Plans are underway to develop a data center complex in Wise County that would include approximately 2 million square feet of building space supported by on-site natural gas-fired power generation.
Officials say the Wise Innovation Hub would be built in phases over about 10 years at the county’s Lonesome Pine Regional Business and Technology Park, which also contains the existing Mineral Gap data center.
The new data center complex could create hundreds of construction jobs and ongoing operational jobs and eventually bring tens of millions of dollars in annual tax revenue to Wise County, officials say.
The project is in the early stages, and details are still being refined. In December, Red Post Energy, a Houston-based independent power producer founded last year, signed a letter of intent with the development’s venture firm, Wise Innovation Hub LLC, for Red Post to design the on-site natural gas power generation.
With that announcement now public, officials plan to increase public outreach this year.
“We’re not going to rush this. … We fully understand that our community is going to need to be involved in this process,” said Brian Falin, Wise County’s industrial development supervisor and director of the county’s industrial development authority.
The plan to have the Wise County project provide its own electricity generation comes at a time when Virginia data centers’ growing electricity usage — including who should pay for infrastructure and other costs associated with that usage — has been a major point of discussion during the General Assembly.
Co-locating natural gas power plants with data centers is a new idea in Virginia, and the extent of the involvement of the local electric utility and the state agency that regulates public utilities remains unclear.
The Wise Innovation Hub represents the latest example of the Virginia data center industry expanding outside the heavily concentrated Northern Virginia region — often called the “data center capital of the world” — to places that can offer advantages such as lower taxes and cheaper land.
Other proposals to build data centers in Southside or Southwest Virginia have been met with mixed receptions. Some residents have welcomed the potential jobs and tax revenue, while others have expressed concerns about impacts on electricity consumption, water usage and land.
Power is a primary challenge
Data centers use buildings full of computer servers and equipment to power businesses, governments and online services, including artificial intelligence, shopping and videos. All of that computing power requires large amounts of electricity.
For the Wise County project, that’s where Red Post Energy comes in. The company was founded last year by CEO Lance Medlin, a Texas native who formerly worked in the oil industry and describes himself as both an environmentalist and an industrialist.
Red Post’s plan is to independently build, own and operate power-generation facilities. In the relatively isolated and mountainous terrain of Southwest Virginia, building small, boutique power generation on site could be more cost-effective than upgrading nearby electric grid infrastructure, Medlin said.
“You have some topography that makes it hard. I won’t say hard from a construction or engineering perspective — it’s just hills and rock, right? But it makes it hard on the economics,” Medlin said. “So it’s hard to put all that labor and machinery and engineering into something that’s kind of out there a bit.”
The Wise County complex’s first 100 megawatts or so of gas generation could potentially come online in about three years and eventually scale up to 500 or 600 megawatts, he said.
For context, assuming an average home uses 1,000 kilowatt-hours of electricity per month, a 100-megawatt power plant has the capacity to power about 72,000 average homes.
Officials said the nine buildings to house data center equipment, which would each be around 240,000 square feet, would be built in phases as clients come on board.
A 2024 state report described a “typical” data center as 250,000 square feet.
Each of the nine buildings would require about 50 megawatts of power, and the electricity generation would scale up along with the buildout of the data center space.
“You’re not putting all of these buildings up at once,” said Ross Litkenhous, a development partner in the Wise Innovation Hub venture firm, co-founder of King George County-based Oasis Digital Properties and CEO of Falls Church-based Cavalry Real Estate Advisors. “We’re building in sequence and so you’re ramping up power in sequence.”
“We will build to the power load delivery. But it also requires us to bring the end users into these buildings that are the ones that are going to be buying the power. And so there’s all this mechanics and kind of choreography of how that works.”
The gas plant would supply most of its power to the data centers, but about 20% to 30% of the electricity would go back to the grid for other electricity customers to use, Medlin said.
Medlin said he believes that keeping 100% of the power only for the data center complex is “morally wrong” because it would mean using scarce resources to build power generation that doesn’t provide electricity to the wider community.
