One of the fastest-growing power markets in the United States has attracted another 1.5 gigawatts of solar and battery energy storage projects to support data center growth amidst the state’s transition to clean energy.
Sumitomo Corporation, a global construction and energy firm founded in Japan, and wholly-owned subsidiary Perennial Power Holdings will partner with CEP Solar to deliver clean energy projects across the Commonwealth of Virginia. CEP Solar is a clean energy company based out of Richmond, Virginia, and is a subsidiary of Commonwealth Energy Partners.
The terms of the new investment have not been publicly disclosed, but the funds will enable Perennial and CEP to commercialize a portfolio of solar and battery storage assets exceeding 1.5 GW. Construction is expected to start in late 2025.
Feeding the beast
Virginia is the largest data center market in the world, boasting more than 400 facilities. Each day, up to 70% of the world’s internet traffic passes through northern Virginia’s “Data Center Alley,” a 25-square-mile section of Loudon County that hosts hundreds of data centers. Loudoun has over 27 million square feet of data center space, and neighboring Prince William County claims more than 5 million square feet. The two largest data center campuses, taking up a combined 22 million square feet of space, have been proposed as part of the Prince William Digital Gateway project in a rural part of Prince William County, near Manassas National Battlefield Park.
According to the Piedmont Environmental Council, unchecked data center growth carries an insatiable demand for massive energy upgrades, extensive acreage, and tremendous water intake, jeopardizing the state’s efforts to meet its climate goals, improve air and water quality, advance land conservation, and protect national and state parks.
Data centers account for about 2% of all U.S. electricity use and growing, particularly in the mid-Atlantic part of PJM territory. The PJM Interconnection anticipates having to support 11 GW of new data centers by 2030 in northern Virginia alone, representing more than 40% of the state’s current peak demand. A recent report from Aurora Energy Research indicates a high-growth case could see data center additions swell to 15 GW by 2030.
PJM predicts data centers will increase peak power demand in Virginia by 50% over the next six years. Dominion Energy forecasts demand will grow 5% annually, more than double the rate pre-pandemic. PJM’s 2024 long-term load forecast predicts that electricity demand will grow 1.7% per year for summer peaks, 2% for winter peaks, and 2.4% for net energy over the next 10 years. The guesses fluctuate and have a wide range, but some considerable degree of growth should be anticipated without question.
“Adding the 10-15 GW of firm generation capacity needed to supply these data centers and keep the lights on in Virginia will not be easy,” notes Zachary Edelen, PJM research lead at Aurora. “It can take 3-4 years for the transmission organization just to greenlight a new generator, and market prices are currently too low for developers to build the kind of capacity required.”
“Plus, this comes on top of multiple other strains on the electricity system, including conventional generator retirements, increasing reliance on weather-dependent resources, an aging transmission grid, and expected load growth from other sources, such as EVs.”
All of that is problematic, particularly considering the need to comply with the Virginia Clean Economy Act of 2020 (VCEA), which requires the commonwealth to transition to 100% clean energy by 2050. Prices in PJM territory skyrocketed in the grid operator’s last capacity auction, ratepayers will start to see the impacts on their bills in mid-2025. Renewables currently make up a small fraction of the grid operator’s energy mix, but once PJM can start interconnecting them again, large-scale deployment of renewable generation resources like the 1.5 GW+ promised by the Sumitomo Group, Perennial Power, and CEP Solar will be essential.
“Our partnership with CEP provides Perennial with greater geographic diversity and exposure to highly attractive end markets, and further accelerates our efforts to expand renewable footprints in the United States,” said Takuya Yoshizawa, president of Perennial Power Holdings.
“This partnership with Perennial aligns with our core values and will accelerate our ability to deliver a scale-diversified portfolio, which consists of both solar and battery storage projects, providing long-term economic and environmental benefits for our partnering communities, landowners, and customers across the Commonwealth,” added Tyson Utt, co-founder of CEP.
Earlier this month, the State Corporation Commission called for a Commissioner-led technical conference to explore the current and projected future challenges presented by serving various types of large-use, hyperscale customers from the perspective of utility consumer services cooperatives, investor-owned electric utilities, existing customers, and potential new load. The December 16, 2024 conference will look at potential frameworks for electric cooperatives and lOUs that would facilitate service in a manner that “reasonably addresses the risks and issues attendant to this new load type, is just and reasonable to both current and future customers, and is permissible under current Virginia statutory law.”
Originally published in Renewable Energy World.
