Data Centers in Appalachia

Advocating for commonsense data center safeguards to protect our communities, air and water

The boom in massive data centers that consume large amounts of energy is bringing new challenges to our region. Northern Virginia currently has the highest concentration of these facilities in the world, but developers are looking to build more across Appalachia, the Southeast and the nation.

A lack of smart regulation for data center development could also mean an increase in fossil fuel energy use. This would create a variety of harmful impacts on communities, including increased air and climate pollution and a rapid rise in electric bills, in addition to strains on local water supplies and local noise pollution from data centers themselves.

It’s true that data centers are power-hungry, but evidence suggests that many sky-high estimates of future electricity demand from data centers are overblown. That hasn’t stopped utility companies or the president from pointing to this buildout as justification for vastly expanding the use of expensive and polluting sources of energy like coal and methane gas, which they brand as natural gas.

Meanwhile, data centers are also increasingly bringing their own methane gas turbines to power their projects or purchasing gas power from third parties, which could drive up fuel prices while increasing local pollution and climate impacts.

Appalachian Voices believes that community members deserve fair treatment and should be meaningfully involved in planning and decision-making about whether and how data centers are built in their communities. We support policies that make sure data centers not only pay their own way, but are built and operate responsibly to protect communities and our air and water. Find our full position statement below.

Updated: July 2026

Appalachian Voices' Position on Data Centers

Data Center Growth in Appalachia and the Southeast

Data centers are facilities that house computer systems to manage our digital world, storing and facilitating everything from audio and video calls, photos, music, work documents, streaming videos, social media, banking and recordkeeping to the generation of artificial intelligence. Development of these facilities is growing across the Appalachian and Southeast regions where Northern Virginia is known as the data center capital of the world.

Data centers vary widely in their size and impacts, but the latest generation of “hyperscale” facilities are extremely energy-intensive. For instance, Microsoft’s proposed Gainesville Data Center in Prince William County, Virginia, would consume 3,000 megawatts of electricity — enough to power a city of up to three million residents. As the impacts of data centers on our air, water, electric bills, and quality of life have grown, federal, state, and local leaders must do more to protect our communities — especially to ensure data center energy needs don’t lead to increased fossil fuel use.

While data center growth is certainly a contributor to rising electricity demand in our region, particularly in Virginia, where data centers account for more than 25% of electricity consumption, researchers at the think tank RMI found that in 2025, data centers made up just 4% of total electricity consumption in the United States, with this projected to increase to 9% by 2035. Increasingly, utilities are attributing much of their forecasted growth in energy demand to proposed data centers, but studies are showing that this demand forecasting may be overestimated.

The Threat of Increased Pollution and Higher Electric Bills

Utilities are pointing to data center demand to justify new fossil fuel power plants that will pollute local communities, exacerbate climate impacts, and raise household electric bills. Meanwhile, mounting evidence suggests that in some places, utilities are significantly overestimating the electricity demand required for new data centers, meaning that expensive and polluting power plant infrastructure could be massively overbuilt to supply electricity for projects that will never materialize.

Data center developers are racing to connect to the electric grid as quickly as possible, with some companies submitting duplicative interconnection requests to multiple utilities in different areas, hoping to gain an advantage and begin operations right away. This process means that a single proposed data center may be counted multiple times in electricity demand forecasts. Speculative data centers that never manifest are being referred to by some experts as “phantom” data centers. This problem is prevalent enough that even high-level staff at major data center tech companies are raising concerns about utility overforecasting.

Here are some examples of reports that highlight how utility estimates for data center growth are implausible:

An analysis of data center demand across four Southeast states suggests that there is only a 0.2% chance that data center demand, as forecasted, will actually materialize, meaning that utility estimates were extreme outliers, with only a 1-in-500 chance of materializing.
A study commissioned by the Southern Environmental Law Center from London Economics International found that even under bullish scenarios for global semiconductor chip manufacturing growth, projected data center demand from just 77% of the U.S. power market would require 90% of global chip supply through 2030. Yet between 2023 and 2025, the U.S. accounted for less than 50% of the sales made by worldwide chip leader Nvidia. This disparity indicates that it is implausible for data centers to be built at the pace utilities are projecting.

In addition to the threat of utilities overbuilding infrastructure, data center developers are increasingly looking to secure their own power supplies to bring their projects online more quickly, an approach that has support from the current presidential administration. Some developers are purchasing and operating their own methane gas power plants on-site, or entering agreements with third-party companies to construct large gas power plants for their projects. Recent examples of this include the xAI data center project in Memphis, Tennessee, where the company began operating dozens of methane gas turbines without the required air permits in a marginalized community already overburdened with environmental pollution, and a now-rejected proposal by Balico in Southside Virginia to construct a massive data center campus powered by 3.5 gigawatts of on-site gas generation. This bring-your-own-gas approach is both creating local air pollution and exacerbating the harms of climate change.

A lack of smart regulation and guardrails for data center development threatens an expensive and polluting fossil fuel buildout, causing not only air and climate pollution but also a variety of other harmful impacts on communities and ratepayers, including rapid increases to electric bills, strains on local water supplies and local noise pollution.

Holding Data Center Companies Accountable to Responsible Development

While the potential for negative impacts from data center growth is immense, there is a lot that lawmakers, utility leaders and regulators and everyday residents can do to ensure that data center development generates benefits in their communities, without causing major problems for the electric grid, increasing costs on residential electric bills, harming water supplies or exacerbating pollution and other negative public health impacts.