Water, gas details still in progress
Concerns about data centers often revolve around how much water they use. Some data center designs can use hundreds of thousands or even millions of gallons of water per day.
Falin said he doesn’t anticipate the Wise Innovation Hub will be a heavy user of water because of advances in the technology used to cool data center equipment.
The industrial park’s water service comes via the town of Wise, and there have been discussions with the county’s public service authority about bringing additional capacity to the park if needed, he said.
“We learned very early on that that was not going to be one of our obstacles,” Falin said.
The business park already has natural gas lines running to it, but supplying a power plant of that size likely would require upgrades, he said.
The developers are in talks with pipeline developers about addressing those infrastructure needs.
“It’s not going to be a situation where we’re going to be looking at several hundred miles of new natural gas pipelines. That’s not what’s going to be involved in this,” Falin said.
“It’s really going to be evaluating what the current infrastructure is and then evaluating what the most opportune way to get additional capacity to this site will be.”
County takes new perspective on jobs, economic development
The Lonesome Pine park totals about 400 acres, with about 300 acres available. Fully building out the data center complex would use up that remaining space, Falin said.
“When we start looking at a per-acre benefit to the county, we’re fully aware that nothing is going to give us the benefit that a data center is going to bring,” he said.
Building the power plant would likely bring 500 to 700 construction jobs to Wise County, and running the power plant would require somewhere between 140 and 260 jobs, Medlin said.
Red Post also plans to offer office space to Siemens and other technology companies to start up a technical training center in Wise County, Medlin said.
Space in the complex would be leased to multiple data center clients. Each of the complex’s nine buildings is projected to support 30 to 50 operational jobs, Falin and Litkenhous said.
Falin said those jobs won’t come all at once — and that’s a good thing.
Conversations with regional employers show they’re already facing a shortage of workers, he said.
Census data shows that Wise County’s population is declining, from 41,452 in 2010 to an estimated 34,973 in 2024.
A project that created a large number of jobs all at once, rather than in phases, “would almost be devastating,” Falin said.
“We don’t have the workforce available in the short term to fill those jobs, and that’s just going to pull employees from the other employers that we have,” he said.
More desirable, Falin said, is an investment such as a data center that brings large amounts of capital that can be taxed.
“There’s been this shift in the economic development dynamic. It always used to be you were chasing the whale job creators. You were chasing the 500, 1,000, 1,500 jobs with minimal capital investment,” Falin said.
“There’s been just a big swing in that now, in that the capital taxable investment is more of a priority for us than the huge job creators. Yes, we know we need jobs in our area, but we have to be realistic about what we can accommodate.”
Local tax rate for data centers is among the lowest
If the Wise Innovation Hub comes to fruition, it would join a relatively small but growing pool of data centers in Southwest and Southside Virginia.
Virginia is the largest data center market in the world. Most of the commonwealth’s data centers are concentrated in Northern Virginia, thanks to the region’s development of electric and internet infrastructure.
Among the better-known data centers outside that part of the commonwealth is the Microsoft facility in Mecklenburg County. It first opened in 2010 and has expanded multiple times since then.
Last year, plans for potential data centers were announced for industrial parks in Botetourt and Wythe counties.
In Botetourt County, Google bought 312 acres in the county’s Botetourt Center at Greenfield to potentially build data centers. The tech giant paid $14 million and committed another $4 million to local projects benefiting the county’s fire service, law enforcement, schools and other departments.
Water usage has become a point of contention with that project, as documents show that Google could possibly use two million to eight million gallons of water per day to mitigate the heat produced by the data centers’ computer equipment.
In Wythe County, a new company called Solis Arx plans to build data centers on a 99-acre lot in the county’s Progress Park. The developer has said water usage will remain far below the available supply because the project will use more efficient closed-loop and air-cooled systems.
Wise County has been working for years to make itself attractive to the capital investment that data centers bring, Falin said.
In addition to preparing the Lonesome Pine technology park for development, the county has one of the lowest tax rates in Virginia for data center equipment at 24 cents per $100 of assessed value.
