Data Centers' Role In Virginia Election Signals What's To Come For CRE's Fastest-Growing Sector

The results of Tuesday's elections in Virginia could have significant implications for data center development in the sector’s largest market. And for an industry facing heightened scrutiny, they may serve as a preview of what’s to come in elections across the U.S. 

Data centers may not have been the marquee issue in Virginia’s closely watched statewide elections, seen nationally as a referendum on the Trump administration and a bellwether for next year’s midterms. But they popped up as a lightning rod for candidates throughout the election cycle. 

Concerns over data centers driving up utility bills factored prominently in the gubernatorial race that saw Democrat Abigail Spanberger defeat Republican Winsome Earle-Sears, part of a Democratic sweep of statewide offices. The focus on data centers was even greater down the ballot, with opposition to large-scale projects playing a central role in many legislative and county-level races. In televised debates and on the campaign trail, data centers were a key issue to a degree that would have been unimaginable until now. 

Attack ads leading up to Election Day decried “losing family farms to data centers” and accused a House candidate of profiting from “pushing hundreds of data centers next to our schools, homes and playgrounds.” The question of how to prevent data centers from driving up energy prices came up in the lone gubernatorial debate and capped an applause line in Spanberger’s victory speech as she promised to make data centers “pay their fair share.” 

In the months ahead, the outcome of Tuesday’s gubernatorial race could shift the policy landscape facing developers in the state. But industry observers told Bisnow the most significant concern for the data center sector from the recent election is the emergence of data centers as a policy issue that voters expect elected officials to address.

“It should be sending a message to the data center industry that this isn't going to stop,” said Adam Waitkunas, president of Milldam Public Relations, a longtime data center PR firm that operates a community relations practice for developers.

“The industry continues to be asleep at the wheel when it comes to this,” he added. “If you look at the money spent on data center-centric advertising in these races, the industry needs to take that as another warning.”

Across the U.S., there has been a dramatic increase over the past year in the volume of legislation and other initiatives from state governments focused explicitly on data centers — in places like Utah, Washington, Minnesota and other emerging markets where data center construction is booming.

Virginia's Loudoun and Prince William counties featured down-ballot races with both candidates taking anti-data center positions, potentially providing a preview of the hostility that lies ahead.

“Everybody in the country should be paying attention, because this is the future of elections,” said Elena Schlossberg, executive director of the Coalition to Protect Prince William County, which spearheads local anti-data center efforts.

As the world’s largest digital infrastructure market, Virginia frequently serves as a canary in the coal mine for challenges facing the sector. 

Virginia is home to the world’s largest data center market in Northern Virginia and the fastest-growing market in Richmond. Data centers in Virginia today use the electricity equivalent of 60% of the commonwealth’s households, with the industry’s power consumption expected to double within 10 years.  

That rapid growth has pushed data center development beyond the borders of traditional industrial hubs and into suburban and rural areas that previously had little in the way of data centers or other industrial infrastructure. 

This geographic expansion has resulted in a wave of organized pushback that has stalled projects, influenced elections and led to significant shifts in local land use policy intended to restrict the industry’s growth. Large-scale data center development plans in places like Prince William County have sparked heated battles over whether such projects are in the best interest of the community, and opposition to these projects has brought together lawmakers from both sides of the aisle.  

At the same time, there has been growing alarm over the data center industry’s massive power usage and its impact on the environment and consumers. 

A study commissioned by the Virginia Legislature late last year found that unconstrained data center development will double the state’s electricity demand within 10 years, requiring an unprecedented build-out of power plants and transmission infrastructure that would be “very difficult to achieve” and likely raise energy prices for consumers by as much as $40 per month.

These energy and land use concerns have pushed data centers from obscurity to a high-profile political flashpoint in the state. Twenty-nine bills aimed at regulating data center development or power consumption have been filed in the state legislature over the past 18 months. 

But only one of those bills made it through the legislature and onto the governor’s desk, and Gov. Glenn Youngkin vetoed it in April. The now-outgoing Republican, an advocate of the data center industry’s growth in the state, said he was unlikely to sign any bills that “create unnecessary red tape.” 

Industry insiders are watching whether Spanberger will be more willing to sign such legislation when it inevitably reaches her desk in the coming months. While the moderate Democrat isn't an anti-data center crusader, she is considered more likely than Earle-Sears would have been to sign these bills into law. Her potential willingness to sign such bills would be one of the most significant impacts of this week's election.

“The challenge will be, does she sign the legislation?” Schlossberg said.

On the campaign trail, Spanberger and Earle-Sears sparred over how to manage the industry’s skyrocketing energy use and impact on consumers, offering two vastly different approaches.

To meet data center energy demand in the state, the Youngkin administration had advocated for changes to the Virginia Clean Economy Act that would slow the retirement of fossil fuel power plants and allow utility Dominion Energy to build more. Earle-Sears echoed Youngkin’s position.

While Spanberger has also advocated for increasing energy production, she has urged more development of renewables like wind and solar. 

“She won't be as open to expanding natural gas, so I think that's probably the biggest difference there,” Waitkunas said. 

Spanberger also made energy affordability a key talking point on the campaign trail.

She will take office just as state regulators are evaluating Dominion's proposal to create a special power tariff in which data centers would pay a far higher share of costs upfront, a measure meant to ensure other customers aren’t stuck with the bill for new power plants and transmission upgrades to serve data centers that don’t end up being built. 

Spanberger has emphasized the importance of data centers paying their own freight for energy infrastructure. She drew pushback from industry group the Data Center Coalition after she suggested that if she disagrees with regulators’ decision on Dominion’s data center rate, she would push for legislation mandating a greater cost burden for data centers. It is just one instance where the incoming governor hasn't hesitated to point a finger directly at data centers as being culpable in escalating energy prices. 

“We’re going to produce more energy and we’re going to lower costs, and we’re going to do it by producing more energy here in Virginia, and we’re going to make sure that large utility users … pay their fair share,” she told supporters following her victory Tuesday.