Gov. Abigail Spanberger is not inclined to impose a moratorium on data centers.
Some local governments are, though — and already have, or have come so close that it’s clear no data centers need apply to locate in those localities.
Front Royal has said no data centers are permitted in the town’s industrial areas, which pretty much rules out data centers anywhere. Shenandoah County considered a ban but was worried about the legal consequences. Frederick County is looking at removing data centers as a permitted use, which isn’t an outright ban but could effectively become one. Spotsylvania County supervisors last week voted to endorse a statewide data center moratorium; both Spotsylvania and Loudoun — ground zero in Data Center Alley — are both mulling bans on new data center development.
We’ve seen public opinion pivot sharply against data centers. Even without a formal ban, it’s hard to imagine some localities embracing a potential data center development they once might have.
The irony is that a data center moratorium began as a liberal idea — championed by such left-wing acolytes as Sen. Bernie Sanders and Rep. Alexandria Ocasio-Cortez — and has now been embraced by some on the right. The formal call in Virginia for a data center moratorium came from state Sen. Glen Sturtevant, R-Chesterfield County; some of the most fervent anti-data center protests have been in Republican-voting counties. Spanberger dismissed the idea of a moratorium in an interview last week with the Petersburg Progress-Index, but the reality is that, in piecemeal fashion, a data center moratorium may already be here in parts of Virginia.
Let’s look at what this might mean.
1. Data center development has been shifting to Texas
Even before data centers became a radioactive political topic in Virginia, Texas was on track to surpass Virginia in data center development. Texas is simply a lot bigger, physically. Now it has a state government that is more open to such development than Virginia’s is. The Chicago-based global real estate firm JLL produced a report in June that said 77% of the nation’s data center development is now taking place “in frontier markets” — meaning new places, with West Texas leading the way. JLL says that Texas is now almost even with Virginia in terms of capacity, but when you factor in projects under development, Texas will have twice as much data center capacity as Virginia. JLL shows at least a half dozen states that are slated to add more data center capacity than Virginia.
Whether that’s a good thing or a bad thing depends on how you feel about data centers, but the point is that Virginia is going to lose its data center capital status regardless. Whether that means data center development in Virginia is slow, or simply rising faster in other states, is hard to tell at present, but it certainly suggests that the data center market of the future won’t look like the data center market of the recent past.
2. Southwest Virginia may draw more attention from data centers
Why? Because some Southwest Virginia localities have no zoning ordinances that can be used to keep data centers out. This has become a point of contention in Wythe County, which proudly has no zoning outside the towns of Wytheville and Rural Retreat, but now has drawn two data centers. Simply from a market perspective, Wythe County would be an easier place to locate a data center than some other community where a crowd of protesters might show up at the planning commission.
3. A data center moratorium would relieve pressure on water supplies (at least for now)
This would be one of the clearest outcomes. Data centers use a lot of water for cooling, and water is supplied locally. No data centers, no extra strain on the water supply. A Virginia Department of Environmental Quality study that came to light recently warned that eastern Virginia “has limited capacity for significant new withdrawals.” That impacts the potential for data center development in the region (and might be yet another reason why data centers might look to Southwest Virginia instead). It’s worth noting, though, that while this report has been read in the context of data centers, it actually puts the blame on paper mills in West Point and the city of Franklin: “Major withdrawals, especially at paper mills near Franklin and West Point, have caused inland groundwater levels to decline below sea level, altering the predevelopment flow pattern in the [Virginia Coastal Plain].” On the other hand, those paper mills were there first, with data centers coming later and it’s data centers that are growing, not paper mills.
Water use has also been one of the main concern of those who object to the Google data center coming to Botetourt County. (Disclosure: Google is one of our donors, through its Google News Initiative, which has helped support our expansion in the New River Valley. Donors have no say in news decisions; see our policy.) Google has contracted for up to 2 million gallons of water a day from the Western Virginia Water Authority. However, water usage in the Roanoke Valley has declined so much over the past two decades that Google could take all that, and the valley would still use less water than it did 20 years ago. (See that data here.) It’s only if Google asks for more than the 2 million gallons contracted for that there’s a problem. More recently, Google has reduced its water estimate to 1.2 million gallons per day because it plans to use electric cooling in at least one of the three buildings.
This is where things get more complicated and the reason for me adding “at least for now” to the title of this section. While water usage is a concern now, data centers are working on ways to reduce water demand so at some point in the future, this may not be as big a concern. Here’s where we come to the trade-offs. While Google’s reduction in water usages in Botetourt is a good thing as far as water demand, by using electric cooling it’s going to be drawing more electricity from the power grid. While Google has said that it will be buying renewable energy for some of the power supply, it will still be drawing some from Appalachian Power. Appalachian’s grid is 65% coal-powered, so the trade-off here is between using more water or burning more coal. Of course, if a data center moratorium somehow shut down a project that’s already in motion, Google wouldn’t be using either. It also wouldn’t be supplying tax revenue or bringing jobs to Botetourt County, either.
Everything in life is a trade-off; these are some of the ones involved here. Loudoun County has been able to reduce its real estate tax rate because it has so many data centers. If a moratorium shut down Google, then the next time Botetourt taxes go up, the question will be whether the moratorium would be to blame.
4. Slowing or even halting data center development in Virginia may not help the grid
The strongest argument against data centers is the enormous amount of electricity they consume. However, unless there’s a nationwide moratorium on data center development, data centers are going to go somewhere. Even if that’s not Virginia, power will be required somewhere — and the electricity grid is connected. Virginia is part of the PJM grid that covers all or parts of 13 states and the District of Columbia — including Ohio, which is another fast-growing data center state. A data center company that passed over Virginia and located in Ohio would lessen pressure on Virginia’s utilities, but would not lessen the pressure on the overall PJM grid, just move that pressure around some. As long as we’re part of a multi-state grid, we’re going to be impacted by what happens elsewhere. Even if we were magically disconnected from other states on the grid, fuel prices (or prices for solar panels or wind turbines) don’t respect state lines.
