increasing the amount of storage Dominion and APCo are required to procure, and adding new targets for long-duration storage (over 10 hours). A separate bill requires Dominion to model economic dispatch scenarios for storage in its IRPs.
An energy storage facility that is co-located with a solar farm that already has an approved special exception will not be required to go through a new permitting process. Legislators acceded to the governor’s amendment limiting the capacity of the storage facility to 100% of the nameplate capacity of the solar facility.
Shared solar, a/k/a community solar, is set to expand significantly under bills approved for Dominion and APCoterritories. While the existing program in Dominion territory has so far benefited only low-income customers, the legislation requires that the expanded program enroll nearly as many non-low-income customers.
Though most of the renewable energy action this year has been around solar, the governor also approved legislation establishing an offshore wind industry workforce program.
Distributed resources
The percentage of renewable energy certificates that Dominion must obtain from projects below 1 MW is set to increase. The 50-kW minimum for power purchase agreements (PPAs) will no longer apply, allowing residents and small commercial customers to use solar or wind PPAs.
Standby charges for net-metered solar can now be assessed only above 20 kW for residential projects in Dominion territory. (In 2020, the VCEA removed them entirely in Appalachian Power territory.)
Balcony solar, also called plug-in solar, will become legal, with no local permit or utility approval required. The legislation provides for a maximum output from the solar panels of 1200 kW. The SCC will develop a notification form that the customer must provide to the utility.
Localities can now require solar canopies to be included on some new parking lots.
Appalachian Power must develop a virtual power plant (VPP) program, following similar legislation last year for Dominion. Separate legislation authorizes VPP programs for electric cooperatives.
By July 1, 2028, localities must adopt streamlined permitting software for residential solar, which can be an existing platform like the national SolarAPP+ or a Virginia-specific platform to be developed by Virginia’s Department of Energy.
A consumer protection bill requires solar companies to provide a set of disclosures to residential customers in an effort to eliminate predatory practices.
A distributed energy resources task force will meet to discuss additional ways to support distributed solar and storage. The governor amended this bill mainly to specify that the task force will be chaired by the Chief Energy Officer, which the House and Senate concurred with. In March the governor appointed Southern Environmental Law Center attorney Josephus Allmond to this new cabinet position, a move applauded by distributed energy advocates.
Finance
Most proposed grant funds for renewable energy did not survive their voyages to the Finance and Appropriations committees, but two avoided the shoals and have now been approved by the governor. One is a new clean energy innovation bank and fund. The other is a one-year, $2 million grant fund to defray solar interconnection costs incurred by public bodies.
Utility regulation
The governor approved the General Assembly’s overhaul of the utility planning process. Among the changes, Appalachian Power will once again have to submit integrated resource plans (IRPs) to the State Corporation Commission, all IRPs will use a 20-year planning period instead of 15 years, and both utilities must align their IRPs more closely with the VCEA.
Also approved was a bill requiring the SCC to consider and make recommendations on proposals concerning performance-based regulation of utilities.
Dominion and APCo will now have to submit annual reports to the SCC disclosing their votes at regional transmission organization PJM and explaining how these votes are in the public interest. The utilities’ votes were previously secret. Rising electricity rates due to data center demand and PJM’s failure to move on renewable energy projects awaiting interconnection have triggered suspicions that the utilities with voting power at PJM might be acting – ahem – other than in their customers’ best interests.
Of course, the move that will most affect the plans of utilities and other power generators is Virginia’s return to the Regional Greenhouse Gas Initiative, required now by statute. The timeline and procedure is laid out in the budget, but the administration hasn’t waited for that to be finalized. A statement from RGGI welcoming Virginia back into its fold says our participation will be in effect in time for this September’s carbon auction.
Grid optimization
The governor proposed, and legislators agreed to, a disappointing amendment to a bill requiring Dominion and APCo to assess their surplus interconnection capacities and establish pilot programs to add solar and storage at these connection points. The General Assembly had set hard targets for the pilot programs, subject to SCC approval; the amendment loosens the targets with the addition of the phrase “up to” those amounts. This further weakens a bill that was already a skinny version of its original handsome self.
Finally, Dominion and APCo will need to report grid utilization metrics to the SCC, which will use that data to report on the potential for increased grid utilization using non-wires alternatives.
Reports show that 2025 was another record year for solar in the United States. The nation saw 27,225 MW of solar added last year, more than any other energy source and blowing away natural gas, the only fossil fuel that gained capacity. In fact, the U.S. also installed more energy storage and wind energy than gas. All in all, clean energy added 50 GW to the grid, fully 92% of all new generating capacity.
And this didn’t just happen in states with renewable energy mandates. Texas took the lead on clean energy from California, installing 11.6 GW of new solar and 7 GW of battery storage. Indiana, Florida, Arizona, Ohio, Utah, and Arkansas were also among the top 10 states for solar additions in 2025.
But then there was Virginia. Virginia installed only 716 MW of solar in 2025, the least amount since 2019 and less than half of what it installed in 2024. The state added no new battery storage, though the Department of Environmental Quality approved plans for several projects late in the year.
For a state with one of the most ambitious energy transition laws in the country, we should be doing a heck of a lot better. For context: 716 MW of solar is less than the amount of new data center capacity Dominion Energy Virginia says it’s receiving requests for each month.
Never mind the Virginia Clean Economy Act, Virginia is going backwards on climate.
