Apr 8, 2026
Northern Virginia has been a global center of data center development for decades. What is changing now is the geography of that growth. As its most established markets mature and near-term power capacity becomes harder to secure, development is extending southward into Central Virginia, bringing data centers into the conversation for communities around Richmond that have not historically experienced them at the same scale.
That expansion is also drawing attention to the infrastructure behind the industry. Data centers are the physical foundation of cloud computing, streaming, financial transactions, business applications, artificial intelligence, and much of the digital activity that occurs every day. Unlike most commercial buildings, they operate continuously and depend on substantial electrical capacity, cooling, and connectivity.
Virginia became an early center of the industry because several advantages converged here: Northern Virginia developed a dense fiber network, had access to reliable and comparatively inexpensive energy, offered available land and proximity to major customers, and benefited from a state tax incentive for data center investment. Those conditions helped make Northern Virginia the world’s largest data center market, accounting for 13% of reported global operational capacity and 25% of capacity in the Americas. Virginia’s Joint Legislative Audit and Review Commission (JLARC) expects significant additional growth outside Northern Virginia, including along the I-95 corridor into Central Virginia.
That growth is exposing a constraint that increasingly determines where projects can advance and on what timeline. Land, fiber, entitlements, and access to utilities still matter, but electrical infrastructure nearby does not necessarily mean the required load can be served. The more consequential question is: When can that power actually be delivered?
The scale of data center electricity demand has changed quickly. U.S. data centers consumed approximately 176 terawatt-hours of electricity in 2023, or 4.4% of total U.S. electricity use, according to Lawrence Berkeley National Laboratory. By 2028, that share is projected to reach between 6.7% and 12%. Artificial intelligence is one factor accelerating that growth as higher-density computing requires greater electrical capacity and more intensive cooling.
Virginia is experiencing that pressure at particularly high concentration. After years of relatively flat statewide electricity demand, JLARC’s independent forecast found that unconstrained demand could double within a decade, with data centers as the principal driver. Its analysis concluded that meeting that level of demand would require substantial additions to both generation and transmission infrastructure.
Demand for new data center capacity, meanwhile, remains strong. Wood Mackenzie reported that the disclosed U.S. project pipeline reached 241 gigawatts at the end of 2025, up from 93 GW a year earlier. Yet only 33% of that pipeline was under active development, and new capacity added to the pipeline fell by half between the third and fourth quarters of 2025 as load-queue constraints weighed on the market.
The distinction is significant. A large development pipeline is not the same as a large supply of executable projects. Increasingly, execution depends on whether power can be generated, transmitted, interconnected, and delivered on a commercially useful timeline.
That reality is changing how sites are evaluated. A property can sit near significant transmission infrastructure and still require utility upgrades, a new substation, interconnection studies, network improvements, or long-lead electrical equipment before the target load can be served.
For developers, power diligence therefore extends well beyond identifying infrastructure on a map. The relevant questions are how much capacity can be committed, when it can be delivered, what improvements stand between the existing system and energization, and whether that system can accommodate future growth.
Those variables can materially change site value. A property with strong conventional real estate fundamentals may prove less viable than a less obvious site with greater certainty around the timing and phasing of power.
Once development advances, the utility schedule becomes part of the project schedule. Power availability can affect procurement, phasing, sequencing, commissioning, and ultimately when a facility becomes operational. Long-lead electrical equipment may need to be secured early, utility-interface work may need to precede other scopes, and commissioning must account for when the appropriate source and configuration of power will actually be available.
Where only part of the required load can initially be served, phased energization can become part of the strategy. An initial building—or portion of a campus—may come online while infrastructure for later capacity continues to develop. A construction team cannot independently create grid capacity, but early engagement among the owner, utility, designers, and builders can align infrastructure and project sequencing with the capacity that can realistically be delivered.
That changes the meaning of speed to market. In a power-constrained environment, speed is not simply a matter of compressing the construction schedule. It also depends on identifying constraints while there is still time to change the site plan, phasing strategy, procurement approach, or energy solution.
For some projects, however, grid service still cannot meet the business timeline. That gap is moving phased utility service, behind-the-meter generation, energy storage, and other strategies much earlier into development planning. The trend is increasingly described as bring your own power, or BYOP: instead of treating utility service as a fixed downstream input, developers evaluate dedicated or on-site generation alongside the site and grid strategy. The concept is gaining traction across the data center industry as grid interconnection timelines and power requirements diverge.
The issue has also reached federal regulators. In June 2026, the Federal Energy Regulatory Commission directed all six regional grid operators under its jurisdiction to justify or reform rules governing how data centers and other large loads connect to the transmission system. The action reflects the scale of the challenge: integrating rapidly growing loads while maintaining grid reliability, affordability, and workable interconnection timelines.
BYOP and other alternative power strategies can create greater certainty around energization, but they do not remove infrastructure complexity. On-site generation may introduce requirements involving fuel supply, permitting, emissions, equipment procurement, site configuration, redundancy, utility coordination, commissioning, and long-term operations. At sufficient scale, the power solution becomes a substantial infrastructure project in its own right.
Its purpose also varies. Dedicated generation may bridge the period before full utility service becomes available, supplement grid capacity, or form part of the long-term operating strategy. Storage and load-management systems may solve different problems.
The important shift is not toward a single technology or delivery model. It is that the energy solution increasingly has to be evaluated alongside the site itself.
Power does not displace the traditional fundamentals of data center development. Land economics, fiber connectivity, entitlements, environmental conditions, water, constructability, access, and community impacts all remain essential to site viability. What power changes is whether those advantages can be put to use on the timeline required by the business.
That has implications across disciplines. Development teams need to establish a credible path to capacity before land and capital decisions become difficult to unwind. Utilities must determine how new loads can be integrated into the broader electrical system. Design and construction teams must translate the resulting power strategy into procurement, phasing, infrastructure, commissioning, and delivery.
Those analyses are most useful when they occur together. Treating them sequentially can narrow alternatives; evaluating them concurrently allows assumptions to be tested while the site plan, infrastructure strategy, schedule, and capital plan remain flexible.
Hyperscale operators have long embedded energy strategy into their real estate decisions. The lesson for smaller operators and enterprise users is not to replicate hyperscale development at a smaller size. It is to apply the same rigor to the relationship among land, infrastructure, power, and time.
As data center development expands into new Virginia markets, the value of a site will increasingly depend on more than what can be built there. It will depend on whether the infrastructure required to operate it can be delivered when the business needs it.
