Why developers come here
Northern Virginia is where the modern data center industry grew up. Loudoun County’s “Data Center Alley” sits on the densest fiber interconnection point in the country, next to the federal government and its contractors, inside PJM’s wholesale market. That network effect is why operators keep building here even as land, power, and politics get harder.
The 2024 JLARC study, the most thorough public accounting of the industry in any state, estimated data centers support about 74,000 jobs and $9.1 billion of Virginia GDP a year, most of it during construction. It also found that unconstrained electricity demand in Virginia would roughly double within ten years, driven mainly by data centers, and that a typical Dominion residential customer could see generation and transmission costs rise $14 to $37 a month by 2040 unless cost allocation changes.
Power is the constraint. Virginia’s industrial rate averaged 10.08 cents per kWh through June 2026 per EIA, up from 9.18 cents a year earlier, and PJM capacity prices for 2026/27 cleared at the $329 per MW-day cap. Developers now go south and west for land and interconnection slots rather than waiting in Loudoun.
Incentives
- Sales and use tax exemption under Va. Code 58.1-609.3(18) on servers, enabling software, chillers, generators, and related equipment. Requires at least $150 million of capital investment and 50 new jobs paying at least 1.5 times the prevailing average wage, reduced to $70 million and 10 jobs in distressed localities, plus a memorandum of understanding with the Virginia Economic Development Partnership. It runs through June 30, 2035; an operator investing $35 billion and creating 1,000 jobs can extend it to 2040. The exemption saved data centers about $1.9 billion in fiscal 2025 according to figures cited during the budget debate.
- 2026 budget fight. The Senate sought to end the exemption; the House tied it to conditions. The compromise, in the HB 30 budget signed in June 2026, kept the exemption and added a data center electricity consumption tax of $0.011 per kWh from July 1, 2026 through June 30, 2028, capped at $600 million a year. Utilities collect it; self-supplied facilities remit directly. A joint subcommittee is due to report on the exemption’s future by December 15, 2026.
- Property tax on computer equipment is the big local revenue source. Loudoun reports data centers generated about 38 percent of its general fund in FY2026, roughly $1.1 billion, which has let it cut its real estate rate every year for a decade. Localities set their own tangible personal property rates on servers; some southern counties offer reduced rates through technology zones to attract projects.
- 2026 laws. Of 61 data center bills, 15 passed. HB 1393 requires cost-based rates that recover new generation costs from customers with 25 MW or more of demand; HB 284 requires demand-flexibility programs for those customers by 2029; HB 153 lets localities require sound assessments and impact reviews for facilities of 100 MW or more; HB 496 and SB 553 require water-use reporting; HB 507 requires Tier 4 or equivalent backup generators for permits issued after July 2026.
Power
Virginia is in PJM, so new generation and large loads go through PJM’s interconnection queue and Dominion’s transmission planning. Dominion Energy Virginia serves Northern Virginia and most of the east; Appalachian Power serves the southwest; cooperatives such as NOVEC serve pockets of Loudoun and Prince William.
The State Corporation Commission’s November 2025 order in Dominion’s biennial review (Case PUR-2025-00058) created the GS-5 rate class for customers with 25 MW or more of demand at high load factor, effective January 1, 2027. New GS-5 customers sign 14-year contracts, pay at least 85 percent of the transmission and distribution capacity charge and 60 percent of generation charges each month regardless of usage, post collateral, and must give years of notice to reduce contracted demand. Consumer advocates wanted 20-year terms. The SCC also approved a $775.6 million rate increase, adding about $16 a month to the typical residential bill.
Dominion’s queue is long: industry summaries describe roughly 70 GW of requests with about 25 GW assigned connection dates through 2031. Delivery dates in Loudoun have stretched years out, which is the main reason activity has moved to Louisa, Caroline, Stafford, Spotsylvania, Culpeper, Pittsylvania, and Mecklenburg counties, where transmission is available and localities are recruiting.
Where the projects are
Loudoun, Prince William, and Fairfax remain the core. The growth ring runs down I-95 and US-29 and into Southside. Tracked projects include EdgeCore’s Louisa County campus, CleanArc’s VA1 campus in Caroline County, and STACK’s Stafford Technology Campus. Culpeper’s technology zone has attracted AWS, CloudHQ, EdgeCore, and others. Land in the Prince William data center corridor has traded near $1 million an acre, and Loudoun industrial land has gone higher.
Local politics
Loudoun ended by-right data center development on March 18, 2025 by a 7-2 vote; every new project now needs a special exception with public hearings, though about 22 pending applications were grandfathered. Prince William’s 2,100-acre Digital Gateway, approved in 2023 next to Manassas National Battlefield, was voided by the circuit court in August 2025 over defective public notice, affirmed by the Court of Appeals on March 31, 2026, and abandoned when QTS dropped its Supreme Court appeal in July 2026. Both fights were about noise, diesel generators, viewsheds, transmission lines, and the sense that residents were not consulted.
Southside and Piedmont counties have generally welcomed projects for the tax base, sometimes with revenue-sharing or reduced equipment tax rates, though Culpeper and Louisa have each seen contested rezonings. Statewide, the 2026 session showed both parties willing to tax and condition the industry while stopping short of ending the exemption.
What a landowner should know
Outside Northern Virginia, developers are looking for 300 to 1,500 acres near existing 230 kV or 500 kV transmission, ideally with an existing or planned Dominion substation, flat topography, and access to water and sewer or the ability to build closed-loop cooling. Option agreements with 18 to 36 month diligence periods are standard because the Dominion and PJM interconnection timeline drives everything. Ask whether the developer has a PJM queue position or a Dominion large-load study underway.
Localities now control the pace. Check the county’s zoning for data centers, any technology zone incentives, and whether HB 153 sound assessments apply. The state contact is the Virginia Economic Development Partnership, which administers the exemption MOU; the SCC posts large-load rulings and Dominion’s tariffs.