Why Are So Many Data Centers Being Built Across Virginia?
If you have driven through Northern Virginia recently, you have probably noticed them: massive, windowless buildings appearing along highways, behind neighborhoods, and across land that looked completely different only a few years ago.
From Loudoun County, Stafford County, Prince William County to communities across the Commonwealth, data centers are becoming an increasingly visible part of Virginia’s landscape. This has left many Virginians asking a number of questions: Why are so many data centers being built across Virginia? And what is the impact on local utilities such as electrical power, water, loss of rural parts of counties, noise impacts to nearby residential communities?
The answer to the first question is a combination of Northern Virginia’s established internet infrastructure and the growing demand for artificial intelligence (AI), migration to cloud computing, video streaming, online services, and digital storage. Globally, the massive demand for computer processing of data has expanded exponentially, and it keeps growing daily.
What Is a Data Center?
A data center is a specialized facility that houses computer servers used to store, process, and distribute digital information.
When information is stored “in the cloud,” it is stored on physical equipment located inside these facilities. Everyday activities including checking email, streaming television, using artificial intelligence, accessing online banking, and opening cloud-based documents may all depend on servers operating inside these facilities.
Why are Data Centers so Large?
Data centers tend to be large because of the very nature of data storage and processing. Most facilities contain thousands of multi-ton racks of computer processing equipment, as well as redundant systems to ensure security and reliability of the data processing going on 24/7, 365 days a year. Data centers also require emergency power back-up systems and battery banks. There are also economies of scale for power and cooling needs of the computer processors. By the very nature of the operation, scaling up is more efficient.
Why Northern Virginia Became a Data Center Hub
Northern Virginia became a major center for internet infrastructure during the early development of the commercial internet. The region developed extensive fiber-optic networks and major internet connections that allowed large amounts of information to move quickly between businesses, government agencies, internet providers, and users.
As more technology companies moved into the area, the region also developed the utility connections, contractors, infrastructure, and experienced workforce needed to support additional data center development.
Other advantages include proximity to Washington, D.C., federal agencies, government contractors, major East Coast markets, and Virginia economic incentives for qualifying investments.
These factors helped make Northern Virginia the largest data center market in the United States and one of the world’s most important digital infrastructure hubs.
Is Artificial Intelligence Driving Data Center Growth?
Artificial intelligence is one of the biggest reasons demands for new data centers is increasing.
AI systems require substantial computing power to train models, analyze information, generate content, and respond to users. However, AI is not the only factor. Cloud computing, video streaming, online shopping, remote work, cybersecurity, digital payments, and the growing amount of information stored online are also increasing demand. More and more computer users store their data in the cloud; the “cloud” is supported by data centers.
What Are the Benefits of Data Centers in Virginia?
Data centers can provide significant economic benefits to Virginia and the communities where they are located.
These facilities may generate substantial local tax revenue from buildings, computer equipment, electrical systems, and other business property. That revenue can help fund schools, transportation, public safety, infrastructure, parks, and other public services.
Data center development also requires major investments in construction, technology, fiber-optic networks, electrical systems, and cooling equipment.
Virginia’s Joint Legislative Audit and Review Commission estimated that the industry contributes approximately 74,000 jobs, $5.5 billion in labor income, and $9.1 billion in gross domestic product to Virginia’s economy each year. [1] Much of this activity, however, is associated with construction and supporting industries rather than permanent employment inside completed facilities.
Data centers also provide the infrastructure needed to keep modern digital services available, reliable, and secure.
Although data centers provide increased tax and labor revenue, they require less local demand for services than other types of development. The impact to schools, social services, motor vehicle traffic, public safety and other local services is much less than other types of economic development or housing construction.
What Concerns Are Data Centers Creating?
The rapid expansion of data centers has raised questions about infrastructure, natural resources, and the impact they have on surrounding communities.
1. Electricity Demand
Data centers require significant amounts of electricity to operate servers and cooling systems around the clock. Continued growth may require additional power generation, transmission lines, substations, and other electrical infrastructure.
This has raised questions about how the cost of expanding the electrical grid should be divided among data center operators, utilities, residents, and other businesses.
The U.S. Department of Energy estimated that data centers accounted for approximately 4.4% of total U.S. electricity consumption in 2023 and could account for approximately 6.7% to 12% by 2028.[4]
2. Water Use
Some data centers use water to cool computer equipment. The amount varies based on the facility’s design, technology, weather conditions, and operating needs.
Although newer cooling technologies may reduce water consumption, water use remains an important consideration in areas experiencing rapid development.
3. Noise and Visual Impact to Nearby Communities
Cooling systems, ventilation equipment, transformers, and backup generators may create continuous sound. The effect on nearby residents depends on the facility’s design, location, sound barriers, and local noise requirements. The massive “monolithic” design of data centers, especially the data centers initially built, failed to recognize that aesthetics and screening matters in certain communities. As data center operators have learned the hard way, neighbors care about how something looks that is located “next door”. The failure of the data center to be a good neighbor in certain instances has created extensive public opposition to new data centers.
4. Land Use and Environmental Effects
Large data center campuses may require substantial amounts of land, along with substations, transmission lines, roads, and utility connections.
Some residents are concerned about the loss of forests, farmland, and open space, as well as whether large facilities are compatible with nearby neighborhoods, parks, historic areas, and environmentally sensitive land.
5. Permanent Jobs
Data center construction can create significant economic activity, but completed facilities may employ fewer permanent workers than other large commercial developments. Supporters note that many permanent positions are highly skilled and that the industry also supports contractors, utilities, construction companies, and technology businesses.
Conclusion
Virginia’s data center growth is the result of decades of investment in internet infrastructure and increasing demand for artificial intelligence, cloud computing, digital storage, and other online services.
These facilities can generate tax revenue, attract investment, and strengthen Virginia’s technology economy. They also raise important questions about electricity, water, land use, infrastructure, noise, and quality of life questions for nearby communities.
As data center development continues across the Commonwealth, Virginia will need to balance technological and economic growth with the long-term needs of residents, natural resources, and local communities.
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Founded in 1993, Briglia Hundley, P.C. is a full-service law firm located in Tysons Corner, Virginia, serving private and municipal clients throughout Virginia, Washington, D.C., and Maryland. The firm holds a Tier 1 ranking in U.S. News & World Report’s Best Law Firms and has been named AV Preeminent by Martindale-Hubbell.
Our attorneys provide experienced, practical, and responsive legal representation in a wide range of litigation and transactional matters.
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Sources
[1] Virginia Joint Legislative Audit and Review Commission, Data Centers in Virginia, December 2024.
[2] Virginia Economic Development Partnership, Data Centers.
[3] Virginia Economic Development Partnership, Data Center Retail Sales & Use Tax Exemption.
[4] U.S. Department of Energy, DOE Releases New Report Evaluating Increase in Electricity Demand from Data Centers, December 20, 2024.
