Virginia's Data Center Boom Strains Grid, Forces New Transmission Projects
Northern Virginia has become the data center capital of the world, handling a third of global internet traffic and generating significant local tax revenue. This expansion, driven by demand for streaming and other services, necessitates the construction of new PJM Interconnection transmission lines to meet increased electricity demands across the region.
Key Takeaways
- Northern Virginia hosts the world's largest concentration of data centers, processing one-third of all global internet traffic.
- Data center expansion is moving into Prince William County (VA) and Frederick County (MD), with plans for 2,000-acre campuses featuring over 20 million square feet of data center space.
- New data center campuses will add hundreds of megawatts to the regional power load, necessitating new high-voltage transmission lines like the 70-mile Maryland Piedmont Reliability Project (MPRP).
- Loudoun County expects three-quarters of a billion dollars in local tax revenue from data centers this year, highlighting their economic impact.
Additional Context
The surge in data center development across Virginia has significantly increased commercial electricity sales, with the state experiencing faster growth than any other except Texas between 2019 and 2025 (EIA, October 2025). PJM Interconnection's 2026 Long-Term Load Forecast Report projects the Dominion zone, covering Virginia, to see the largest absolute increase in summer peak demand from 2026 to 2030, primarily due to data center expansion (EIA, October 2025). This increased demand has led to a dramatic rise in PJM capacity prices, with rates soaring from $28.92 per megawatt-day (MW-day) in 2024/25 to $329.17/MW-day for 2026/27. The Institute for Energy Economics & Financial Analysis (IEEFA, July 2025) attributes 63% of the 2025/2026 auction price increase, totaling $9.3 billion in costs, to data center-driven demand forecasts.
Bloomberg (June 2026) reported that the AI data center boom risks a breakup of the biggest U.S. power grid operator, PJM Interconnection, as soaring power bills and strained electricity supplies lead to political backlash. Utility Dive (January 2026) highlights that unless PJM stops buying capacity for new data centers and instead provides interruptible service until they bring their own capacity, consumers will pay an additional $100 billion through 2033. This could also lead to a greater risk of rolling blackouts by June 2027 if the grid falls below reliability standards (Utility Dive, January 2026). The Virginia legislature commissioned a study, released in December 2025 by the Joint Legislative Audit and Review Commission (JLARC), found that meeting all data center demand forecasts would require an unprecedented level of new power plant construction and a doubling of power imports (JLARC, December 2025).
Read full article at mshale.com
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