The Scale of the Data Center Demand
Northern Virginia — “Data Center Alley” — hosts the world’s highest concentration of data centers, clustered around Loudoun, Prince William, and Fairfax counties. The numbers are staggering:
- 70,000 MW in capacity requests as of February 2026, up from 47.1 GW in contracted pipeline just months earlier.
- 88% increase in power capacity requests from data centers in a single year (through December 2024).
- Virginia’s overall energy demand could rise 85% over the next 15 years — with projections suggesting consumption could nearly triple by 2040.
This demand surge has transformed Dominion’s investment posture from routine grid maintenance to crisis-level infrastructure buildout.
Dominion’s $50 Billion Response
Dominion’s five-year capital plan (2025–2029) includes:
- $17 billion specifically for data center infrastructure and clean energy transition.
- A $1 billion super high-voltage transmission line dedicated to data center hubs.
- A proposed 1,000 MW natural gas plant in Chesterfield County.
- The 2.6 GW Coastal Virginia Offshore Wind (CVOW) project (~$10 billion), expected to complete by end of 2026.
- Exploration of Small Modular Reactors (SMRs) for scalable, carbon-free baseload power.
GS-5: The Most Aggressive Data Center Rate Class in the US
Starting January 2027, Dominion will implement the GS-5 rate class for customers consuming over 25 MW:
- 85% minimum demand charge: Data centers must pay for at least 85% of their contracted distribution and transmission demand — even during off-peak periods.
- 60% generation demand minimum: Generation charges are also subject to a floor, preventing data centers from arbitraging load curves.
- Cost-causation principle: The rate structure ensures data centers pay for the infrastructure they require, rather than spreading costs across residential and small commercial ratepayers.
This parallels APS’s 30–45% data center surcharge in Arizona and Grant County PUD’s unbundled rate strategy in Washington.
PJM Interconnection Reality
Virginia sits within PJM’s footprint, where the interconnection queue now exceeds 260 GW of pending projects. Data centers are the fastest-growing segment. The backlog means:
- New generation takes 4–7 years from application to operation.
- Transmission constraints in Northern Virginia create locational pricing premiums.
- PJM’s 2025 State of Market report identifies data center demand as “non-competitive” in the capacity market, distorting auction prices for all ratepayers.
What Virginia Commercial Buyers Should Do
- Model GS-5 impact: If your facility exceeds 25 MW, quantify how the 85% minimum demand charge affects your annual electricity cost structure starting January 2027.
- Explore behind-the-meter generation: On-site solar, battery storage, and fuel cells can reduce contracted demand and mitigate minimum charge exposure.
- Watch PJM capacity costs: The record $329/MW-day capacity auction means delivery charges in Dominion territory will rise significantly starting June 2026.
- Evaluate Virginia demand response: With thinning PJM margins, curtailable load in Virginia commands growing premium payments.
Source: Dominion Energy 2025 Investor Day (February 2026); Virginia Business Magazine; Piedmont Environmental Council; Cardinal News; Thomas Jefferson Institute; American Action Forum; PJM State of the Market Report 2025.