What ‘data center alley’ portends for America’s AI-powered future
As data centers hurtle to the forefront of the national debate over artificial intelligence (AI) and energy costs, northern Virginia offers a preview of the political fights that will play out in communities across the country seeking to cash in on the booming industry. Virginia is the unofficial data center capital of the world, with...
As data centers hurtle to the forefront of the national debate over artificial intelligence (AI) and energy costs, northern Virginia offers a preview of the political fights that will play out in communities across the country seeking to cash in on the booming industry.
Virginia is the unofficial data center capital of the world, with more than half of the world’s internet traffic running through hundreds of facilities in Loudoun and Fairfax counties, generating some 74,000 jobs and $9.1 billion for the state’s economy each year.
But the sprawling data centers are also transforming the landscape and gobbling up massive amounts of water and electricity, leading state politicians to grapple with how to regulate and monitor the rapid development — without alienating the powerful interests backing the projects, from tech giants to local leaders and labor unions.
It’s a delicate balance that’s quickly moving to the center of a national conversation about how to execute on the Trump administration’s push to rapidly expand the country’s AI infrastructure.
Policymakers across the country are watching Virginia’s efforts closely, said Michael Villa, an analyst at 10a Labs, the AI company behind the Data Center Watch Project.
“They look up to Northern Virginia because [they] are the ones with more experience and where this dynamic has been working for longer,” he told The Hill.
Your data is ‘in a building in Ashburn’
Northern Virginia has been a hot spot for data centers stretching back to the 1990s, due to its proximity to the nation’s capital and surrounding metro areas, land affordability, tax breaks and local ordinances clearing the way for construction.
The demand for the data centers — massive facilities that house computers, servers, and other IT systems that process and store online data — has steadily increased over the years and is set to explode amid the global race for computing power.
“Everybody doesn’t really realize that your data isn’t just out there, your photos are not just wandering in the ether,” said Trinity Mills, a conservation advocacy coordinator at the Loudoun Wildlife Conservancy. “They’re in a building in Ashburn.”
It’s a frustrating reality for people living next to these buildings, who point to higher energy bills and increased noise in their neighborhoods.
Tracy Fowle, a 57-year-old lifelong resident of Loudoun County, said the emergence of data centers in her community is driving her out.
“Well, it’s certainly very depressing, such so that I’m going to be leaving the area…We are going to put our house on the market next year,” Fowle told The Hill. “We’ve lived here since 2006, but this is not a comfortable place for me anymore.”
“The power lines, the growth of the data centers [and] the construction doesn’t stop. It is just ongoing. And I would rather have something more peaceful in my backyard,” she added.
With Homeowner Associations (HOAs) unable to slow the construction, she said residents have three choice: “grin and bear it,” move someplace else or band together to force political action.
Energy costs: A major flashpoint
The impact on energy costs, amid a growing focus on “affordability” under Trump, is particularly prickly for developers.
The three states with the largest concentration of data centers saw a surge in utility bills as of August, compared to the same time last year. Illinois saw a 16 percent increase, Virginia followed at 13 percent and Ohio at 12 percent, according to a report from CNBC, well above the 6 percent average national increase in electricity prices.
Some of the largest data centers are expected to consume as much electricity as a city of more than half a million people, Ali Fenn, president of Lancium, a company that secures land and power for data centers in Texas, told CNBC.
Dan Dorio, vice president of state policy at the Data Center Coalition (DCC), a membership organization for the industry, said the jury is still out on the impact of these projects on regional energy costs.
He pointed to a University of California, Berkeley study that found states with the highest “load growth” in electricity demand saw reductions in real prices from 2019 to 2024, “whereas states with contracting loads generally saw prices rise.”
“The industry is leaning in to be a responsible, [responsive] partner in the communities where they operate to help answer questions about the development, to work with those local leaders, those local infrastructure providers, to ensure that these projects are going to be economic value to the community,” Dorio said.
Over 300 data centers across northern Virginia used nearly two billion gallons of water in 2023, while Loudoun County alone used 900 million, according to a study by the Environmental and Energy Study Institute.
