Data centers are a hot topic for Virginia legislators

Virginia’s 2025 General Assembly kicked off this week and data centers are at the top of many legislators’ and advocates’ list of priorities. And rightfully so. Home to at least 300 data centers, Virginia is often called the data center capital of the world.  

Until now, decision-making about data centers has largely been in the hands of developers, and localities with minimum transparency about final decision making, growth patterns, power and water needs and usage, pollution, and the impact on utility bills. 

Increasing the urgency for policy changes, is Dominion’s continued usage of data centers to justify its continued and even increased reliance on methane gas and pipelines in direct opposition to goals that the legislature set out in the Virginia Clean Economy Act. 

New opportunities to weigh in on data centers 

 Policy changes are needed to address the current tax exemption for data centers, increase transparency, reduce impacts, and provide guardrails for future development. 

During this legislative session, SELC and its partners are focused on proposals to:  

• Increase transparency at the local and state level about data centers’ environmental and economic impact; 

• Redesign the tax exemption to be far more selective, only providing tax breaks to highly efficient data centers with demonstrated commitments to carbon free electricity; and 

• Provide early oversight by the state utility regulator to ensure these energy-intensive facilities do not threaten our electric system or increase bills for other customers.  

Passing commonsense legislation that requires more from local decisionmakers, data center developers, and big tech companies like Amazon and others will benefit communities across the Commonwealth.

Nate Benforado, senior attorney

Prior action

This is not the first time the General Assembly will take up data centers. There were several bills during the 2024 session, but lawmakers decided more studying of the issue was needed.  

The Joint Legislative Audit and Review Commission (JLARC) was tasked to conduct the study and submitted findings in December. 

Notably, the report found that building enough new power generation and power lines to serve new data centers will be “very difficult” under current projections—regardless of clean energy requirements. Even in a scenario in which data center growth is constrained by half, building enough new infrastructure will be “difficult.”  

If this growth comes to fruition, bills for non-data center utility customers could increase significantly, but even if it doesn’t, customers could still face higher bills. With so much growth being driven by a handful of large companies, if even one of the big players decided to move its operations out of the state, Virginia customers could be saddled with high bills—paying for data center-related investments that are no longer needed. 

Gudrun Thompson, leader of SELC’s regional energy program, says the rampant growth of data centers throughout the South is unsustainable, without safeguards that protect communities, and utility programs and policies that can supply clean electricity to power centers—instead of driving the buildout of new methane gas plants and pipelines.  

“The growth in electricity demand from data centers threatens the clean energy transition in the South. Elected officials need to work with Big Tech, utilities, and stakeholders to craft policies that ensure data center growth is sustainable and does not jeopardize achievement of state clean energy goals or corporate climate commitments,” said Thompson. 

What’s next?

This year’s Virginia General Assembly session is a short one of 46 days, starting on January 8 and closing on February 22. Aside from our work on data centers, SELC will support bills that will advance solar in the state and move clean transportation forward, including efforts to get more EV charging stations in underserved areas of the state.  

Trip Pollard leads SELC’s transportation group regionally and has spent most of his career focused on Virginia environmental policy specifically. 

“While it is impossible to predict what will get passed, we will work to advance much-needed policies this session and to introduce measures that set the stage for future legislative action. You’re seeing that this year with data centers and rural EV charging,” Pollard said. “The groundwork has been done for action on those issues. The environmental community in Virginia is strong and ready to make progress this session and beyond.”