In his State of the Commonwealth Address this week, Gov. Glenn Youngkin made the case that Virginia needs to ramp up energy production. Specifically, he said that energy production needed to be nearly doubled over the next 10 years.
This declaration shouldn’t come as a surprise, not after a state report in December that said, if data centers continue to grow without any restraints, electricity demand in the state will nearly triple. Even if their growth is restrained — and we’re seeing moves at both the state and local level that might do that — the demand for electricity is still projected to double, the report said.
However, Youngkin cited another figure that might have taken some by surprise: “We now import roughly 40% of our power needs versus 18% in 2020,” Youngkin said. “Worse yet, the cost of that imported power is almost 10 times higher than it was just one year ago.”
This is true, and becomes the subject of today’s column.
The growth in Virginia’s need to import energy coincides with, yes, the growth of data centers.
Here’s a figure that Youngkin didn’t cite but is just as relevant: Virginia now imports more electricity than any other state.
California has been the nation’s top importer of electricity. Given its size and its growing aversion to fossil fuels, that’s understandable. However, the U.S. Energy Information Administration reported in December that California’s electricity imports have dropped, while Virginia’s have risen, and Virginia now imports more electricity than any other state. Virginia now imports about 50 million megawatt-hours per year, the EIA said, while California’s imports are down to 43 million megawatt-hours.
In 2019, the figures were quite different, with California importing 71 megawatt-hours and Virginia, then in fourth place, 31.
The EIA says there’s a simple reason for this: Virginia needs more out-of-state power because data centers are growing so fast while California has made a big push to add solar energy, which has reduced its need for out-of-state power:
“For decades, utilities in California and Virginia have consumed more electricity than they produce. Electricity generation has increased in both states, but interstate receipts have generally increased in Virginia over the past five years while they have decreased in California. Between 2019 and 2023, electricity receipts by Virginia utilities increased by 61% (19.0 million MWh), while California utilities’ receipts declined by 39% (27.8 million Mwh).
“Interstate electricity receipts into Virginia have increased with growing commercial-sector demand, including from data centers. The decrease in California is due to a combination of increased rooftop and net-metered solar installations and investment in energy efficiency programs. Rooftop solar capacity in California is greater than in any other state, and more utility-scale solar farm capacity is located there than in any other state. For example, the 16.6 gigawatts (GW) of rooftop solar capacity in California exceeds the 15.0 GW of utility-scale solar farms in Texas.”
In theory, there’s nothing inherently wrong with importing electricity. We must take a brief detour to describe how trade of any kind works, courtesy of the 18th century Scottish economist Adam Smith: Trade is supposed to encourage efficiency. We import things that are more efficient to produce elsewhere. Take coffee, for instance. Two-thirds of American adults drink coffee daily. In theory, American farmers could supply that demand — if they grew coffee in greenhouses, which is both difficult and expensive. Instead, it’s cheaper and easier just to import it from countries whose climates are better suited for coffee-growing. (Fun fact: There’s a smidge of coffee-growing in California, Hawaii and Puerto Rico.)
The same principle applies to electricity or anything else. In this case, the EIA says that 25 states produce more electricity than they consume, so naturally that excess gets sold to other states. (The states themselves really have nothing to do with this; these are all utility-to-utility sales.) The problem comes with the price — and, if you care about such things, the source. There’s also the question of how dependent you want to be on other states for power. Nobody seems to mind that 80% of our coffee comes from Latin America, but we have started to care about how so many of our electronics come from China. How much should we care that we’re becoming increasingly dependent on other states for our electricity — and will become more so as our power demands grow?
