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Data centers, explained

A plain-language guide in about five minutes. Unfamiliar terms are in the glossary. If a data center is proposed near you, see the guide for residents.

What is a data center?#

A data center is a building full of computers called servers. Servers store files, run websites and apps, and handle things like email, video streaming, and online banking for people and businesses everywhere.

The equipment inside runs all day and night. A federal research lab describes data centers as places that house computing equipment that operates continuously to answer requests sent over the internet. They range from small setups in closets to massive warehouses with thousands of servers.[1]

From the outside, most data centers look like large, plain industrial buildings with few windows. Around them you may see cooling equipment, backup generators, fences, and often an electric substationA fenced facility that steps electricity down from high-voltage lines so it can be used locally. More in the glossary., which is a fenced yard of electrical equipment that connects the site to the power grid.

Data centers use a lot of electricity. The U.S. Department of Energy reports that data centers used about 4.4 percent of all U.S. electricity in 2023. It projects they could use about 6.7 to 12 percent by 2028.[2]

Why are so many being built in Virginia?#

Northern Virginia is the largest data center market in the world, according to a 2024 study by JLARC, the General Assembly's research and audit agency.[3][4]

JLARC points to several reasons. They include a strong fiber network, which is the system of underground cables that carry internet traffic, along with a supply of reliable, low cost power and available land.[3]

History plays a part. Loudoun County notes that in 1992 engineers connected local fiber networks in a parking garage in Vienna, Virginia. That created an early internet meeting point nearby, and data centers grew up around it.[5]

State tax policy also matters. Virginia exempts qualifying data center equipment from sales tax. JLARC found the exemption saved the industry $928.6 million in fiscal year 2023, making it by far the state's largest economic development incentive. JLARC also reported that the industry says the exemption is a key factor in where it decides to build and expand.[4]

Most of the industry is in Northern Virginia, but JLARC found it is starting to spread into new localities, mostly along the I-95 corridor. To attract data centers, a locality must have large, flat areas of land and access to transmission linesHigh-voltage power lines, usually on tall towers, that carry electricity long distances. More in the glossary..[4]

Why power matters (and what a substation is)#

Power is often the deciding factor for where a data center can go. Electricity travels long distances on transmission lines, which are the tall, high voltage lines strung between large towers. A substation is a fenced site that steps that high voltage down so it can be used by homes and buildings.

The amounts are large. JLARC estimated that Virginia data centers use about 5,050 megawattsA measure of how much power something uses at once. 1 GW equals 1,000 MW. More in the glossary. of power, roughly what 2 million Virginia households use. A megawatt is a unit of power. JLARC also noted that some planned data center campusesA site with several data center buildings, usually built in phases. More in the glossary. are expected to use well over 1,000 megawatts each.[6][4]

Demand is growing fast. The U.S. Energy Information Administration reported in May 2026 that commercial electricity sales in Virginia rose by nearly 30.0 million megawatt hours between 2019 and 2025, mostly because of data centers. It also reported that the winter peak demand in the Dominion Energy area reached 25,413 megawatts in the 2025 to 2026 winter, 45 percent higher than in 2019 to 2020.[7]

ProjectionLooking ahead, JLARC projected that if growth is not limited, demand for power in Virginia would double within the next 10 years. This is a projection, not a certainty. Power limits can also slow projects. JLARC reported that Dominion Energy paused adding new data center loads in Loudoun County for a period because of limits on its transmission lines.[3]

How a data center gets approved in a Virginia county#

Each county decides where data centers may go through its zoning ordinance, which is the local law that sets what can be built on each piece of land. JLARC describes three main paths a project can take.[4]

  • By rightA use the zoning already allows, so no public hearing or board vote is needed to approve it. More in the glossary.. The land is already zoned for data centers, so county staff review the plans against the written rules. There is no vote by elected officials.[4]
  • Special exceptionPermission the county board must vote on, usually after a public hearing, which can come with conditions. Counties use different names for it. More in the glossary., also called a special use permit or conditional use permit. The zoning allows a data center only with special approval, which elected officials decide. State law lets a county board keep this power for itself and attach conditions and safeguards to an approval.[4][8]
  • RezoningChanging what a piece of land is allowed to be used for. More in the glossary.. The owner asks to change the zoning of the land itself. Elected officials decide.[4]