For comparison, Mecklenburg County, home to the large Microsoft facility, has a tax rate of 66 cents.
Loudoun County — the Northern Virginia locale that is home to the largest data center market in the world, dubbed “Data Center Alley” — levies a rate of $4.15, the same as its general personal property tax rate.
Even with Wise County’s low rate, Falin said he anticipates that property and real estate taxes from each of the nine data center buildings could bring $3 million to $5 million annually in revenue.
Wise County’s total annual budget is around $83 million, and it’s been wrestling with a multimillion-dollar budget gap.
Falin said that while he believes county supervisors will solve the budget problems independently of the data center plans, building the complex has the “potential to be transformative,” even though the benefits likely won’t accrue for several years.
“It’s no secret that we’re experiencing a little bit of a budget situation right now in Wise County. We’re not desperate, but this is our opportunity to course correct on our budget situation for generations,” Falin said.
In Mecklenburg County, for example, data center taxes account for more than a third of the county’s general revenue and helped pay for a $154 million project to renovate a high school and middle school.
General Assembly debates state tax exemption
In Virginia, data centers that meet certain requirements, including investing at least $150 million and creating at least 50 jobs — or, in economically distressed localities, $70 million and 10 jobs — are exempt from paying state retail sales and use tax on computers and other equipment. The tax exemption is set to end in 2035.
As the Virginia General Assembly works out the next biennial budget, the Senate money committee has proposed ending that exemption in 2027, which the committee said could lead to nearly $1 billion in additional revenue over the biennium.
“It’s time for data centers to pay their fair share,” Sen. Louise Lucas, D-Portsmouth, said in a social media post.
In the House, Del. Rip Sullivan, D-Fairfax County, is carrying HB 897, which would continue the tax exemption for data centers that move away from using fossil fuels.
If that bill became law, the Wise Innovation Hub would be ineligible for the tax exemption because of its natural gas plant.
Litkenhous said Sullivan’s measure hurts efforts to build data centers in “frontier markets” such as Southwest Virginia, where the electric grid infrastructure is not as robust as it is in Northern Virginia.
On-site gas generation is “a necessary option, and in some cases the only option,” Litkenhous said.
The tax exemption also helps data center developers attract clients, he said.
“Not only are we competing with the rest of Virginia, but we are also competing with other states to attract and retain those end users,” Litkenhous said.
Details on roles of utility, state agency to be determined
Because the technology park already is zoned for industrial use, the project will not require local rezoning but will need permitting, environmental reviews and other regulatory approvals, Falin said.
It remains to be seen how Red Post’s natural gas plant would fit in with Old Dominion Power, which is the electric utility that serves the Lonesome Pine technology park, as well as with state regulations surrounding public utilities.
Drew Gardner, a spokesperson for Old Dominion Power, which is a subsidiary of Kentucky Utilities, said in a statement that the company works closely with potential new customers to evaluate their energy needs and system impacts.
“A customer seeking to connect its own power source to the electric grid and sell excess generation, whether to us or otherwise, must meet certain requirements,” Gardner said. “To the extent it is appropriate for us to do so, we work with such customers to help them understand and comply with such requirements.”
Meanwhile, Virginia’s State Corporation Commission regulates public utilities in the commonwealth, including Old Dominion Power.
If a utility proposes building a power plant to supply more energy to the electric grid, it’s up to the SCC to consider it for approval or rejection. An example is Dominion Energy’s recently approved natural gas plant in Chesterfield County.
[Disclosure: Dominion is one of our donors, but donors have no say in news decisions; see our policy.]
On the other hand, the concept of co-locating data centers and power plants is an “emerging issue” in Virginia, said SCC spokesperson Greg Weatherford.
“Because there is no precedent or legislation to guide the SCC on this question, we can’t say what the SCC’s role would be. It may be something the Commission would decide at some point,” Weatherford said in an email.
In 2024, a developer, Balico, announced plans for a complex of multiple data center buildings plus on-site natural gas power generation in Pittsylvania County, but officials there voted down the project after months of community opposition.