5. A statewide moratorium would lead to more pollution
Again, this is predicated on the belief that if data centers can’t go to Virginia, they’ll simply go somewhere else. That would relieve Virginia of the localized pollution associated with backup generators at data centers, although it would just move that to some other state. Maybe that’s their problem then. However, more broadly, sending data centers to another state would not alleviate the carbon footprint that data centers have on the overall environment when we factor in the electricity they draw from utilities. On the contrary, sending data centers to other states would make things worse. Here’s why.
Many of the places data centers might go depend more heavily on carbon-heavy fossil fuels than Virginia does. Virginia’s power grid is 51.63% natural gas and 1.49% coal, according to Choose Energy, which has combined federal statistics. (Keep in mind that these are overall averages; the mix varies by time of day.) Added together, that’s 53.12% carbon-based energy. For those curious about the rest, it’s 27.88% nuclear, 14.89% solar, 1.33% hydropower, 0.03% wind.
Ohio’s grid is 54.52% natural gas and 18.89% coal, so 73.41% carbon-based to our 53.12%.
West Virginia has made a pitch for data centers. Its energy grid is 87.18% coal and 6.08% natural gas, so 93.26% carbon-based.
Of any state that is entirely or mostly on the PJM grid, Virginia has the least carbon-intensive power generation of any state except New Jersey, which gets most of its power from nuclear.
If data centers that skipped Virginia went to Texas, that wouldn’t directly impact the PJM grid, but if you’re concerned about the environment overall, sending data centers to Texas isn’t the solution either because its power grid is more carbon-based than ours (and Texas would love data centers because they would help the state’s natural gas industry). A statewide data center moratorium in Virginia would lead to more pollution; it wouldn’t be our pollution, but everything is connected, so eventually it would become our pollution. Only a nationwide ban would address that — and even then we’d have to talk about data centers going to China or India, which spew far more carbon into the atmosphere than we do.
“Star Trek” fans will recognize this as a real-life version of the fictional Kobayashi Maru test, which was designed to be a no-win scenario for Starfleet recruits.
6. A moratorium would hurt some rural localities that want data center jobs and taxes
Yes, there are some rural localities that want data centers. They see tax revenues that aren’t possible from any other industry likely to locate there. They also see jobs. Data centers aren’t big job generators, but the jobs they do generate are high-paying — which seems another plus to some rural areas where even a 20-job announcement is a big deal. What these counties see is the state’s haves telling the state’s have-nots that they can’t have the same economic opportunities that the haves have enjoyed so much that now they’re tired of it. This may be a short-sighted way to look at the situation — this ignores the energy demands, the water demands, and so forth — but what other choice do some of these rural counties have? It’s not as if lots of other high-revenue, high-paying industries are looking to locate there. If we’re going to shut the door on data center development, are these rural counties owed any reparations for not being able to take advantage of an opportunity others have had? In spirit, this would be similar to the revenue-sharing deals some cities struck with adjacent counties years ago for not initiating annexation proceedings.
The biggest project at risk to a moratorium would be the Stack Infrastructure project at the Southern Virginia Megasite in Pittsylvania County; Stack has committed to 2,500 jobs over 20 years as part its performance agreement. That would make it the largest economic development project in the region since the state started keeping records in 1990. Calling for a moratorium on data centers is easy and likely politically popular in many places, but who wants to tell Pittsylvania County — a community that over time has seen the collapse of its economic pillars of tobacco and textiles — that as part of a moratorium it would have to forgo 2,500 jobs that would pay more than the county’s median household income?
7. We don’t know what the impact would be on supply chain industries
Data centers are a flash point, but the arguments over them often obscure how data centers are driving a manufacturing renaissance elsewhere in the supply chain — the Munters plant in Botetourt County that makes heating and cooling equipment has seen employment triple; the Hitachi transformer plant in Halifax County is adding 825 jobs.
“Demand from data centers is already catalysing billions in foreign direct investment from companies such as Hitachi and Siemens to build US manufacturing capacity for advanced electrical equipment,” a former Joe Biden adviser recently wrote in the Financial Times. “The data centre bonanza is a special kind of opportunity: one where deep-pocketed buyers like Silicon Valley’s hyperscalers are willing to open their wallets to pay for fast, reliable access to industrial technology. It offers a chance for the US to get ahead in the next key technologies and to build domestic supply chains based on demand rather than subsidies and tariffs. Preventing construction will not only deny the U.S. as much as a percentage point in annual GDP growth in the coming years and a shot at leading the development of critical technologies.”
This is the industrial renaissance both parties have promised over the years, and neither has delivered through their policies; instead, it’s coming almost by happenstance, in a sector we didn’t expect. We don’t know what impact a data center moratorium in, say, some localities in Northern Virginia might or might not have on manufacturing jobs in Southside. Maybe none. We just don’t know, though. We know that Virginia overall has been losing jobs, but here’s a job sector that’s growing. If the governor is reluctant to impose a data center moratorium, maybe, just maybe, it’s because she has to balance a lot of competing interests that local governments don’t have to.
The point here is not to make the case for a data center on every corner — or any corner, for that matter. It is, though, intended to highlight that a lot of these issues are more complicated than can fit in a tweet, or on a protest sign.
For more political news and analysis, see our weekly political newsletter, West of the Capital, that comes out on Friday afternoon.