Youngkin is, and he cites the increased cost — which does have the effect of making Virginia less competitive to companies that are comparing costs. However, doubling energy production in Virginia, as he wants, means that we need more energy generation sites — be they solar farms, nuclear stations, natural gas plants, wind farms, you name it. Meanwhile, conservative rural localities are becoming increasingly resistant to solar projects, not many people want a nuclear plant next to them, environmentalists are quick to point out that natural gas is a fossil fuel, and Trump has made it clear that he is “going to try and have a policy where no windmills are being built.” (He consistently and incorrectly refers to wind turbines as windmills. Windmills use wind to perform a mechanical function, such as grinding grain. Wind turbines convert wind into electricity. Feel free to oppose them, if you wish, but let’s at least call things by their correct name.) The point is, it’s hard to build any energy generation sites. We can’t have “all of the above” energy if the reality is “none of the above” from local governments. We can’t really have any new energy, at least not our own.
I dealt with some of those issues in a previous column so no need to repeat those. Instead, let’s look at electricity imports this way: Virginia is part of the PJM electric grid, which covers parts of Illinois, Indiana, Kentucky, Michigan, North Carolina and Tennessee and all of Delaware, Maryland, New Jersey, Ohio, Pennsylvania and West Virginia plus the District of Columbia. Of those 13 states included, the EIA says four are energy exporters: Illinois, Michigan, Pennsylvania and West Virginia. Since only parts of Illinois and Michigan are in the PJM, let’s concentrate on the other two energy export states, both of which are fully within this grid.
Virginia is buying expensive out-of-state energy.
In both states, the electricity is more expensive than in Virginia, according to the EIA. So, yes, Youngkin is right: Whenever we import electricity, we’re paying more for it than we’re paying for power generated within the state. I realize electric customers may find this hard to believe, but the EIA shows that Virginia has some of the least expensive electricity in the country — only 16 states are cheaper, while 33 are more expensive. (These are based on the EIA’s totals for each state; some sectors are more or less expensive. For instance, Virginia’s power is rated cheaper than North Carolina overall but industrial rates are cheaper in North Carolina, which helps make North Carolina more competitive for economic development purposes.)
For those who are concerned that we’re pumping too much carbon into the atmosphere and throwing the climate off-kilter, consider this:
At the same time that Virginia is mandating an elimination of carbon-based fuels, we’re importing more carbon-based fuel.
Right now, Virginia gets about 63% of its energy from carbon-based energy sources, according to Choose Energy. Most of the non-carbon energy comes from nuclear (almost 29%) although solar is now up to 7.22% of the state’s energy mix.
Pennsylvania is, by far, the top electricity exporter in the country, and it’s within our grid. The EIA shows its power is also about 10% more expensive than ours. It’s also primarily based on natural gas — 62.62% of Pennsylvania’s power comes from natural gas. That’s not necessarily what makes it more expensive; Louisiana gets about three-fourths of its power from natural gas and it has the second-cheapest electricity in the country. (Electricity pricing is complicated.)
If we buy power from West Virginia, its power is also more expensive — and, I know you’ll be shocked by this, 82.69% of it comes from coal.
It is possible for utilities to buy power from other grids, so let’s look at some of the other top energy-exporting states.
Alabama ranks second; its power is also more expensive than Virginia’s, and 52.51% of its power comes from natural gas.
Illinois ranks third and yes, its power is also more expensive than ours; 52.11% of its power comes from nuclear.
Wyoming ranks fourth and, finally, we get to a state whose power is cheaper than ours; 62.68% of that comes from coal.
Arizona ranks fifth. Again, more expensive than ours, and 50.79% comes from natural gas.
The bottom line: Four of the top five energy-exporting states have rates that are higher than ours and four of the top five (just a different four) rely primarily on fossil fuels. That means the more electricity we import from other states, the more we’re reliant on more expensive electricity — and are doing more to pump carbon into the air. It seems contradictory for Virginia to say, “Oh, no, we’re not going to produce any carbon,” but then pay others to do it for us.
Is there common ground here?
It’s easy to focus on political conflict; it’s harder to find common ground — but in theory there ought to be some here. We’d all benefit from cheaper electricity as well as from cleaner electricity. That, though, would mean building more energy generation — and agreeing on what kind it should be. As we’re seeing, there’s not much common ground about that, at all.
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