In 2020, the VCEA set Virginia on a path to 100% carbon-free electricity by 2050, with clean energy targets that were both ambitious and achievable. In 2020, though, electricity use was barely growing. Today, our utilities are swamped with new demand from data centers.
Instead of ramping up additions of solar and storage, utilities are importing more fossil fuel electricity from other states – and in the case of Dominion, bucking the national trend towards renewables and instead pursuing a 944-MW gas peaker plant.
Sadly, the State Corporation Commission, which should enforce the VCEA, all but rubber-stamped Dominion’s flawed claim that the gas plant meets the requirements of the law’s reliability escape clause. The result will be higher bills for its customers, as Dominion’s increased reliance on fracked gas runs into the high gas prices that have made other states turn so heavily to clean energy.
The SCC also made it harder for the private sector to install solar. In February, the commission rejected a challenge from the Distributed Solar Alliance to Dominion’s punitive new interconnection requirements for projects over 250 kW, including most large rooftop projects on public schools. Again, the SCC simply accepted Dominion’s claims in the face of strong contradictory evidence.
All this backsliding has probably driven CO2 emissions higher instead of lower, though we don’t know for sure. Dominion used to calculate carbon emissions from its power plants in its integrated resource plans (IRPs) back when the numbers were declining. Its last couple of IRPs omitted the information, which might have drawn unwelcome attention to the incompatibility of new gas plants with climate action.
As for the state as a whole, the Department of Environmental Quality is responsible for keeping track of Virginia’s greenhouse gas emissions, updating an inventory it keeps on its website.
However, DEQ produced no updates during former Gov. Glenn Youngkin’s administration until Youngkin was on his way out at the end of 2025, when it released an update for 2021. In response to an email I sent to DEQ, a spokeswoman told me the agency is now working on the 2022 inventory, and that this lag time is totally normal.
We have to assume the numbers for 2022 won’t be good, but they will only have gotten worse between then and now. Nationwide, greenhouse gas emissions increased by 2.4% in 2025, including a 3.8% rise in power sector emissions due to utilities burning 13% more coal. The increase in coal-burning is attributed to rising data center demand and high natural gas prices, which motivated fuel-switching at utilities.
But all that was 2025; in 2026 we have a new Democratic governor and Democratic majorities in the House and Senate. Surely things are looking up?
Dominion’s 2,600 MW Coastal Virginia Offshore Wind (CVOW) project will start delivering carbon-free power this month, with full completion expected next winter. The General Assembly has sent to the governor’s office the most ambitious set of energy bills since the VCEA, along with legislation and a budget amendment that will put Virginia back into the Regional Greenhouse Gas Initiative (RGGI).
Returning to RGGI is important to reducing CO2, but it’s no panacea. RGGI works by sending a market signal to electricity generators in member states, rewarding efficiency and carbon-free energy and penalizing carbon-emitting generation.
However, it does not reach generators in non-member states, so the electricity Virginia imports is largely unmanaged. That’s a huge loophole that will only grow with the data center industry here, driving up overall carbon emissions. In the case of Northern Virginia Electric Cooperative – second in data center load only to Dominion – almost all of the electricity it provides to its customers is imported, and it is projecting enormous growth.
There are ways to close the loophole. Electric cooperatives could be required to meet the same renewable energy minimums that apply to Dominion and Appalachian Power, and data centers located anywhere in the state could be required to source clean energy. (The latter requirement was included in bills in both the House and Senate that died this year, though the House provisions might still be incorporated into a budget amendment that the governor and General Assembly leaders are debating.)
The SCC’s willingness to put consumers and the climate second to Dominion’s interests presents a separate problem. Some of the bills passed this year will make it harder for Dominion to propose further investments in gas plants; in particular, legislation requiring more storage and demand response and better management of the grid all work against the case for expensive peaker plants.
The House and Senate also passed integrated resource planning reform legislation that requires Dominion and Appalachian Power to present the SCC with plans that adhere more closely to the spirit of the VCEA. The General Assembly is also taking tentative stepstowards performance-based regulation, which would reward utilities for doing things like meeting clean energy and affordability goals rather than for just building more infrastructure.
But there is no way to fully tame profit-motivated utility monopolies that lavish elected officials with millions of dollars in campaign contributions. Gov. Abigail Spanberger and legislative leaders will have to remain vigilant and ready to counter SCC missteps like its orders on interconnection and Dominion’s gas plant, and to keep the pressure on the utilities to make money in ways that are better aligned with the public interest.
The good news is that Dominion tends to bend with the political winds. Though in the last few years it doubled down on gas in sync with Republican obsessions, back in 2022 it published a climate report that envisioned a grid dominated by solar. This year, with Democrats back in charge, Dominion is already acceding to some legislative initiatives it fought in past years.
But Spanberger needs to drive the agenda. She will have an opportunity to lay out a path forward this fall when she releases the energy plan that Virginia law requires of each new governor.
According to statute, the plan needs to identify actions to be taken over the next 10 years that further the goals of the Commonwealth Clean Energy Policy. The policy has a timeline that is even more aggressive than the VCEA’s (2040 instead of 2050 for electricity), and it targets the entire economy for decarbonization by 2045. That means the governor’s energy plan must address emissions from transportation, buildings, industry and agriculture as well as the power sector.
After that, it will be up to the governor to make sure her administration and the legislature follow through with the plan. Certainly, they face a daunting task in putting Virginia back on its climate track. But we won’t get there by building more gas and less solar.
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. . .
Power for the People VA 