A large substation on Data Center Alley in Ashburn, Virginia. (Photo: Rich Miller)
Dominion Energy says it has restored new connectivity for some data center customers in a power-constrained area of Loudoun County in Northern Virginia. However, available power remains far less than data center vendors originally anticipated, and power limitations in parts of the “Data Center Alley” are likely to remain in place until the new transmission infrastructure is complete in 2026.
In July, Dominion Energy began telling data center companies that power to some new facilities in eastern Loudoun County would be delayed by years. The delays are due to bottlenecks in the utility’s transmission infrastructure, which has not kept pace with the dynamic growth of Northern Virginia’s data centers. Dominion says it has been analyzing its network in the short term and working with customers to identify strategies to continue providing “incremental” capacity for new projects.
“We’ve definitely made progress,” said Aaron Ruby. Media Relations Manager for Dominion Energy. “After completing a comprehensive analysis of our system and moving forward with several short-term projects, we were able to lift the temporary pause and gradually resume new data center service connections. We have met with each of the impacted customers to discuss our plans and how we will serve their individual facilities.”
“(Dominion) has found that they can provide a percentage of what is requested,” said Buddy Rizer, executive director of the Loudoun County Department of Economic Development. “They’re incredibly busy trying to figure it out. Before 2026, we have serious power issues on a large majority of the projects that were planned and in the pipeline.”
Dominion has not specified what percentage of the requested power will be available for new connections. According to industry sources, the utility has been in talks with up to 20 companies with expansion plans in the affected area and is trying to make new connections available to as many companies as possible.
A district report released at a Sept. 20 board of directors meeting said the restrictions “affect two-thirds of Loudoun’s substations and most of the projected data center growth in Loudoun.”
“While Dominion Energy and the data center industry continue to work to understand the impact of this new constraint, early projections indicate that most of the current construction and planned data center development will receive a significantly reduced allocation of expected power through January 2026,” says the report.
“Early projections indicate that most of the current construction and planned data center development will receive a significantly reduced allocation of expected capacity through January 2026.”
— Report of Loudoun County Planning and Economic Development Staff
The power supply delays could impact where and when new data centers are built in Northern Virginia, reshaping the map into a strategic hub for cloud infrastructure. If power continues in Eastern Loudoun, future development may shift to nearby submarkets such as Leesburg, Prince William County and Frederick County in Maryland. The news could also spark competition for the remaining space in Ashburn, which has one of the lowest vacancy rates for data center space in the country.
Delays possible, capacity may shift
The performance limitations will not impact data centers already in operation, but will impact future construction of new projects. Data center executives operating in Northern Virginia say they are working hard to analyze the impact of the power restrictions.
“We are not seeing any delays in providing space this year,” said Marc Ganzi, CEO of DigitalBridge, which supports three companies operating in Ashburn — Vantage Data Centers, DataBank and Landmark Dividend. “We went all the way to 2023 to see which workloads will be impacted or delayed. We do not see any compromises in our bookings in terms of who is used.
“We’re seeing delays,” Ganzi added on a recent conference call. “I think that’s one of the most important things to come out of it. There should be some delays in 2023 and there should be some delays in 2024, but we see things normalizing in 2025 and 2026.”
“There will be some locations that will be impacted,” said Bill Stein, CEO of Digital Realty, the largest operator in Northern Virginia, at the Cowen Infrastructure Summit last month. “We have 24 megawatts that we’re sure we have power to do (at Ashburn).
“We also have 200 megawatts that we can build in Manassas, which is not part of this supply shortage,” Stein noted. “I think it’s also important to remember that each year we’re going to have about 50MB that will be renewed for the next four or five years (when the leases expire). That’s all inventory that has power, and we would expect this power issue to have a positive impact on pricing.
“I think it’s everyone’s guess as to how high those prices are going to go,” Stein continued. “But the fact of the matter is that prices will go up because supply is limited.”
New transmission lines in 2026
In August, Dominion CEO Bob Blue said the company was “performing additional in-depth substation-by-substation analysis and continuing to work with customers and other stakeholders on projects to accelerate new connections and ramp-up schedules; and reviewing a variety of engineering alternatives to address areas of concentrated load.
“Based on the work and reach to date, it’s clear that we will be able to resume new connections in the near future,” said Blue. “But how much and how quickly is still to be determined. The longer-term solution absolutely requires the construction of additional transmission infrastructure.”
Dominion is accelerating work on a 500 kV transmission line in Southern Loudoun County, expected to be completed in 2026, that will remove many of the transmission bottlenecks that are limiting new connections for data centers in Eastern Loudoun. Dominion’s Ruby said the company expects to submit the official application for the project next month, which was detailed in filings with PJM Interconnection.
“We are also in the early stages of developing a second 500kV-230kV line, which we will submit to the SCC next year,” Ruby said.
Through 2026, Dominion is working on improvements to the existing infrastructure that may allow for additional capacity. These short-term projects include:
- Rerouting of three existing 230 kV transmission lines;
- Expansion of Goose Creek substation including installation of a new 500kV-230kV transformer
- Installation of a new set of series reactors on an existing 230 kV transmission line.
“We’re working with (Dominion) to quickly pursue some infrastructure programs,” Rizer said.
Providers are examining their options
Most data centers aren’t saying much about whether the “significantly reduced allocations” will change their development plans or commitment to the ashburn market. A significant number of providers operating in Northern Virginia have locations or properties in submarkets outside of Ashburn, such as the Dulles Cloud Corridor near Arcola, Prince William County or Leesburg. This could allow them to accelerate construction in those markets to serve customers seeking capacity in Northern Virginia.
Perhaps the biggest beneficiary of Loudoun’s power delays is Quantum Loophole, a data center developer building a massive campus on the Potomac in Frederick County, Maryland. Quantum Loophole announced today that it has signed contracts with four tenants representing 240 megawatts of capacity.
Rizer acknowledges that some vendors and customers may adjust their short-term plans, but is confident that Data Center Alley will remain a dynamic market for years to come.
“Four years seems like a long time, but you’re not going to exit the market, especially if you have capacity back at the end of that period,” Rizer said. “I haven’t spoken to anyone who says he’s going all the way.”
“It was a little wake-up call for the region,” said Ganzi. “But it’s still a great market and I think all our colleagues want to be there.”