ASHBURN, Va.—Traveling along Route 28 in Loudoun County, Virginia, massive data centers dominate the landscape. These centers house computers that power the internet and artificial intelligence, distinguishing the region as a leader in this sector.
Virginia, particularly Northern Virginia, outranks global competitors like Beijing in data center development due to its government support, existing infrastructure, affordable electricity, and available land.
Harvard Business School’s Shane Greenstein commented, “With land available next to Dulles airport and easy internet access, Virginia’s dominance isn’t surprising.” The rise of AI has led to even larger data centers, maintaining Virginia’s appeal for expansion compared to emerging markets like Columbus, Ohio, and Phoenix.
According to Cushman & Wakefield, Virginia had 6,247 megawatts of data centers and 2,610 megawatts under construction as of June, far surpassing any other market. But these facilities employ few compared to their vast capacities, with 12,140 operational jobs, which is less than the number of school bus drivers in the state.
Environmentalists argue the costs outweigh benefits, pointing to local farm loss and increasing national electricity demand, which conflicts with reducing greenhouse gases.
The Piedmont Environmental Council highlighted a withdrawn 2.2-million-square-foot proposal in Remington, Virginia, which required 800 megawatts, nearly paralleling Vermont’s peak load.
Paving the Information Super Highway
Initially, Virginia’s proximity to Washington, D.C., and institutions like DARPA laid the groundwork for its prominence in the internet era. In the 1990s, companies like America Online moved to Loudoun County, attracting other internet businesses and spurring investment in data infrastructure.
Equinix established Northern Virginia’s first data center in 1998, setting a precedent for data storage. The dot-com bust led to re-purposing vacated buildings for new internet giants such as Amazon, which opened its first regional data center in 2006.
Dominion Energy, Virginia’s largest utility, encouraged this development with competitive electricity prices, lower than many competitors. In 2008, Virginia’s tax incentives increased investments, leading to projects from tech giants like Facebook and Google.
Amazon’s $2.5 billion investment in a second headquarters in Arlington and $35 billion in statewide data centers stands out. Virginia’s data centers consumed 3,583 megawatts in 2024, nearly seven times the 2013 amount.
With AI data centers requiring more power, analysts suggest Virginia’s dominance will persist. However, as data centers increase, so do concerns. Virginia’s Joint Legislative and Audit Review Commission reported the industry could triple energy demands, impacting the economy with 74,000 jobs and $9.1 billion added to the GDP.
Yet, the report lacks forecasts on resources and environmental impact. Concerns are growing over increasing electricity rates, loss of rural land, and ecosystem damage. Virginia’s utility regulator is reviewing Dominion’s proposal to raise household bills due to grid upgrades and supply issues.
The Piedmont Environmental Council acknowledges data centers’ regional benefits, funding schools and public services. However, they question the balance of benefits against environmental costs, emphasizing the need for comprehensive evaluations.
The rise of AI data centers might spark an investment bubble, questioning their long-term viability. Despite the state’s advantages, Virginia’s transformation into the data center capital raises questions about costs, environmental impacts, and business sustainability.
Original Story at insideclimatenews.org