Lawmakers grapple with Virginia’s increasing energy demand

Virginia faces a dilemma. Data center developers are clamoring to build in Virginia with the sort of zeal typically reserved for hipsters attempting to win admittance into secret speakeasies.

Residents of some Virginia localities have fought mightily against data center growth, citing environmental concerns and increased demand for electricity, and county and state politicians have taken notice. Some are making moves to limit construction of data center campuses, especially near residential areas and historic landmarks.

In December 2024, the Joint Legislative Audit and Review Commission (JLARC) released a study warning that energy demand from data centers in Virginia could more than triple by 2040.

“This growth is creating unprecedented challenges for the state’s energy infrastructure,” Hal Greer, JLARC’s director, stressed at a presentation late last year.

Building the infrastructure to meet even half the energy demand of unconstrained data center growth in Virginia will be “difficult,” the report says.

Even so, the push is on for more energy sources to fulfill today’s and tomorrow’s demands. Virginia’s status as CNBC’s Top State for Business, awarded for a record sixth time in July 2024, depends on it, says Glenn Davis, director of the Virginia Department of Energy. “Economic development follows energy supply.”

A former tech business owner and Republican delegate from Virginia Beach, Davis’ opinion is not shared by all of the state’s leaders about how best to meet future energy demands. But most acknowledge diversification of energy sources is in the state’s future.

Imagine the electricity produced in Virginia is a pizza. In 2023, natural gas provided 55% of that pizza, according to the U.S. Energy Information Administration. Nuclear energy supplied another 32%, while renewables, like solar, hydroelectric and biomass, accounted for 12%. Only a tiny sliver of the pizza was coal: 2%.

Virginia Gov. Glenn Youngkin wants a deluxe pizza with all the toppings. Throughout his tenure in office, he’s sung the praises of “all-American, all-of-the-above” energy priorities. Youngkin is open to renewables, but he’s especially keen on expanding natural gas production and nuclear energy as part of the overall picture.

Youngkin would rather do without the Virginia Clean Economy Act, the 2020 state law that mandates that 100% of energy consumed in the commonwealth must be generated by renewable energy sources by mid-century. It was passed while Democrats held both the state Senate and the House under Democratic Gov. Ralph Northam, and Democratic lawmakers have refused to let Youngkin dismantle the law during his tenure.

“It is driving up rates, driving down reliability, and constricting our economic growth,” he lamented in his 2025 State of the Commonwealth address.

“We’re still in a situation where the VCEA is the law,” says Stephen Haner, senior fellow for energy and the environment at the Thomas Jefferson Institute for Public Policy, a right-leaning think tank.

Meanwhile, Fortune 500 utility Dominion Energy is moving forward with its Coastal Virginia Offshore Wind project under construction 27 miles off Virginia Beach’s shore, as well as nuclear, solar and battery storage projects. Both Dominion, which serves 2.7 million customers in Virginia, and Appalachian Power are also exploring the construction of small modular reactors, nuclear plants much smaller than traditional reactors.

Any speculation about the makeup of Virginia’s future energy pizza, of course, also has to take into account the Trump factor. The new resident of the White House takes a dim view of renewables and lives by the motto “drill, baby, drill.”

“Right now, the entire industry is holding its breath about whether he’s going to try to repeal the tax credits that currently are so important to the development of renewables,” says Jared Burden, a partner in the Harrisonburg office of GreeneHurlocker who frequently works with solar developers.

Another wild card that could impact how the state ultimately meets the energy demands of tomorrow: which party wins control of Virginia’s House of Delegates and the governorship in November.

“I’m hoping very much that some of this stuff becomes a big campaign issue in ’25,” Haner says. “If the Democrats want to continue with the path we’re on, they should talk about it. The Republicans, who think we’re on the wrong path, should talk about it. Because I’m afraid people don’t understand what’s going on, and they don’t understand the impact it’s going to have on them.”

Power plays

Under the VCEA, Virginia must retire natural gas-fired facilities by 2050. That hasn’t stopped Davis from touting natural gas as a solution to the state’s future energy needs, though.

“There is no way we solve the demand requirements in the commonwealth of Virginia without growing natural gas,” he says.

Republicans don’t have the votes in the state legislature to repeal the VCEA, but Dominion is still hoping to build a new natural gas plant in Chesterfield County billed as a “peaker plant” to provide energy at the hottest and coldest times of year, when renewable energy methods may not be up to the job.

In its 2023 resource plan, Dominion noted that the VCEA allows utilities to petition the SCC “for relief” from the VCEA’s carbon-free requirements “on the basis that the unit retirements would threaten the reliability or security of electric service to customers.”

Also, JLARC’s report includes a section on how building seven or eight gas plants over the next 15 years could cover the state’s energy needs. Dominion did it at that pace between 2012 and 2018, the writers note.

