Dominion Energy Plans More Green Power for Virginia’s Data Centers

Dominion Energy is developing more renewable energy for its power grid, a welcome development for tech companies seeking more green power for their data centers in Northern Virginia.

The utility’s addition of more solar and wind generation marks a change in strategy for Dominion, which previously featured natural gas as the largest component of its growth plans.

The shift has been influenced by demand for renewables from customers in the data center industry, as well as a shift in the state’s political climate. It will also help address concerns about a shortage of green energy in the largest growth market for cloud computing.


“The data center industry has led the charge in Virginia for renewable power,” said Stan Blackwell, the Director of Customer Service and Strategic Partnerships for Dominion Energy. “For the last three or four years, it is by far the fastest-growing industry in Virginia.”

Northern Virginia has the world’s largest concentration of cloud data centers, filled with servers from hyperscale providers like Facebook, Microsoft, Google and Amazon, who all plan to power 100 percent of their operations with renewable energy.

Dominion has outlined several initiatives to boost its renewable generation:

  • Dominion is building an offshore wind generation facility that will bring 2.6 gigawatts (GWs) of wind power online between 2024 and 2026. The project, which will feature 220 giant wind turbines 27 miles off the coast near Virginia Beach, is an expansion of a pilot project that recently entered production.
  • Dominion has scaled up its plans for solar energy projects, with a long-term roadmap to add 15.9 GWs of solar generation over the next 15 years. That includes a 1,200-acre solar array at Dulles Airport that is scheduled to come online in 2024.
  • The utility has issued a series of RFPs for new renewable capacity – including wind, solar and biogas resources – from both large and small generation projects, hoping to purchase 1.1 GWs of new generation. It also plans to add 2.7 GWs of energy storage, a key strategy to address the intermittent nature of solar and wind generation.
  • Dominion is also acquiring renewable projects to support data center customers, such as last week’s deal to buy a 150-megawatt array in Ohio to provide solar power for Facebook. It has done similar projects with Amazon Web Services and Microsoft.

Those initiatives will dramatically boost the renewables within Dominion’s generation mix, which has been weighted towards nuclear, natural gas and coal. Over time, this will allow data center providers to become less reliant on power purchase agreements (PPAs) to offset the carbon impact of their Virginia operations.

“In 15 years, our generation portfolio will be 75 percent carbon free,” said Blackwell. “We don’t have enough renewable power today to meet the data center industry’s needs, and so all the big players and a lot of the colo providers are going out and securing renewable contracts with third parties. In an ideal world, they would like to get that energy from their incumbent utility. We recognize we’re not there today.”

The Virginia Clean Economy Act Changes the Game

Virginia’s focus on climate issues follows a shift in power in the 2019 fall elections, in which Democrats gained a majority in Virginia General Assembly. In April 2020 the state legislature passed the Virginia Clean Economy Act (VCEA), which mandates that Dominion Energy switch to 100 percent renewable energy by 2045.

In July, Dominion and Duke Energy cancelled the Atlantic Coast Pipeline, citing regulatory and market challenges, and Dominion sold its gas transmission and storage assets to Berkshire Hathaway.

Dominion has since filed plans to quadruple the amount of solar and wind generation in its 15-year integrated resource plan, reaching 40 percent renewables by 2030 and 75 percent by 2035 as required by the VCEA. That’s a huge shift from its 2018 resource plan, which envisioned greater reliance on natural gas via the Atlantic Coast Pipeline, and projected that renewables were unlikely to exceed 13 percent of its mix within the next 15 years.

Dominion’s slow progress on renewables has brought sharp criticism from Greenpeace, which in its 2019 “Cleaner Cloud” report said the utility was not keeping pace with the data center industry’s appetite for renewable energy. The environmental group said Dominion had “strongly resisted any meaningful transition to renewable sources of electricity,” even though five out of Dominion’s 20 largest customers are data center companies that have committed to becoming 100 percent renewable.


“Given the urgent need to transition away from fossil fuels as rapidly as possible to combat the most extreme consequences of climate change, the source of electricity deployed by the local utility in these data center hotspots takes on global significance.”

In 2019 a group of data center operators – including Amazon Web Services, Apple, Microsoft, Equinix, Iron Mountain, and QTS – wrote a letter to Dominion urging the utility to boost its plans for renewable generation.

“Given the significance of our growing and energy-intensive industry in relation to total energy demand in Virginia, companies’ data center energy interests should be taken into account in decisions regarding the future of the region’s energy infrastructure,” the group said.

The passage of the VCEA and cancellation of the Atlantic Coast Pipeline have changed the game in Virginia. Dominion’s updated timetable may be unlikely to win over Greenpeace, and still lags the climate roadmaps of some hyperscale operators, but will simplify the challenges for data centers seeking to continue to expand in the state.

“If the ultimate goal is for green power to decarbonize, the grid, it’s going to happen in Virginia,” said Blackwell. “My guess is that over time (data center operators) will phase out some of their third-party contracts because they’re buying varbon-free energy directly from Dominion. It’s fair to say that over the short term, a lot of these companies will still be looking to third-party renewable purchases through PPAs to meet their commitments.”

Northern Virginia’s Competitive Position Still Strong

Dominion’s increased commitment to renewable energy provides better long-term visibility into the energy footprint for cloud computing providers in Northern Virginia, where demand shows no sign of slowing. In 2020 there was a record 500 megawatts (MWs) of absorption in Northern Virginia, representing more than 70 percent of the leasing in North America in 2020, compared to 50 to 55 percent in recent years.

Northern Virginia is home to more than 100 data centers and more than 10 million square feet of data center space. As the cloud grows, having servers in the region has become the table stakes for companies with ambitions in cloud computing. Other regions (most notably Atlanta) have sought to position themselves as alternatives to Northern Virginia, which is instead boosting its share of new capacity.

“The next six five or six data center markets, even when combined, didn’t grow as much as (Virginia),” Blackwell noted. That’s clear in recent deals that value property in Ashburn’s “Data Center Alley” at more than $2 million an acre, and developers are land banking parcels that may be suitable for future data center development.

“All the land that had wetlands and weren’t perfect for development – those pieces of property have been bought,” said Blackwell. “We don’t see a slowdown in the next five years. We thought people would be moving to more Southern Virginia where there is cheaper land, but that migration has just not happened.”

“You have to be in close proximity to Ashburn in the existing market,” said J. Blair Pritchard, Senior Economic Market Specialist for Dominion. “The teardown and rebuild at a higher FAR (floor-to-area ratio) is the new greenfield site. It’s really astonishing to me how much activity we’ve seen in that vein, versus branching out just a little bit. There’s a reluctance to go further away from all this data gravity.”

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