Virginia faces a significant challenge in meeting its increasing energy needs, driven by various factors such as the rapid expansion of the data center industry, increased electrification, population growth, and continued economic development. To address this demand, the state must accelerate its adoption of renewable energy sources. This article is the first in a series examining the crucial role of siting reform in addressing Virginia’s energy challenges. Without these reforms, the state will struggle to implement the large-scale clean energy solutions needed to meet future demands affordably and with zero emissions.
Energy Demand
According to PJM’s latest demand forecast, Virginia’s energy demand is expected to rise by 85 percent over the next 15 years. The biggest factors are the expansion of data centers and increased electrification.
Data Centers
Northern Virginia is recognized as the data center capital of the world, with Loudoun County earning the nickname “data center alley.” The area boasts over 29 million square feet of data center space—equivalent to the size of Central Park in New York City. These systems are essential to process and store massive amounts of data and operate 24/7 to provide cloud computing and other data services used in household technology, business applications, and the federal government. Data centers use tremendous quantities of energy due to their need for constant power to keep servers and cooling systems running.
According to Dominion Energy’s 2023 Integrated Resource Plan, the energy demand from these data centers reached 2.8 gigawatts (GW) in 2022 and is expected to exceed 7 GWs by 2032. As a comparison, one GW of energy is what a typical nuclear power plant can produce.
Since 2019, Dominion has connected 94 data centers with over 4 GW of capacity in Northern Virginia, including 15 centers added in 2023, and another 15 projected to come online by the end of 2024. Companies such as Google Cloud, Microsoft Azure, and Amazon Web Services aim to operate their data centers with 100 percent renewable energy between 2025 and 2030. Powering data centers will undoubtedly require additional clean electricity to meet their energy demand and the companies’ clean energy goals.
Electrification
Electrification is another reason for Virginia’s explosive energy demand growth. According to the National Renewable Energy Lab, electric vehicle deployment, adoption of electric heat pumps and other technologies could increase U.S. electricity consumption by 40 percent by 2050. The sector with the largest potential for transformational change by 2050 is transportation.
Virginia is seeing a rapid increase in the use of electric vehicles. As of July 2023, Virginia had 56,000 registered electric vehicles, representing a 126 percent increase since 2021. The Electrification Coalition highlighted the EV market share across the Mid-Atlantic and the graph shows Virginia in the middle of the pack among the states.
With federal funding, Virginia schools have also transitioned their fleet from diesel to electric—improving health outcomes for students. Virginia in fact ranked fourth in the country for electric buses already in service or on order. In addition, local governments such as Fairfax County have started to convert their fleets of vehicles.
State Population Growth
Population growth is another factor in the Commonwealth’s growing energy demand. The University of Virginia Weldon Cooper Center has published 2030, 2040, and 2050 projected populations for Virginia’s counties and cities. State population estimates show the Commonwealth is expected to add almost 500,000 residents (about half the population of Montana) since the 2020 Census, reaching 9.1 million by 2030. The two graphs below show the overall population growth and the largest and fastest growing localities. Increased population is directly correlated with increased energy consumption.
Business & Economic Development
Recently, Virginia was ranked as one of the top states for business by Site Selection magazine. This recognition highlights the Commonwealth’s strong business environment, driven by factors such as a skilled workforce, infrastructure, and favorable policies that attract major investments from a variety of industries. Virginia’s economic development is closely tied to its energy landscape, with the state’s growing economy driving an increased demand for energy. Key industries such as technology, manufacturing in addition to data centers are expanding rapidly, making Virginia a national hub for economic growth.
Moving Forward
All of these growth factors highlight a bright future for Virginia’s people and economy—if we can meet electricity demand in a clean and affordable fashion. Undoubtedly, Virginia possesses the clean energy resources to meet its future energy needs, but project development is stalled due to a patchwork of local rules and unclear approval criteria. This fragmented regulatory environment creates significant delays and uncertainty for developers, hindering the timely and cost-effective implementation of new energy projects. We must tackle these inconsistencies and establish more transparent project criteria to get utility-scale clean energy deployed to maximize Virginia’s economic potential.
This blog post is the first in a series that will examine Virginia’s need for siting and permitting reform for clean energy projects.