Virginia is developing a piecemeal data center moratorium. The potential impacts are complicated.
Gov. Abigail Spanberger is not inclined to impose a moratorium on data centers.
Some local governments are, though — and already have, or have come so close that it’s clear no data centers need apply to locate in those localities.
Front Royal has said no data centers are permitted in the town’s industrial areas, which pretty much rules out data centers anywhere. Shenandoah County considered a ban but was worried about the legal consequences. Frederick County is looking at removing data centers as a permitted use, which isn’t an outright ban but could effectively become one. Spotsylvania County supervisors last week voted to endorse a statewide data center moratorium; both Spotsylvania and Loudoun — ground zero in Data Center Alley — are both mulling bans on new data center development.
We’ve seen public opinion pivot sharply against data centers. Even without a formal ban, it’s hard to imagine some localities embracing a potential data center development they once might have.
The irony is that a data center moratorium began as a liberal idea — championed by such left-wing acolytes as Sen. Bernie Sanders and Rep. Alexandria Ocasio-Cortez — and has now been embraced by some on the right. The formal call in Virginia for a data center moratorium came from state Sen. Glen Sturtevant, R-Chesterfield County; some of the most fervent anti-data center protests have been in Republican-voting counties. Spanberger, through a spokesperson, dismissed the idea of a moratorium in an interview last week with the Petersburg Progress-Index, but the reality is that, in piecemeal fashion, a data center moratorium may already be here in parts of Virginia.
Let’s look at what this might mean.
1. Data center development has been shifting to Texas
Even before data centers became a radioactive political topic in Virginia, Texas was on track to surpass Virginia in data center development. Texas is simply a lot bigger, physically. Now it has a state government that is more open to such development than Virginia’s is. The Chicago-based global real estate firm JLL produced a report in June that said 77% of the nation’s data center development is now taking place “in frontier markets” — meaning new places, with West Texas leading the way. JLL says that Texas is now almost even with Virginia in terms of capacity, but when you factor in projects under development, Texas will have twice as much data center capacity as Virginia. JLL shows at least a half dozen states that are slated to add more data center capacity than Virginia.
Whether that’s a good thing or a bad thing depends on how you feel about data centers, but the point is that Virginia is going to lose its data center capital status regardless. Whether that means data center development in Virginia is slow, or simply rising faster in other states, is hard to tell at present, but it certainly suggests that the data center market of the future won’t look like the data center market of the recent past.
2. Southwest Virginia may draw more attention from data centers
Why? Because some Southwest Virginia localities have no zoning ordinances that can be used to keep data centers out. This has become a point of contention in Wythe County, which proudly has no zoning outside the towns of Wytheville and Rural Retreat, but now has drawn two data centers. Simply from a market perspective, Wythe County would be an easier place to locate a data center than some other community where a crowd of protesters might show up at the planning commission.
3. A data center moratorium would relieve pressure on water supplies (at least for now)
This would be one of the clearest outcomes. Data centers use a lot of water for cooling, and water is supplied locally. No data centers, no extra strain on the water supply. A Virginia Department of Environmental Quality study that came to light recently warned that eastern Virginia “has limited capacity for significant new withdrawals.” That impacts the potential for data center development in the region (and might be yet another reason why data centers might look to Southwest Virginia instead). It’s worth noting, though, that while this report has been read in the context of data centers, it actually puts the blame on paper mills in West Point and the city of Franklin: “Major withdrawals, especially at paper mills near Franklin and West Point, have caused inland groundwater levels to decline below sea level, altering the predevelopment flow pattern in the [Virginia Coastal Plain].” On the other hand, those paper mills were there first, with data centers coming later and it’s data centers that are growing, not paper mills.
Water use has also been one of the main concern of those who object to the Google data center coming to Botetourt County. (Disclosure: Google is one of our donors, through its Google News Initiative, which has helped support our expansion in the New River Valley. Donors have no say in news decisions; see our policy.) Google has contracted for up to 2 million gallons of water a day from the Western Virginia Water Authority. However, water usage in the Roanoke Valley has declined so much over the past two decades that Google could take all that, and the valley would still use less water than it did 20 years ago. (See that data here.) It’s only if Google asks for more than the 2 million gallons contracted for that there’s a problem. More recently, Google has reduced its water estimate to 1.2 million gallons per day because it plans to use electric cooling in at least one of the three buildings.
This is where things get more complicated and the reason for me adding “at least for now” to the title of this section. While water usage is a concern now, data centers are working on ways to reduce water demand so at some point in the future, this may not be as big a concern. Here’s where we come to the trade-offs. While Google’s reduction in water usages in Botetourt is a good thing as far as water demand, by using electric cooling it’s going to be drawing more electricity from the power grid. While Google has said that it will be buying renewable energy for some of the power supply, it will still be drawing some from Appalachian Power. Appalachian’s grid is 65% coal-powered, so the trade-off here is between using more water or burning more coal. Of course, if a data center moratorium somehow shut down a project that’s already in motion, Google wouldn’t be using either. It also wouldn’t be supplying tax revenue or bringing jobs to Botetourt County, either.
Everything in life is a trade-off; these are some of the ones involved here. Loudoun County has been able to reduce its real estate tax rate because it has so many data centers. If a moratorium shut down Google, then the next time Botetourt taxes go up, the question will be whether the moratorium would be to blame.
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