Data center companies are some of the wealthiest corporations in the world, and many are desperate for electricity interconnection. Local and state decision-makers are well-positioned to set up tax structures and incentives that deliver maximum benefit to their communities, rather than granting these corporations major tax breaks without any strings attached. When structured well, fair tax structures for data center development have the potential to significantly boost local tax bases. Meanwhile, developers can and should go beyond minimum requirements by investing additional funds into critical infrastructure and resources for local communities and the surrounding power grid. At the same time, utilities must be held accountable to transparent and accurate demand forecasting around data center growth, and to ensuring that any new power source developed for a data center is clean, and that costs to connect to the grid are paid for by the data center companies.

Here are some examples of how data center development can and should mitigate negative impacts and support electricity affordability and resilience for households:

Rewiring America published a report arguing that the fastest way for hyperscale data centers to obtain all of the electricity they need is to upgrade residential households with heat pumps and pay for rooftop solar, batteries and other distributed energy resources for residences that can be managed in a virtual power plant to reduce peak demand and provide new clean capacity. In this way, a data center developer could actually help lower residential power bills.
Duke University researchers found that we could meet growing electricity demand from data centers without building new power plants if we require these large energy users to limit their energy use during the hours of the day and times of year when electricity demand is at its peak.
Google and utility Xcel Energy announced a deal in which Google will build a new data center in Minnesota that is connected to Xcel’s grid. Under a novel tariff agreement, Google will pay Xcel for the addition of 1,400 MW of wind, 200 MW of solar, and a 300 MW iron-air long-duration battery. Google will also pay $50 million towards Xcel’s existing distributed battery program, funding capacity and resilience solutions for residential customers of the utility. According to Google, this ensures the company “will pay all costs associated with our electric service.”

Appalachian Voices believes that community members deserve fair treatment and meaningful involvement in local planning and decision-making about whether and how data center development occurs in their communities. We support policies for holding data center companies accountable to responsible development that protects communities and our air and water.

This means data center development should:

Mitigate strain on the electric grid and ensure that new power generation is carbon-free:

Any power generation infrastructure proposed to be built and owned by a data center developer (co-located on-site or “behind-the-meter”) must be carbon-free. Proposed fossil fuel power generation at data center sites threatens to drive carbon emissions up exponentially, and for most use cases, on-site generation is not the smartest option.
Data centers should be required or incentivized to use carbon-free energy resources to power their operations. This can happen in at least a couple of different ways:
- Data centers can enter into special tariff arrangements with their local utilities to pay for clean energy resources that are grid-tied and match their load.
- In many jurisdictions, data centers can purchase clean energy generation from third parties that fully matches their load. In these circumstances, the clean power generation should be new, its output should align with the data center’s demand profile, and it should be located in the same transmission zone as the data center.
Data centers should be required to utilize more energy-efficient operations.
Data centers should be required or incentivized to participate in demand flexibility to reduce peak-hour power usage.

Eliminate unfair costs for other electricity customers by ensuring that data centers pay their own way:

Data centers should pay the full cost of the electric grid upgrades that they need — our communities should not subsidize Big Tech.
State legislatures and utility regulators should allocate power infrastructure costs to the data center companies whose demand creates the need for it.
Utility regulators must protect non-data center ratepayers by carefully scrutinizing demand forecasts that may include duplicative data center power requests. Investor-owned utilities are incentivized to build as much infrastructure as regulators will approve. Regulators must find ways to place the financial risk of overbuilding on data center developers, not on captive residential and small business customers.

Happen in full transparency:

State and local governments should ensure that the data center industry and individual data center developers and operators are transparent about energy use, water consumption, noise and emissions associated with their facilities. The Virginia General Assembly passed a bill in 2026 requiring transparency around noise, electricity usage, and impacts on ground and surface water resources, agricultural resources, parks, registered historic sites, and forestland. This bill is a good start; however, the new policy only applies to proposed facilities requiring 100 MW or more of power supply.
Data center companies should work proactively with local governments and regulators to engage residents in planning early and often, so that community priorities have a real influence on project outcomes.
State and local governments should require adequate disclosure of information so that affected residents can engage meaningfully in decision-making processes around data center proposals that impact their communities.

Protect local water resources:

Developers should be required to minimize strain on local water supplies by using closed loop cooling or close-coupled cooling. Alternatively, these facilities should use 100% recycled or gray water for their cooling systems.
If closed-loop systems are not feasible and recycled water is not available, then data centers should be required to completely offset all water used by implementing a replenishment program within the same watershed.

Support local employment, workforce development and family-sustaining wages:

Developers should include high local hiring rates in RFPs for project construction.
Developers should consider utilizing Project Labor Agreements to ensure market-competitive wages, investment in local workforce development, and a steady supply of highly skilled labor for project construction.

Center community benefits:

State and local governments should require or encourage data center developers to work with local communities to address their concerns, prevent and mitigate any negative impacts, and otherwise engage with local stakeholders to ensure data center projects have a net positive impact.
State and local governments should ensure that tax breaks for data centers are used to encourage data center developers and operators to meet public-interest goals and do not unreasonably reduce the tax revenues that states and localities should expect to collect from industries operating in their jurisdictions.