For a rezoning or other zoning change, state law requires the county Planning CommissionAn appointed county board that reviews land-use proposals and makes recommendations to the Board of Supervisors. More in the glossary. to hold at least one public hearing and send a recommendation to the Board of SupervisorsThe elected governing body of a Virginia county, which makes final land-use decisions. More in the glossary.. If the commission does not report within 100 days after its first meeting on the matter, unless the board sets a shorter period, the proposal is treated as recommended for approval. The Board of Supervisors must then hold its own public hearing before it votes.[9]

Before these hearings, the county must publish notice twice in a local newspaper. The first notice can run no more than 28 days before the meeting, and the second no less than five days before. For most zoning map changes, owners of the affected land and of neighboring land must get written notice at least five days before the hearing.[10]

Rules differ by county and change over time. For example, on March 18, 2025, Loudoun County made data centers a special exception use in areas where they had been allowed by right. In September 2024, Fairfax County required data center buildings to be at least 200 feet from the lot line of nearby residential zoning, and required larger projects to get special exception approval except in its I-5 and I-6 industrial districts.[11][12]

The power lines are a separate decision made by the state. In general, a utility may not build an electric transmission line of 138 kilovolts or more unless the State Corporation CommissionVirginia's State Corporation Commission, which approves utility rates and new high-voltage transmission lines. More in the glossary., or SCC, approves it. The SCC is the state agency that regulates utilities. It must find that the line is needed and that the route avoids or reasonably reduces harm to homes, scenic and historic places, and the environment. SCC approval of a line counts as meeting local zoning rules for that line.[13]

In SCC cases, the utility must notify local officials, affected landowners, and the public. The application is posted on the SCC website, people can submit comments, and a hearing examiner, who acts like a judge, usually makes a recommendation before the commissioners decide.[14][15]

What residents commonly ask about#

Loudoun County lists the concerns its residents have raised, including water use, noise, air quality, how the buildings look, land values, and energy infrastructure. Below is what public sources say about some of the most common topics.[5]

Noise

Cooling equipment and backup generators can make noise. JLARC found that noise has been an issue for a minority of data centers but can harm nearby residents. It is usually a low frequency hum or drone that is not loud enough to damage hearing. Problems have mostly come up when buildings are close to homes.[4]

JLARC also found that a large majority of data centers do not cause noise complaints because of where they are or how they are designed. JLARC said noise near homes presents unique challenges, and that local noise ordinances carry a low maximum civil penalty of $500.[3][6]

JLARC recommended letting localities require sound modeling, which predicts how loud a site will be before it is built, and set maximum sound levels. Some counties have acted on their own. Fairfax County now requires noise studies before and after construction.[6][12]

Water

Some data centers use water to keep their equipment cool, so residents often ask whether there will be enough for everyone else.

JLARC found that data center water use in Virginia is currently sustainable. Most data centers, 83 percent, used about the same amount of water as an average large office building, or less. Data centers made up 2 to 21 percent of total water use at six water utilities, and less than 0.5 percent of all water withdrawn in the state.[6][4]

JLARC also cautioned that localities with limited water should consider local impacts. It recommended letting localities require water use estimates and consider water use when deciding rezonings and permits.[4][6]

Power lines and electric bills

Serving data centers can require new power plants, transmission lines, and substations. Residents ask where new lines will go and whether their own bills will rise.

