Ivy Main Is Right – It’s Not Acceptable (or Sustainable) for Virginia Legislators to “Pass the Buck on Concrete Data Center Reforms”

As always, Ivy Main makes really strong points, in this case about data center tax breaks, and I agree with the overwhelming majority of what she has to say – with just a few updates and quibbles with her on this topic. So, with that, see below for her key points, followed by my comments (in parentheses/bold/green).

• “What [House of Delegates leaders] are backing down from is their former insistence that data centers use clean energy. Instead, they propose to punt this and every other data center issue over to a commission.” (It turns out that the agreed-upon budget released last night actually (as State Senator Danica Roem explains) “establishes a data center electricity consumption tax…estimated to generate $600M…each year during the biennium. So hopefully, that will encourage data centers to be a lot more energy efficient.  But yes, Ivy Main is right, I’m still not seeing an insistence that data centers use clean energy. Of course, the problem for data centers is that they are such voracious consumers of electricity, that it’s hard to figure out how to power them using EVERY form of power – nuclear, renewables, natural gas, etc. – let alone if we try to power them with only renewables. Remember, as a major JLARC study back in December 2024 found, “New solar facilities, wind generation, natural gas plants, and increased transmission capacity would all be required to meet unconstrained demand, and the number of projects needed would be very difficult to achieve. For example, new solar facilities would have to be added at twice the annual rate they were added in 2024, and the amount of new wind generation needed would exceed the potential capabilities of all offshore wind sites that have so far been secured for future development.” So yes, this issue needs to be addressed by the Virginia General Assembly, as soon as possible, or unconstrained data center growth could end up sucking up all the power generated by Dominion’s new offshore wind project, etc., while raising electricity rates for all of us. Not acceptable.)
• “… the House budget proposal originally incorporated provisions drawn from legislation introduced by Del. Rip Sullivan, D-Fairfax, requiring data centers that take advantage of the tax exemption to buy increasing percentages of renewable energy, refrain from using onsite fossil fuels as their primary energy source, and begin phasing out the backup diesel generators that threaten air quality. The bill passed the House but died in the Senate around the same time Lucas decided there shouldn’t be a tax exemption at all. ” (This is really puzzling; I’m not clear at all why Del. Sullivan’s excellent legislation was killed in the State Senate. Does anyone know the full story here?)
• “Instead of resolving the impasse, though, it actually goes backwards on regulating data centers. It still leaves the tax exemption intact, but now ‘includes explicit direction for the establishment of a Commission to thoroughly evaluate the direct and indirect costs and benefits of the data center industry.’ The commission is to issue a report and recommendations for legislative and budgetary changes, which the General Assembly will then consider next year.” (I agree 100% with Ivy Main that *if* the point of forming a commission is simply to kick the can down the road and not make hard decisions, then no, thanks!  But last week on WAMU, House Finance Committee Chair Vivian Watts promised that “We’re talking about 5 months; the reports will come out in November at the next legislative session,” and then the General Assembly will act on those reports’ recommendations. So…maybe that’s just a charade, but I’m not convinced that it necessarily is; we’ll see, but I feel like as long as public pressure remains strong on this issue, which I believe it will, the General Assembly won’t be able to sidestep it indefinitely.)
• “Doing nothing pretty much described 2026 legislative action on data centers as well. Among the few reforms House and Senate Democrats seemed to agree on were that data centers needed to buy renewable energy and storage to limit the increase in Virginia’s carbon emissions and to decrease the pollution from diesel generators. The House did this by way of Sullivan’s bill; the Senate supported a different approach. Each chamber killed the other’s bill. ” (I agree strongly with this – in the end, the 2026 Virginia General Assembly didn’t really address some key, crucial issues related to data centers, and that’s simply not going to cut it going forward.)
• “By backtracking now, House leaders and the governor show they are willing to capitulate entirely to the data center industry and its labor allies.” (This issue simply has to be dealt with; we can’t just give the data center industry everything that it wants, as that’s simply not sustainable fiscally, environmentally or politically. As for the data center industry’s “labor allies,” I’m not sure I understand what the data center particularly has to offer in terms of good jobs. I mean, there certainly are jobs BUILDING the data centers, but after they’re built, as this article points out, “while data centers may create many jobs in the short term, most result in relatively few permanent jobs…The typical data center results in an almost negligible number of permanent jobs relative to its scale…But it’s also wrong to conclude that data centers never create a meaningful number of jobs. Under the right circumstances, data centers can contribute a fair number of employment opportunities to local communities. A single facility won’t put thousands of people to work forever, but ongoing data center construction, along with data centers that require especially high numbers of staff, can result in large-scale ongoing employment.”)
• “House and Senate members should definitely work together this summer to align their proposals, ensuring both chambers agree on the terms of the legislation before it is introduced.  A commission with that task could be useful. After all, the Commission on Electric Utility Regulation, now rebranded as the Energy Commission of Virginia, succeeded in bringing together House and Senate members around a striking number of good energy bills this year. But a commission that is thrown together suddenly and instructed to retrace the steps of a report issued barely 18 months ago seems suspiciously like a substitute for action. ” (Agreed 100%; it really depends whether or not a commission is a serious effort to address the data center issue, or just an excuse for inaction. If the former, then great; if the latter, then…hard pass.)

A couple more points I’d make: 1) people hate data centers, for a lot of good reasons, but they also rely on the services (high-speed connectivity – for websites, email, streaming, etc; “cloud computing”; etc)  that data centers provide, and would be very unhappy if those services went away (or were a lot slower, less reliable, etc.); 2) people also may not be aware of it, but they’d be VERY unhappy if their tax rates went up or their services were slashed if data center tax revenues dried up in places like Loudoun County, where those revenues account for something like 42% of the county’s general fund revenues – and as high as 60% “within about 3 years”…