Once a company builds a new natural gas facility, the expectation is that it will operational “for a very long time,” notes Carrie Hearne, executive director of the Commission on Electric Utility Regulation, a state body that studies the impact of legislation on electric utilities. “We want to make sure we’re not having stranded costs to the ratepayers if those projects will need to be decommissioned by a certain date.”

Other players are also looking into expanding natural gas in Virginia. Oklahoma-based Williams Cos. filed a federal application last fall to expand its 10,000-mile natural gas pipeline, which would add about 26 miles of pipeline and a compressor station in Pittsylvania County.

In the realm of nuclear energy — a significant part of the governor’s “all-of-the-above” energy ethos — Dominion and ApCo are taking steps toward building SMRs, which advocates say could be in operation in the mid-2030s, although so far, only two are operating worldwide so far.

In July 2024, Dominion announced it had issued a request for proposals to evaluate the feasibility for an SMR to be developed at its North Anna power plant, where it has two conventional, large nuclear reactors. That announcement was followed by an October 2024 event where leaders from the utility and Amazon.com announced an agreement to explore working together on the potential development of a SMR.

Appalachian Power, a subsidiary of American Electric Power that serves about 550,000 customers in parts of Central and Southwest Virginia, announced in November 2024 that it plans to bring a SMR project to Campbell County.

Virginia saw more nuclear news in December 2024 when Youngkin announced that Commonwealth Fusion Systems, a Massachusetts-based fusion energy company, plans to build the world’s first grid-scale commercial fusion power plant in Chesterfield County — a private investment projected to cost more than $2.5 billion.

The plant, which will be located at Chesterfield County’s James River Industrial Center, a site owned by Dominion, will produce about 400 megawatts of carbon-free electricity by the early 2030s, CFS officials predict.

Other options

To meet half of all unconstrained energy demand by 2045, Virginia would need “a sustained build-out of new renewable, carbon, nuclear and storage facilities,” according to JLARC.

According to the study’s authors, under this scenario Virginia would need to add solar facilities at a rate of 650 to 700 megawatts per year. The report’s authors note that Virginia added 1,000 megawatts of solar facilities in 2024, indicating that this would be a manageable goal.

Solar developers, however, are finding it difficult to get approval for projects at the local level. Particularly in rural areas, localities are getting an earful from constituents unhappy about solar for a number of reasons, including the potential of projects to detract from an area’s natural beauty.

“There’s a growing playbook opposing solar,” GreeneHurlocker’s Burden says. “Without regard to all this national and state policy, it’s still been very difficult to get solar projects approved at the local level.”

Also, legislation that would have created a state solar board and technical center to assist localities considering solar projects died in the 2025 General Assembly session after critics argued that the state was trying to override local decisions on land use. In the state Senate, the bill failed in a 19-20 vote.

Hearne, whose organization drafted the proposed legislation, thinks it’s likely the General Assembly will revive discussions on solar power in future sessions.

Davis stresses that energy storage also is needed to make solar projects work for Virginia, allowing utilities to capture and save electricity to use on rainy days.

Meanwhile, wind energy has an opponent in the White House now. As one of his first acts of office, Trump issued an executive order temporarily ceasing all federal wind leases.

However, the $10.7 billion CVOW project, which is set to produce 2.6 gigawatts of energy, enough to power 660,000 homes, is now half-finished, fully certified under the Biden administration, and is expected to be completed in 2026.

While a spokesperson from Dominion declined to be interviewed for this story, the utility issued a statement Jan. 21 stating it is “confident CVOW will be completed on time, and that Virginia’s clean energy transition will continue with bipartisan support for many years to come.”

Other offshore wind farm plans — including Dominion’s two undeveloped ocean leases off North Carolina and the Chesapeake Bay — will have to wait for a wind-friendlier administration. Dominion said in January that it doesn’t have an estimated timeline for development of its other leases.

Federal edicts have also failed to hamper Apex Clean Energy’s Rocky Forge Wind project, Virginia’s only onshore wind farm. Construction began on the Botetourt County project in February, according to Brian O’Shea, director of public engagement for the Charlottesville-based company. In December, Apex announced that it had reached a deal for Google to purchase the energy developed at the wind farm. The facility is expected to be operational by the end of 2026.

Finally, it doesn’t get as much PR as nuclear and renewable energy, but coal is still a small part of Virginia’s power generation picture, although mining has significantly declined in the state’s Southwest region. Dominion still produces electricity with coal units at three plants, including one in West Virginia.

However, with Trump in the White House, some are speculating that there might be a day when Virginia increases its use of coal to produce electricity.

“As demand growth outpaces the ability to bring new generation online, it’s reasonable to foresee greater utilization of the region’s existing coal fleet,” states Conor Bernstein, vice president of communications at the National Mining Association.