Oversight Battles, Energy Challenges, and Industry Growth
As the data center industry continues to expand, local communities and regulatory bodies are grappling with balancing economic growth, infrastructure demands, and environmental impacts. This week’s edition of Zoning In explores pivotal developments shaping the industry, from debates over by-right use policies in Virginia to groundbreaking energy agreements in the Midwest. We also highlight critical legal challenges, op-eds advocating for greater oversight, and the implications of Federal Energy Regulatory Commission (FERC) rulings on the future of data center operations. Dive into the stories that underscore the complex interplay between innovation and accountability in one of the world’s fastest-growing industries.
County Considers Stricter Oversight on By-Right Use
A contentious proposal in a Virginia county to remove data centers as a “by-right” use, requiring all new projects to go through a legislative application process. The Planning Commission is still deliberating over the amendments the Board of Supervisors introduced in July, which aim to allow more oversight of data center developments in various areas.
Key Developments:
Progress in Arcola:
The commission is leaning toward restricting by-right data centers in the Arcola area, aligning with Planning and Zoning staff who cite proximity to residential neighborhoods as a concern.
A straw poll saw a 6-2-1 split in favor of the change.
Pushback in Ashburn:
Commissioners largely oppose removing by-right status near Loudoun County Parkway and Shellhorn Road, an area already heavily developed with data centers.
A 7-1-1 straw poll reflects strong sentiment against the change.
Undecided in Leesburg:
The commission deferred judgment on proposed changes along Crosstrail Boulevard, opting to consult with external experts, including economic, environmental, and infrastructure advisors.
Broader Implications:
The amendments represent the first phase of a larger review of data center standards, addressing land use, aesthetics, infrastructure, and environmental concerns. A final vote is expected at the commission’s Dec. 12 meeting.
This evolving debate underscores the growing tension between economic development and community impact in data center growth. Stay tuned for further updates in Zoning In.
Read The Full Article at Loudon Now
Shaping Data Center Growth in Light of FERC’s Landmark Ruling
The Federal Energy Regulatory Commission’s recent ruling rejecting AWS’s proposal to source energy directly from the Susquehanna nuclear power station highlights critical challenges and opportunities in aligning modern data center operations with legacy utility frameworks. The decision to deny the request without prejudice underscores the need for regulatory clarity to balance energy demand growth, grid stability, and customer equity.
Key issues include the potential for “stranded assets,” where utility customers may unfairly bear the cost of infrastructure repurposed for high-demand data centers, and the challenge of integrating centralized generation systems with large, exclusive industrial loads. The ruling serves as a pivotal moment for data center operators to collaborate with regulatory bodies like FERC and PJM to develop adaptable frameworks that ensure fair cost distribution while fostering sustainable data center expansion.
A forthcoming FERC rulemaking in 2025 is expected to address these complex issues and create a path toward long-term efficiencies and investment clarity, ensuring data centers can continue to grow without compromising grid reliability or customer equity.
Read The Full Article at Utility Dive
Powering Growth: Midwest Utility, Tech Giants Reach Deal to Balance Data Center Demand
Indiana Michigan Power (I&M) has reached a joint settlement with major tech companies, including Amazon Web Services, Microsoft, and Google, to manage the power demand of new and future data centers in northeast Indiana. This agreement ensures that large-load customers make long-term financial commitments proportional to their energy needs, preventing costs from being shifted to existing residential and commercial customers.
Highlights include:
- AWS and Google’s planned data center campuses in Indiana, with $11 billion and $2 billion investments, respectively.
- A $2.5 million, five-year commitment from the tech companies to support low-income Indiana residents through the Indiana Community Action Association.
- Sliding-scale rate structures, financial viability requirements, and exit fees for data centers in other AEP territories to balance infrastructure costs with industry growth.
With U.S. data center energy demand projected to double by 2030, utilities like I&M are navigating the challenges of meeting this critical load growth while safeguarding grid stability and protecting existing ratepayers.
Read The Full Article at PowerGrid.com
Arkansas Judge Temporarily Blocks Law Banning Chinese-Owned Data Centers
An Arkansas judge has issued a 14-day restraining order against enforcing state laws that ban data centers with ties to China. The decision stems from a lawsuit by Jones Eagle LLC, owned by a naturalized U.S. citizen born in China, challenging the constitutionality of Acts 636 and 174. These laws prohibit foreign ownership of properties and specifically target data centers and crypto-mining infrastructure linked to “adversarial” nations.