Along with using substantial amounts of water to cool off servers, data centers depend on back-up diesel generators that pollute the air 200-600 times more than natural gas-fired power plants, according to a study conducted by University of California, Riverside.
Emissions are projected to cost the public health care system more than $20 billion come 2028, with disadvantaged communities being more susceptible, according to the study.
Uphill fight to impose guardrails
The financial benefits of data centers for local coffers are undeniable.
Revenue generated from data centers accounts for over a third of Loudoun’s tax base, bringing the county over $1 billion this year, and has reduced residential property taxes by 48 cents per $100 of value, according to a Loudoun County spokesperson.
However, Buddy Rizer, executive director for economic development in Loudoun County, said the county is slowing down applications because of energy constraints.
“We’re toward the end of our growth for data centers,” he said.
But Rizer doesn’t expect the national demand to slow down anytime soon.
“I don’t know what the alternative is, unless everyone’s going to stop using the internet,” he said.
Given the economic boon, lawmakers have been cautious in crafting new regulations.
Virginia House Del. Ian Lovejoy, a Republican who represents a district in northern Virginia, introduced legislation to place a land buffer between data centers and residential areas, spurred by data centers sharing property lines with homes and elementary schools in his district.
He has found support from Del. Shelly Simonds (D), who plans to introduce her own legislation tracking water usage by the facilities in the state.
Both Simonds and Lovejoy said that bills to regulate the centers have been hard to pass due to some indifference from colleagues representing southern Virginia and opposition from local politicians on county boards that support the developments.
“There’s a rising awareness that the data centers are contributing to higher energy costs across the state,” said Simonds, who represents a southern Virginia district.
State legislators managed to pass some legislation to regulate the industry earlier this year, only to have it shot down by Virginia Gov. Glenn Youngkin, a Republican.
Youngkin vetoed the bill in November that would’ve required developers to perform a land assessment of proposals that are within 500 feet of homes and schools, looking at ground and surface water resources in the area and potential interference with historic sites.
“While well-intentioned, the legislation imposes a one-size-fits-all approach on communities that are best positioned to make their own decisions,” he said in explaining the veto.
“Virginia is the data center capital of the world, and we should not enact legislation to allow other states to pass us by nor to restrict local government from developing data centers based on their community’s specific circumstances,” Youngkin continued.
Powerful forces meet growing resistance
Prominent data center operators have also courted Virginia lawmakers on both sides of the aisle.
A Business Insider review of filings earlier this year found that the DCC donated around $165,000 to state lawmakers between last year’s November elections and the start of the January legislative session.
The group donated $25,000 to Youngkin, who last month announced two data center developments from Vantage and CleanArc Data Centers, collectively valued at $5 billion.
The incoming Democratic administration of Gov.-elect Abigail Spangerger and Lt. Gov.-elect Ghazala Hashmi has proposed working with the legislature to force data centers to “pay their fair share” for electricity, to ensure that consumers don’t see inflated energy bills.
But data centers have faced limited resistance at the state level, due in part to an unusual alliance between big business and labor unions, said Lovejoy, the Republican state legislator.
“You have the business community, and you have the labor unions who really, really enjoy these types of projects,” he said. “So you have sort of this bond between two opposing forces that are usually opposed to one another, all swimming in the same direction for once.”
However, voices of opposition are seeing increasing success across the country.
At least 16 data center projects, including nine in Virginia, have been blocked or delayed as local opposition mounts to the developments, according to a new study, which also found growing opposition from local politicians in both parties.
Brennan Gilmore, executive director of environmental group Clean Virginia, said that mounting successful opposition now was especially important because the “worst impacts are still to come.”
Gilmore warned of projections that energy costs would double or even triple if the current trajectory in data centers continued.
“Virginia is expected to bear the burden of building out the infrastructure to support that level of demand, a build out that took 100 years to get to our current level, in an extraordinarily collapsed time frame,” he said. “So essentially we have an energy crisis on the horizon.”
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