Power struggles in Data Center Alley
Higher electricity load forecasts and transmission challenges may create reliability issues for new data center projects in Northern Virginia.
Northern Virginia’s data center supremacy may be threatened by a power crunch.
Dominion Energy said challenges delivering electricity along high-voltage lines may result in its inability to serve new data center projects in Ashburn, Loudoun Now reported.
Northern Virginia houses about 250 data centers. Companies are attracted by low utility rates, tax breaks, available land and nearby connectivity to the Equinix Internet Exchange and the world’s highest density of dark fiber. More than 20% of all known hyperscale data centers are located in Northern Virginia, according to the Virginia Economic Development Partnership.
Dominion Energy currently provides electricity to over 12 million square feet of commissioned data center space, the company said on its website. However, the recent forecasts show strains under larger and faster than expected growth. Recent electricity load forecasts from Dominion and Northern Virginia Electric Cooperative were "noticeably higher" than last year’s, according to PJM Interconnection LLC, a regional transmission organization that coordinates the movement of wholesale electricity in parts of the mid-Atlantic region that includes Northern Virginia.
Dominion's 2022 forecast predicts a 3% annualized growth rate for 2022-2027 entirely due to data center loads, particularly in the Northern Virginia/Dulles Airport area, which is experiencing “very high concentrated load growth.” PJM said it expects reliability issues as soon as 2024, even with supplemental upgrades.
“Without further transmission upgrades, in 2024/25, [t]he area will not have sufficient transmission capability” for general delivery and some outage scenarios, PJM said in a July 12 presentation.
"If this is to come to fruition as we recently learned, it will obviously likely be a slowdown in delivery of new supply in what is our largest and the largest and most consistently in demand data center market in the world," said Andy Power, president and CFO at Digital Realty, a real estate investment trust that owns and maintains more than 290 data centers around the globe, said on July 28 earnings call. He said that Dominion Energy very recently informed its major customers about “a potential pinch point in Eastern Loudoun County that could delay deliveries until 2026.” The issue is related to transmission infrastructure, not power generation, he added.
“The data center industry has grown substantially in Northern Virginia in recent years, and we’ve made significant investments to meet the growing demand for electricity. That growth is now accelerating, which is resulting in transmission constraints in a pocket of eastern Loudoun County that primarily serves large customers,” Dominion Media Relations Manager Aaron Ruby told Loudoun Now. “The constraints will not impact residential or small business customers. We are working expeditiously with the industry, government and other stakeholders to alleviate the constraints. We’re committed to pursuing solutions that support our customers and the continued growth of the region.”