Wires & Water June 2026 Update: The Costs of Growth Are Coming Into Focus

In this update:

• The Tax Break Debate Reaches a Boiling Point

• The Grid Is Feeling the Pressure

• High-Voltage Power Lines Face Growing Opposition

• Air Quality, Water & Public Health

• What You Can Do

  
  

Virginia's data center debate is entering a new phase.

Earlier discussions on data centers focused largely on where they were being built. Today, the conversation is increasingly centered on their impact - rising electricity costs, new power lines and substations, air quality, water resources, public health, and who bears the long-term costs of growth are taking center stage.

Recent developments show that issues once largely confined to Northern Virginia are spreading across Virginia and reaching communities much closer to home.

Photo credit: An Amazon Web Services data center near single-family homes in Stone Ridge, Virginia. GETTY IMAGES

The Tax Break Debate Reaches a Boiling Point

Virginia's long-running debate over data center tax incentives has reached a critical stage.

The state's data center tax incentives helped make Virginia home to the largest concentration of data centers in the world. 

Supporters argue the incentives attracted billions of dollars in private investment and helped establish Virginia as a global technology hub. Critics counter that the rapid growth has also increased demand for new power plants, transmission lines, and other infrastructure, raising questions about who should bear those costs. Recent reports estimate the exemption now costs Virginia more than $1 billion annually.

Budget negotiations remain stalled as lawmakers debate whether to scale back the incentives or keep them in place while imposing stronger environmental and energy-related requirements.

Read More

• VAs budget negotiations stall over data center tax breaks - shutdown concerns grow

• Data center impasse could lead to Virginia’s first-ever partial state government shutdown

• Virginia's data center tax break is costing the state more than $1 billion a year

• Here’s what House lawmakers want to require of data centers to keep their tax break

Why This Matters for Nelson County

The debate is no longer just about tax policy. At its core is a larger question: who should pay for the infrastructure needed to support continued data center growth? Decisions made in Richmond could influence future transmission lines, power plants, utility costs, and environmental protections that affect communities across Virginia – including Nelson County. As lawmakers consider the next steps, feedback from residents can help shape how those costs and benefits are balanced moving forward.

The Grid Is Feeling the Pressure

Electricity demand is no longer a future concern – it is already reshaping Virginia's energy landscape.

Demand is rising so quickly that grid operators are beginning to sound the alarm. PJM (the regional grid operator serving Virginia and much of the Mid-Atlantic) reported a surge in electricity prices this year, while the North American Electric Reliability Corporation issued rare warnings that rapidly growing power demand from AI and data centers could make it harder to deliver enough electricity when it is needed most.

The response is already underway. Dominion is proposing one of the largest gas plants in Virginia history, while utilities are turning to battery storage and other technologies to help keep the lights on.

Photo credit: Power lines cross a farm near Frederick, Maryland, 40 miles north of Washington, on July 7, 2010. J. Scott Applewhite/AP

Read More

• Data Centers Drive 76% Surge in PJM Power Prices

• AI boom sparks rare warning of ‘significant risks’ to grid - E&E News by POLITICO

• Dominion announces plans for new 3-gigawatt gas plant in Cumberland County

• For cheaper power, Virginia’s local utilities build small grid batteries

Why This Matters for Nelson County

Communities across Central Virginia are already seeing the effects. Projects like the proposed Valley Link high-voltage power line demonstrate how infrastructure built to support growing electricity demand can extend far beyond the communities where data centers are located. While the final footprint is still uncertain, residents in nearby communities including Greene, Madison, Orange, Culpeper, Augusta, and Rockingham counties are already debating how and where that infrastructure should be built.

Decisions being made today regarding power generation, transmission, and grid reliability will influence future utility costs, land use, and infrastructure development for households and businesses in Nelson County.

High-Voltage Power Lines Face Growing Opposition

Opposition to major transmission projects continues to grow across Virginia.

The proposed Valley Link high-voltage power line project remains one of the most visible examples. Residents, environmental organizations, conservation groups, and local governments have raised concerns about impacts to forests, farmland, historic resources, scenic landscapes, and private property rights.

Project developers recently released updated route options following public feedback, demonstrating that community engagement continues to shape the process.

Read More

• Residents Wrangle Over Transmission Line Proposal for Rural Virginia 

• Valley Link - updated routes for controversial transmission line project

• Valley Link transmission line risks VA.’s natural resources 

Why This Matters for Nelson County

While no major transmission project is currently proposed within Nelson County, nearby projects demonstrate how infrastructure pressures can expand outward as electricity demand increases. Communities throughout Central Virginia are paying close attention to how these decisions are made and who benefits from them.

Air Quality, Water & Public Health

Several major developments this month focused on the environmental and public health impacts associated with data center growth.

A Washington Post investigation found that Virginia data centers are supported by roughly 10,000 diesel backup generators and raised concerns that emissions from those generators could affect air quality in nearby communities. 

At the same time, growing public concern prompted the Virginia Department of Environmental Quality (DEQ) to change how it reviews generator permits, placing greater emphasis on the combined emissions from multiple data centers in the same area rather than evaluating each project separately.

Attention is also turning toward the water demands of large data centers. As new projects are proposed across Southwest Virginia and other rural communities, residents are increasingly asking questions about long-term impacts on local water supplies and watersheds.

Photo credit: Vantage VA2 data center in Sterling, VA. Photo source: Loudoun County online mapping tool.

Read More

• As data centers boom, Virginians breathe the exhaust of 10,000 diesel generators

• Virginia DEQ Revises Data Center Generator Rules as Community Pushback Builds

• More data centers are being proposed in Virginia. Here's what to know about their water usage

Why This Matters for Nelson County

Concerns about air quality, water resources, and public health are no longer limited to communities located directly next to major data center campuses. As development expands across Virginia, these issues are increasingly becoming part of statewide conversations about growth, environmental protection, and quality of life.

What You Can Do

1. Stay Informed

   • Sign up for updates from Friends of Nelson and the Piedmont Environmental Council.

2. Take Action

   • Share Friends of Nelson updates with friends and family.

   • Email or call your State legislators and let your voice be heard. 

   • Attend Nelson County Planning Commission and Board of Supervisors meetings

   • Monitor and submit comments on utility, power line, and energy projects through the Virginia SCC.

3. Learn More

   • Piedmont Environmental Council Data Center Resources

   • American Rivers' Data Centers and Rivers Guide: Protecting Clean Water and River Health

Friends of Nelson will continue monitoring developments related to data centers, energy infrastructure, and public policy that may affect Nelson County and surrounding communities.

Update by Erin Palmquist for Friends of Nelson