For an opposing point of view, see “The Governor and General Assembly’s data center budget ‘solution’ doesn’t fix anything,” by Chris Miller of the Piedmont Environmental Council.
Over the past decade, Virginia has been at the epicenter of the digital domain. Northern Virginia alone handles more than a fifth of global internet traffic, bringing with it billions of dollars in private capital investment, lucrative jobs and a critical tax base that supports public schools, parks, and infrastructure. This dynamic growth would not be possible without data centers, which according to the Northern Virginia Technology Council “generated nearly $40 billion in total economic impact statewide [in 2025], supported more than 112,000 Virginia jobs, and contributed over $1.5 billion in annual state tax revenue.” These gains are certainly not limited to Northern Virginia. For example, one large project will bring $5 billion in investment to Farmville in rural Prince Edward County.
Despite these clear economic wins, a growing chorus of critics and local activists are pushing for heavy-handed restrictions, moratoriums, and strict utility roadblocks on data centers. Policies, including a recently enacted statewide 1.1 cent tax on every kilowatt hour of power data centers use, are the result of misinformation about data centers using an inordinate amount of water and electricity. According to a recent analysis by the Taxpayers Protection Alliance (TPA), that’s simply not the case in Old Dominion. It’s long past time to address the rampant misinformation holding back data centers in the state of Virginia.
Much of the pushback against the more-than 600 data centers dotting Virginia relies on overblown rhetoric regarding the physical and environmental footprint of these oft-misunderstood projects. Critics frequently claim that these facilities impose massive strains on local infrastructure, draining municipal water supplies and putting an unsustainable burden on the electric grid. For example, state Sen. Danica Roem (D) claims, “when the time comes, you find out we have now put such enormous pressure on our electrical grid … if we continue the path that we’re on, we’re going to overload the grid.” Claims about data centers placing “enormous pressure” on the grid or “thirsty” projects posing a “big problem during times of water stress” fall apart on closer scrutiny.
According to new state-specific data released by TPA, the perceived environmental and energy crises surrounding these installations are more myth than reality. For example, critics frequently argue that the cooling infrastructure required for server farms is depleting regional water resources. Yet, TPA’s analysis reveals that in 2025, data center water consumption accounted for a mere 1.4 percent of all water usage across Virginia. The remaining 98.6 percent went to residential, agricultural and other commercial operations. Banning a highly successful and job-and-revenue-creating industry over a sliver of state water consumption is economic self-sabotage pure and simple.
Popular arguments regarding energy consumption follow a similarly flawed logic. Activists argue that the expansion of artificial intelligence and cloud computing will trigger widespread blackouts and crash the grid. But TPA’s findings show that even amid massive digital expansion, data centers accounted for just 4.6 percent of all electricity consumption in Virginia in 2025. Part of the reason for these low figures is that Virginia data operators largely pay their own way for electricity consumption. Virginia utilizes large-load pricing mechanisms (e.g., on-site connection fees and the GS-5 tariff) that require data centers and massive industrial energy users to pay the vast majority (up to 85 percent) of the transmission capacity costs they trigger during ramp-up periods. Dominion Energy data indicates that Northern Virginia residential customers pay significantly less than the national average for transmission costs precisely because large-scale data center customers pick up a disproportionate share of the local grid infrastructure bill. This funding structure paves the way for private-sector investments that fuel power supply and bolster the grid.
While grid modernization and energy production must continue to scale to meet overall future demands, scapegoating the tech sector avoids the real issue. The answer to growing energy needs is to foster open competition, modernize infrastructure and build out reliable power generation, not to ban the businesses and projects funding local municipal budgets and driving down taxes.
The commonwealth needs to keep its doors open to digital investment, ensure a competitive regulatory environment and pave the way for six-figure blue-collar jobs. Banning data centers or taxing them out of existence is the wrong approach.
Ross Marchand is the executive director of the Taxpayers Protection Alliance.