ProjectionJLARC found that data centers currently pay the full cost of the service they receive, but that growing demand is likely to raise costs for other customers. It projected that a typical Dominion Energy residential customer could see generation and transmission costs rise by about $14 to $37 a month by 2040, in today's dollars, depending on how fast demand grows. These are projections.[6][3]

In November 2025, the SCC created a new rate class for Dominion customers that need 25 megawatts or more, starting January 1, 2027. These customers must sign 14 year commitments and pay for at least 85 percent of their contracted transmission and distribution demand and at least 60 percent of their contracted generation demand, even if they use less.[16]

ProjectionJLARC also found that in three Virginia electric cooperatives, which are member owned utilities, data centers could make up 80 percent or more of energy sales by 2030. This is a projection.[6]

Taxes and local revenue

Data centers pay local taxes mainly through business personal property and real estate taxes. JLARC found that localities with data centers can collect substantial tax revenue from the industry.[4][5]

The amounts vary a lot. In JLARC's review, data center revenue ranged from less than 1 percent to 31 percent of total local revenue in mature markets. Loudoun County received $733 million, or 31 percent, and Prince William County received $110 million, or 7 percent.[4][6]

Loudoun County reports that in fiscal year 2026, data centers generated $1.2 billion in real and personal property tax revenue, which it says is 39 percent of the county's overall budget. Its adopted budget for fiscal year 2027 projects $1.3 billion.[5]

At the state level, the sales tax exemption for data center equipment is a cost. JLARC found it was worth $928.6 million to the industry in fiscal year 2023.[4]

Jobs

Most jobs come during construction. JLARC found that about 1,500 workers can be on site while a data center is being built, but a typical 250,000 square foot data center may have about 50 full time workers once it is running.[3][4]

Across Virginia, JLARC estimated the industry supports about 74,000 jobs. About 59,000 of those are tied to construction and 15,000 to operations. JLARC noted that the economic benefits come mostly during construction.[4][6]

Loudoun County reports that more than 17,000 direct and indirect data center related jobs have been created there.[5]

How to read a PoweredAcre county page#

Each county page follows the same layout, so you can compare counties side by side.

  • Opening summary. A few plain sentences at the top that describe what is planned or built in the county and where things stand right now.
  • Key facts box. A short list of the main facts, such as known projects, how they are zoned, and the utility that serves the area. Each fact comes from a public record or news report.
  • Numbered footnotes. A small number after a sentence points to an entry in the Sources list at the bottom of the page. Select the number to see the document the fact came from and open it yourself.
  • What we don't know yet. A list of open questions and gaps, such as details not yet filed or decisions not yet made. We list these so a missing fact is not mistaken for a settled one.
  • Last reviewed. The date we last checked the page against its sources. Plans and votes can change quickly, so check this date and the county's own website for the latest.

Sources

  1. 2024 United States Data Center Energy Usage Report Lawrence Berkeley National Laboratory. Accessed .
  2. DOE Releases New Report Evaluating Increase in Electricity Demand from Data Centers U.S. Department of Energy. Accessed .
  3. Data Centers in Virginia (2024 report) Joint Legislative Audit and Review Commission (JLARC). Accessed .
  4. Data Centers in Virginia, briefing slides (December 9, 2024) Joint Legislative Audit and Review Commission (JLARC), posted by the City of Fredericksburg. Accessed .
  5. Data Centers: The Loudoun Story Loudoun County. Accessed .
  6. JLARC Report Summary (December 16, 2024) Prince William County. Accessed .
  7. Commercial electricity sales have soared in Virginia, driven by data centers U.S. Energy Information Administration. Accessed .
  8. Code of Virginia § 15.2-2286, Permitted provisions in zoning ordinances Virginia General Assembly, Legislative Information System. Accessed .
  9. Code of Virginia § 15.2-2285, Preparation and adoption of zoning ordinance and map and amendments thereto Virginia General Assembly, Legislative Information System. Accessed .
  10. Code of Virginia § 15.2-2204, Advertisement of plans, ordinances, etc.; written notice Virginia General Assembly, Legislative Information System. Accessed .
  11. Data Center Standards and Locations Loudoun County. Accessed .
  12. Board of Supervisors Approves New Data Center Zoning Ordinance Amendment Fairfax County. Accessed .
  13. Code of Virginia § 56-46.1, Commission to consider environmental, economic and improvements in service reliability factors Virginia General Assembly, Legislative Information System. Accessed .
  14. SCC Process (transmission line projects) Dominion Energy. Accessed .
  15. Transmission Line Projects Virginia State Corporation Commission. Accessed .
  16. Regulators approve Dominion Energy rate increase Cardinal News. Accessed .