Virginia’s data center boom tests clean energy law
Known as the data center capital of the world, Virginia offers a crucial test case for electric utilities: Can they meet power demand from the explosion of AI while keeping bills affordable and slashing carbon emissions?
Many experts fear that Dominion Energy, Virginia’s largest utility, is failing that test.
In July, the company won approval from state regulators for its plan to construct a raft of new fossil-fueled plants over the next 15 years — despite a Virginia law that discourages such plants and requires them to phase out completely by 2045.
Now, Dominion is asking the same regulators for permission to build the first of those facilities: a 944-megawatt “peaker” complex that would operate only when demand is at its highest. The utility says the four-unit “reliability center” in Chesterfield County, just outside Richmond, is the best way to meet a surge in electricity needs and warrants an exception to the state’s decarbonization law.
But in a flurry of paper filings over the last month, clean energy advocates and industry groups disagreed — acknowledging a growing demand for power but maintaining that Dominion ignored a range of alternatives in order to justify the new gas complex. Even the nonpartisan expert staff for the regulatory body, the State Corporation Commission, criticized Dominion’s rationale for the permit.
“No one is denying that there is some load growth, and we will need new resources,” Peter Anderson, energy policy director for advocacy group Appalachian Voices, said in a statement. “But there is no justification for backtracking on clean energy progress and saddling communities with new polluting plants.”
“Unacceptable threats to reliability”?
Virginia has fast become ground zero for data centers — immense buildings that house computers and related hardware that power AI chatbots and other software that’s now part of everyday life. The state is already home to hundreds of these facilities, especially outside of Washington, D.C., and along Interstate 95.
Just last week, Google announced plans for another data center in Virginia, and many more are on the way, Dominion says, helping to spur a 5% annual rise in peak electricity use over the next 15 years. And while some critics question the specifics, they accept the overall trajectory of growth.
But the demand surge is testing the limits of the 2020 Virginia Clean Economy Act. The law forces Dominion to convert to carbon-free power in the next two decades and prevents the company from building new fossil-fuel plants until it meets official energy-efficiency targets. The company must also prove that fossil-fuel generation is more cost-effective than nonpolluting means of meeting demand.
Dominion nodded to the law in its March application for the reliability center but also noted that the statute “does not require that the Commission take any action which, in its determination, ‘threatens the reliability or security of electric service to the utility’s customers.’”
The new gas complex is the only cost-effective solution, according to the utility. Without it, the company said in its filing, “unacceptable threats to reliability” will ensue.
“They biased the entire process”
But in written testimony filed with regulators in recent weeks, multiple experts rejected Dominion’s conclusions on both reliability and cost-effectiveness.
Many said a “cold snap analysis,” which Dominion relied on to show that the gas complex would be crucial during extreme cold weather, was unpersuasive. Dominion could easily avoid power shortages by using fully charged batteries and suspending exports to Duke Energy customers in North Carolina, consultants for Appalachian Voices and other nonprofits testified. By correcting these and other assumptions, “all identified energy violations are resolvable without constructing Chesterfield,” Ryan Deyoe, a power markets specialist at analytics firm Telos Energy, wrote on behalf of the groups.