Largest data centre market in U.S. facing power shortage

Due to concerns with the electrical grid, data centre development in Northern Virginia may be delayed. Power availability could affect construction in the largest data centre market in the U.S. for the immediate future, and perhaps for years to come.

The issue is reportedly centred on infrastructure issues, rather than a lack of power being generated. Dominion Energy, the primary provider of power in the region, released a statement focusing on the growth in energy demand from data centres over recent years. “We’ve made significant investments in new infrastructure to meet the growing demand for electricity. That growth is now accelerating, which is resulting in transmission constraints in a pocket of eastern Loudoun County that will impact new connections for large customers. This will not impact residential or small business customers.”

In an earnings call, Andy Power, CFO and President of Digital Realty said that Dominion Energy notified the company of a potential power issue in Eastern Loudoun County that could delay construction of data centre facilities until 2026.

While Dominion Energy could not provide Digital Realty with definitive answers to specific questions, “they have been transparent about the potential issue and are working very diligently to finalize their assessment.” Power continued, “There will obviously be a slowdown in delivery of new supply in the largest and most consistently in-demand data centre market in the world.”

Wells Fargo addressed the issue in a memo from analysts to clients, which warned that Dominion “could halt power delivery for new data centre developments until 2025 or 2026,” and that significant delays across 2023 and 2024 could derail 90MW (or more) of planned hyperscale data centre facilities.

So many data centres are located in Loudoun County, Virginia that the area has become known as ‘data centre alley’, with an estimated 70% of the world’s internet traffic flowing through the area. Projects in development comprise 5 million square feet of data centre space, with many more in the planning stage.