Now They Want to Rein It In

Congressman Suhas Subramanyam, who likely represents the Congressional District with the largest concentration of data centers, has become a leading advocate for placing new limits on data center growth in Northern Virginia and nationally.

This summer, he criticized “utility companies and data center overreach,” endorsed a local data-center moratorium, and called for data centers to bear more of their costs. Last week he unveiled a “National Data Center Plan” aimed at changing how data centers are sited, how their impacts are measured, and who pays for their energy infrastructure.

His proposals deserve serious historical context. Virginia did not become the nation’s data center capital by accident. For years, policymakers at the federal, state, and local levels encouraged the digital economy and the infrastructure required to support it.

Subramanyam’s own policy record best illustrates that evolution.

Before entering elected office, Subramanyam served as a technology policy adviser in President Barack Obama’s Office of Science and Technology Policy. In 2016, he co-authored a White House article promoting the “Internet of Things,” connected technologies and the administration’s Smart Cities Initiative.

The article celebrated technologies capable of creating “new jobs, businesses and opportunities” and called for additional public and private investment to accelerate the development of smart cities. But smart cities, cloud computing, artificial intelligence and billions of connected devices require servers, networks, transmission infrastructure and enormous amounts of reliable electricity.

In other words, they require data centers.

Virginia policymakers understood the economic opportunity and acted accordingly. In 2021, while serving in the House of Delegates, Subramanyam supported legislation (HB2273) expanding Virginia’s data center tax exemption by giving favorable treatment for qualifying facilities in distressed communities.

In 2022, the House unanimously approved legislation (HB791) supported by the technology industry establishing rules for valuing certain data center fixtures for local tax purposes.

Then came the major 2023 cloud-computing package prompted by Amazon Web Services plans for tens of billions of dollars in Virginia investments. The General Assembly responded with legislation (HB2479) creating a Cloud Computing Cluster Infrastructure Grant Fund and extending favorable tax treatment for extraordinarily large qualifying investments well into the future. Subramanyam supported this massive effort as well.

This history matters because policymakers, including Subramanyam, actively sought data center investment. They offered tax incentives, grants, promoted economic development, and created a policy environment intended to make Virginia the most attractive place in America for cloud-computing infrastructure.

It worked — and the benefits were real.

As concerns about this growth increased, Subramanyam continued to acknowledge those benefits. In early 2024, he told the Virginia Mercury, “One of the benefits of data centers is how much money it brings to a locality.” Virginia Business quoted Subramanyam saying Northern Virginia residents understood the industry’s “benefits to schools and roads.”

Those observations remain true. But by September 2024, Subramanyam was also openly acknowledging the other side of the equation. During the Loudoun Chamber of Commerce’s 10th Congressional District debate, he was asked how the federal government should strengthen America’s aging electric grid.

His answer went straight to data centers.

“We have so many data centers now and more that are planning to be built,” Subramanyam said, “that it’s actually putting a lot of stress on our power grid.” He said policymakers were having “hard conversations about how we’re going to power them” and pointed to proposed transmission infrastructure extending into West Virginia.

Thus, by the fall of 2024, Subramanyam clearly understood both the scale of future data center construction and the strain it would place on Virginia’s grid. Yet his proposed solution was not to stop building data centers, but to call for federal investment in the local and national electric grid and to advocate “comprehensive legislation” to upgrade it.

He went on to “promote clean energy and invest in clean energy” to fuel Virginia’s energy needs — declaring that Virginia could become “the clean energy capital of the world.” His opponent, Mike Clancy, argued that Virginia was retiring reliable generation too quickly under the Virginia Clean Economy Act (VCEA) and advocated that Virginia needed more than renewable energy and called for an all-of-the-above approach that would include natural gas and small modular nuclear reactors to serve data centers and other future economic growth.

That disagreement is central to Virginia’s data center debate today. The problem is that Virginia encouraged huge new electricity demand while simultaneously adopting energy policies that make supplying new reliable power more difficult, if not almost impossible, and more expensive.

The VCEA was enacted before the explosive growth of artificial intelligence dramatically altered electricity-demand forecasts. Yet instead of reconsidering whether Virginia’s energy generation policy remains realistic, policymakers increasingly focus on restricting the customers creating the demand. That is backward.

A moratorium does not solve Virginia’s underlying energy problem. Nor does treating data centers as villains. The better approach is the one Subramanyam was articulating in 2024: recognize the growth, acknowledge the pressure it places on the grid, and build the infrastructure necessary to serve it.

Virginia needs an energy policy capable of powering the success it helped create. Scapegoating data centers is not an energy policy.

Key Takeaways:

• The Commonwealth’s emergence as a data-center hub was the result of years of tax incentives, grants, favorable policies, and explicit efforts to attract cloud-computing investment — not an accidental development.
• Rep. Subramanyam’s policy evolution from supporting data center growth, including strengthening the electrical grid to support its growth — to now calling for a data center moratorium and greater regulations is indicative of the general shift in data center support among policymakers in Virginia and nationwide.
• The central problem is the intersection of data center growth and Virginia’s failing energy policy. Policymakers encouraged rapidly increasing electricity demand while maintaining energy policies that make reliable new generation harder and more expensive to build. Virginia should expand its energy generation and grid capacity rather than punishing data centers through moratoriums.

Key Quote:

“Virginia needs an energy policy capable of powering the success it helped create. Scapegoating data centers is not an energy policy.”

Derrick Max
Jefferson Forum

Derrick Max is Vice President of Policy at the Jefferson Forum and may be reached at dmax@jeffersonforum.org