Data centers have generated unprecedented controversy across the country over the past two years, but have attracted the most attention in Virginia, North Carolina, and Ohio. Each of those states is currently experiencing a strong surge in electricity demand driven by the expansion of data centers, which has caused consternation among existing power utility customers and their new neighbors. This piece examines the experiences of data centers in each of those states.
In Virginia, Dominion Energy projects about a 5 percent annual increase in peak power demand over the next 15 years, a fact which runs up hard against constraints established by the Virginia Clean Economy Act (VCEA), which requires Dominion to be carbon-free by 2045 and sets limits on building new fossil-fuel plants unless certain efficiency thresholds are met. Pursuant to the VCEA, utilities must also show that any fossil-fuel-based solution is more cost-effective than clean alternatives.
Dominion Energy’s proposal to construct a new, 944 MW natural gas “peaker” plant in Chesterfield County to meet demand has brought this issue to the forefront. Peaker plants are designed to run only during high-demand periods, and Dominion argues this plant is the best and necessary solution to avoid reliability issues.
Clean energy advocates and other stakeholders argue Dominion did not adequately consider cleaner alternatives such as battery storage, grid-enhancing technologies, virtual power plants, or demand flexibility and have challenged Dominion’s modeling, cost comparisons, and assumptions. These critics contend that the analyses are biased toward the outcome of building the gas plant.
Likewise, the Virginia State Corporation Commission’s (SCC) staff has raised doubts about whether the Chesterfield plant is indeed the best or only viable path forward. They noted that Dominion’s economic impact study didn’t show large benefits, pointed out gaps in reliability studies, and criticized Dominion for not having developed cleaner dispatchable options earlier. Ultimately, however, staff did not formally oppose the plant, suggesting that with existing demand growth, regulators may see few alternatives. Public comments and hearings are ongoing.
Tension is increasing between the need to meet reliability goals while achieving the VCEA’s decarbonization requirements. Moreover, ratepayers such as residential consumers and existing businesses and industry may end up bearing the costs of constructing electrical grid infrastructure necessary to support the continued growth of data centers in Virginia.
Those tensions have begun to express themselves in the run-up to the November 2025 Virginia elections because voters are increasingly concerned about rising electricity bills and the strain on the grid that is particularly driven by growth in AI and data centers. Residents and existing businesses and industries are worried not just about high utility rates, but also about whether local power transmission infrastructure can handle surging demand without failure.
As Axios reported, former state lawmaker and director of Virginia's Department of Energy Glenn Davis said, "This is the first time I've really seen energy as part of the conversation during election season.” The concerns have been so pronounced that Amazon Web Services withdrew a plan for a data center in Louisa County, specifically citing community opposition. For Virginians, the issue of data centers and the construction of power plants to support them will continue to loom large.
North Carolina faces the same debate. Data centers are multiplying in North Carolina, driven especially by demand for AI and cloud computing. The growth is creating large, new electricity loads that Duke Energy projects will require adding nearly 6 GW of capacity to meet, nearly double the 3.9 GW it predicted just last year. Like in Virginia, regulators and stakeholders are questioning how to meet that demand while maintaining the clean-energy and decarbonization goals of North Carolina House Bill 951. Duke Energy’s solution is to build a fleet of new gas power plants. Clean energy advocates argue for alternatives like solar and large battery storage. Many critics argue that the proposed data centers may not materialize. And just as in Virginia, a key issue is who will pay for improvements to the electrical grid.
The North Carolina Utilities Commission (prompted in part by filings from environmental nongovernmental organizations like The Southern Environmental Law Center) has begun to dig into questions of large-loads, how to plan for them, and what rules should govern them. Meanwhile, Amazon Web Services has slated a $10 billion, 800-acre campus east of Charlotte for construction, while both Apple and Microsoft have large data centers planned for the areas west of the city as part of a “data center corridor.”
Unsurprisingly, the same issues are being raised in Ohio, where the Public Utilities Commission of Ohio (PUCO) has approved a new tariff requested by AEP Ohio (the investor utility providing electric service in the greater Columbus area) that requires large data centers to pay differently for electricity. Several major tech/data center-industry players, including Amazon, Google, Meta, and Microsoft, alongside the Ohio Manufacturers Association, challenged the proposal, but PUCO denied their appeal.
According to the PUCO ruling, data centers will be charged a minimum of 85 percent of their projected usage, even if actual usage falls below that level. The plan includes a “load-ramp” requirement pursuant to which data centers must gradually come up to their full load, rather than immediate full demand. There is also an exit fee if a data center cancels its project or cannot meet its contractual obligations.
AEP Ohio argued that its system is under strain due to surging energy demand from data center projects. In central Ohio alone, AEP Ohio noted large signed capacity agreements to meet new data center load, plus many more proposed projects. The purpose is to ensure that the infrastructure and grid upgrades necessitated by new, large loads are paid for by the data center operators who create the demand, rather than being funded disproportionately by residential customers and existing businesses and industrial users.
Opponents, including The Data Center Coalition and some manufacturers, argue the new tariff is discriminatory and may overcharge data centers. They say the utility’s demand forecasts might be speculative or overstated. The Ohio Manufacturers’ Association has said it will appeal to the Supreme Court of Ohio, seeing PUCO’s decision as unfair to high-energy industrial users.
Some see a potential solution to at least some of these issues in microgrids. A microgrid is a small network of electricity users with a local source of supply that may be attached to a centralized national grid, but which is able to function independently. Microgrids are becoming more relevant and necessary, not just for data centers but broadly across commercial, industrial, mission-critical, and even community/residential sectors. For instance, West Virginia passed a bill during the 2025 legislative session that created a structure to allow the construction of industrial microgrids that may alleviate some of the pressures on the larger electrical grid. Microgrid legislation is sure to be a live issue in most state legislatures during the coming years.
While Virginia, North Carolina, and Ohio have been at the forefront on data center development issues, we are seeing data center development occurring around the country. Similarly, we are also seeing state regulators and legislators around the country grapple with how best to facilitate the growth of data centers and AI while also protecting existing customers. While there is currently no clear path forward, there is no doubt that these issues will continue to be top of mind.