Governor Sarah Huckabee Sanders criticized the ruling, vowing to appeal, while the plaintiff argues the law violates due process and discriminates based on national origin. The restraining order halts enforcement while the court evaluates a longer-term injunction.
The case underscores growing tensions around foreign investment in critical infrastructure and sets the stage for further legal and policy debates.
Read The Full Article at Data Center Dynamics
Constellation Energy Pushes for Clear Grid Rules to Support Co-Located Data Centers
Constellation Energy has filed a complaint with the Federal Energy Regulatory Commission (FERC), urging the creation of clear guidelines for co-locating data centers directly with power plants. The company argues that existing ambiguity allows utilities, such as Exelon, to block these projects, jeopardizing plans at sites like its Limerick nuclear plant in Pennsylvania.
Co-location enables energy-intensive facilities, like data centers, to bypass lengthy grid interconnection processes by directly sourcing electricity from power plants. This model is crucial for supporting generative AI expansion but has faced criticism from utilities and regulators over grid reliability and consumer costs.
Constellation contends that utility roadblocks, such as requiring unnecessary transmission services, risk stifling innovation and hindering national AI competitiveness. Rival Exelon has responded by supporting fair and reliable policies while committing to participate in the ongoing FERC proceedings.
This debate underscores the tension between advancing cutting-edge tech infrastructure and ensuring equitable, reliable energy distribution across the U.S. grid.
Dominion Reveals Data Center Costs Under SCC Pressure
A new filing by Dominion Energy Virginia highlights the substantial impact of data centers on Virginia’s energy landscape. Responding to an order from the State Corporation Commission (SCC), Dominion disclosed that future data center growth will drive a 20% increase in utility spending, revealing a hidden subsidy by ordinary customers.
The report shows that without data centers, electricity demand in Dominion’s territory would remain flat or even decline slightly over the next decade, contradicting narratives about other drivers like electrification. The filing also estimates billions in transmission project costs linked solely to data center demand, further emphasizing the industry’s significant role.
While the Virginia Clean Economy Act (VCEA) aims for cleaner energy and reduced emissions, Dominion’s latest plans prioritize fossil fuels, citing reliability needs tied to data center growth. The utility’s modeling limits cleaner alternatives like solar and offshore wind, raising questions about its commitment to the VCEA.
With data centers already consuming 25% of Dominion’s energy sales and driving its pivot back to fossil fuels, the debate continues over how to balance economic development with sustainability and equity for Virginia’s residents.
Read The Full Article at Power Grid
Piedmont Environmental Council President Pens op-ed About Data Center Growth
In his op-ed, Christopher Miller, President of the Piedmont Environmental Council, critiques what he sees as the unchecked growth of data centers in Virginia, particularly their strain on energy infrastructure and ratepayers. Key points include:
- Exponential Growth and Energy Demand: Virginia, especially Loudoun County, hosts over 470 data centers. Each consumes energy equivalent to a small city, with projected statewide energy needs reaching 45 gigawatts by 2040—more than double the current capacity. This expansion necessitates costly new generation and transmission systems, burdening Virginia’s ratepayers.
- Lack of Oversight: Local governments and state entities have allowed data center proposals without evaluating their broader impacts. Utility contracts between Dominion Energy and tech giants like Amazon and Google obligate power delivery without sufficient infrastructure or regulatory oversight, creating an “energy crisis by contract.”
- Impact on Communities and Resources: The infrastructure required for data centers, such as power lines and substations, degrades nearby communities’ quality of life and strains water and environmental resources, hindering Virginia’s clean energy goals.
- Dominion Energy’s Role: Dominion has committed to 21 gigawatts of additional electric contracts, nearly doubling its current peak load. Contracts lack transparency and sidestep assessments of cumulative community and environmental impacts. Critics argue Dominion misuses its legal “obligation to serve” to justify risky agreements, increasing costs for ratepayers.
- Economic Imbalance: Large tech firms pay reduced rates for energy compared to residential consumers, effectively subsidized by ordinary ratepayers. Projections suggest energy rates could double or triple within 15 years unless regulatory frameworks are reformed.
- Call for Action: Miller urges the Virginia General Assembly, State Corporation Commission (SCC), and related bodies to establish state-level oversight with criteria addressing economic, environmental, and community impacts. He advocates for more transparency, regulation, and sustainable planning to ensure the data center industry benefits Virginia equitably.
In sum, the op-ed argues that without greater accountability and strategic oversight, Virginia risks significant long-term costs and resource depletion while enabling tech giants to exploit a lax regulatory environment.
