Continued expansion of data centers in Virginia is driving demand for electricity, which gives Dominion Energy the justification for expanding its gas-fired generating fleet and building the Atlantic Coast Pipeline, according to a new report by Greenpeace, “Clicking Clean Virginia: The Dirty Energy Powering Data Center Alley.”
While several major providers of cloud services — Amazon, Facebook, and Microsoft most prominently — have committed to deriving their electricity from renewable energy sources, the boom in data centers has outpaced the ability of the data center industry, Amazon in particular, to line up renewable energy contracts.
“While electricity demand for utilities is flat or declining, electricity demand from data centers in Virginia has grown sharply, between 9 and 11 percent year year, offsetting declines elsewhere, with data center demand regularly touted by Dominion to its investors as a sign of continued growth,” states Greenpeace.
Ironically, although the Greenpeace opposes the Atlantic Coast Pipeline, information in the report undercuts an argument the environmental group’s Virginia allies use against the Atlantic Coast Pipeline: that Dominion forecasts have consistently overstated future electric load. While electricity load has plateaued or even declined in many states, demand from data centers continues to push demand incrementally higher in Virginia.
The Greenpeace report documents just how extensive that increase has been. Total demand from existing Virginia data centers and those under development approaches 4.5 gigawatts, concludes the report, roughly the same power output as nine large (500-megawatt) coal power plants.
Data centers have been a leading economic stimulus in Virginia, which has suffered from a sub-par rate of economic growth during the current business cycle. While individual data centers support only a handful of jobs, those jobs do pay well and the large number of data centers adds up. Moreover, the massive capital investment in servers and other equipment generates enormous local tax revenue.
The Greenpeace study argues that Virginia should enact policies that strengthen the state’s commitment to renewable energy and halt construction of the Atlantic Coast Pipeline, which would support increased natural gas consumption. Last fall Dominion announced plans to develop 3 GW of solar and wind projects by 2022, and significantly more in the years following. But environmental groups have argued that the utility could be more aggressive and that it uses its political clout to create barriers to competition.
In its long-term planning, Dominion continues to project a need for more natural gas, but it has shifted its forecast for the type of gas facility from combined-cycle units — massive plants capable of providing base-load capacity — to gas-turbine units that ramp up and down with fluctuating supplies generated by intermittent solar and wind sources. In Dominion’s view, gas is a natural complement to wind and solar.
Greenpeace described Northern Virginia’s Data Center Alley, encompassing Loudoun, Fairfax and Prince William Counties, as “the beating heart” of the global internet. Those three counties are home to more than 100 data centers and more than 10 million square feet of data center space. States the report:
While the recent growth in larger data centers can be partially attributed to tax incentives offered by the state of Virginia, the presence of the largest piece of AWS’s global infrastructure is itself creating a gravitational effect on other major data center operators, who want to be able to market their operations as having a direct connect to AWS. The recent arrival of new high speed subsea data connections to Europe and Africa from Virginia Beach is attracting major new data center investment in Henrico as well as in southeast Virginia. …
Not only is the data center market in Virginia the largest in the world, but it’s also growing faster than any other region. In the first half of 2018, new multi-tenant colocation data center construction in Virginia was greater than construction in the next four largest areas combined, according to commercial realtor Jones Lang LaSall (JLL). In total, JLL estimates 645 additional megawatts of planned or under-construction colocation capacity in the next year. Dominion Energy has estimated its energy sales to data center customers to grow roughly 20 percent a year through 2021, adding a predicted 2.4 terawatt hours of demand.
In 2016 Virginia generated less than 2 percent of its energy from renewable sources, said the Greenpeace report, ignoring the fact that solar production is ramping up rapidly and will continue to do so for years. “The majority of rising electricity demand needed to power data centers in Virginia is driving even more demand for fossil fuels, and more CO2 emissions that are fueling global warming.”
While the U.S. tech sector has invested heavily in renewable energy, “very little” is occurring in Virginia. the report says. “Companies with 100 percent RE (renewable energy) commitments find when they break ground in Virginia that their options for RE are very limited. As Virginia is primarily a regulated energy market, data centers have few options for buying a renewable supply of energy if not offered by the local utility.”
The main work-around is by purchasing excess green power from other regions by means of renewable energy credits (RECs). But RECs don’t improve the energy mix in Virginia, the report says.
Of the 15 companies measured in this report, only Apple has invested in enough renewable energy procurement to match its demand in the region. Facebook and Microsoft have also shown notable efforts in deploying increasing amounts of local renewables as they scale up operations in Virginia. The remaining companies have energy demand that either far outstrips their supply of renewables (Amazon, for example) or have not deployed any local renewables at all.
Source: Greenpeace, “Clicking Clean Virginia: The Dirty Energy Powering Data Center Alley”
The report has particularly harsh words for Amazon. Amazon’s cloud subsidiary, AWS, committed in November 2014 to use 100% renewables for its global expansion. It embarked upon a rapid expansion in its supply of renewable energy in Virginia in 2015 and 2016, working with Dominion to create a new rate program to reduce the financial risk for companies signing renewable contracts. However, “Amazon has remained notoriously opaque when it comes to publicly reporting information about its current energy use and how fast it is growing.”
Based on what the company reports on its website, Amazon has not signed any new renewable contracts since November 2016, and has actually withdrawn from a previously wind-farm contract in Ohio. While Amazon has committed to adding 132 megawatts of renewable energy to the Dominion grid, it has added 23 new data centers since 2017, representing an additional 626 megawatts of demand. “AWS,” says the report, “no longer appears to be honoring its commitment to 100 percent renewables.”
Amazon responded to the Greenpeace report as follows:
Greenpeace has chosen to report inaccurate data about the energy consumption and renewable mix of AWS’s infrastructure and did not perform proper due-diligence by fact checking with AWS before publishing. Greenpeace’s estimates overstate both AWS’s current and projected energy usage. Additionally, the report does not properly highlight that AWS has been a major investor in solar projects across the Commonwealth of Virginia and played a leading role in making it easier for us and other companies to bring more renewable energy to Virginia through our Market-Based Rate with Dominion Virginia Power.
As of December 2018, Amazon and AWS have invested in 53 renewable energy projects (six of which are in Virginia), totaling over 1,016 MW and are expected to deliver over 3,075,636 million megawatt-hours (MWh) of energy annually.
Further, AWS advocates for tax and regulatory policies at the federal and state levels to promote renewable energy usage. AWS remains firmly committed to achieving 100% renewable energy across our global network, achieving 50% renewable energy in 2018. We have a lot of exciting initiatives planned for 2019 as we work towards our goal and are nowhere near done.
Update: The originally published version of this story did not make it clear that Greenpeace opposes the Atlantic Coast Pipeline. I have edited the story to make it clear that it does. Greenpeace argues that the extraction, transportation and combustion of gas transported by the ACP would emit 69 million tons of greenhouse gasses annually, equivalent to 14 million passenger vehicles.
