Briefing 02/27/2025
This week's roundup: Fredericksburg approves a controversial data center district despite community opposition. In Georgia, lawmakers advance a bill shifting energy infrastructure costs to data centers. Meanwhile, California legislators push for new rules to prevent ratepayers from subsidizing data center energy use.
Fredericksburg Approves Controversial Data Center Project Amid Local Opposition
The Fredericksburg City Council unanimously approved a Technology Overlay District, allowing data centers to be built by right in Celebrate Virginia South. The approval process took 8 months, from formal drafting in mid-2024 to the first council vote in February 2025, partly due to strong community opposition and a 4-3 Planning Commission vote against it.
Projects in the area
The Rappahannock River area has experienced a surge in data center projects.
Right after the approval of the Technology Overlay District, Stack Infrastructure filed for a $10 billion data center project within the technology district in Fredericksburg.
In the neighboring town of King George, Amazon's 2.5 GW, $6 billion data center project—approved in 2023—faces uncertainty as the newly elected Board of Supervisors in 2024 moved to renegotiate tax incentives and reconsider rezoning 500+ acres to agricultural use.
Why it matters:
Community Pushback: Opposition from residents, the Planning Commission, and activist groups like Friends of the Rappahannock (FOR) signals potential resistance to new large-scale data center projects in the area.
FOR engaged with authorities on the Technology Overlay District, securing concessions on environmental safeguards, such as the prohibition on the use of potable water for cooling, incentives for stormwater management, and requirements for trees to create environmental buffers.
However: FOR demands greater transparency, urging the city to disclose data center water usage. They have also raised concerns about power infrastructure, which will be reviewed in a 2025 feasibility study.
FOR has called Fredericksburg citizens to attend public hearings and press officials on the Technology Overlay District’s environmental impact, anticipating future conflicts.
Procedural Challenges: Critics argue the fast-tracked approval bypassed deeper review, with concerns over noise, energy use, and infrastructure burdens. The demand for a special use permit process suggests future legal or political obstacles.
Bottom Line:
While the approval paves the way for major data center investment in the city, concerns from community groups, such as the Friends of the Rappahannock, highlight the ongoing debate in Fredericksburg. These concerns signal potential backlash against future developments.
Georgia Advances Legislation to Shift Data Center Energy Costs Away from Consumers
The Georgia Senate Regulated Industries and Utilities Committee approved Senate Bill 34. The bill mandates that Georgia Power charge data centers directly for infrastructure and energy costs related to their operations, preventing these expenses from being passed onto residential and small business customers. The bill still needs to be brought to the Senate floor for approval.
Bill information
SB 34: Aims to prohibit electric utilities from passing on the costs associated with providing services to commercial data centers to residential and small business customers.
Sponsor: Senator Chuck Hufstetler (R - District 52)
Party Breakdown of Sponsors: 5 Republicans, 14 Democrats
Projects in the area
Georgia has experienced significant growth in data center development, which could lead to rising energy costs due to new legislation. The state currently hosts several data center projects exceeding 100 MW, under development by hyperscalers like Microsoft and Meta, as well as major developers such as T5 Data Centers, QTS, and DC Blox.
Meta is expanding its Stanton Springs - Campus 2 facility with 222 MW of capacity. Microsoft is expanding its facilities in Rome and Palmetto, adding a combined 278 MW.
These expansions are still in the early stages. As of Q4 2024, the 500 MW needed to supply these hyperscaler projects has yet to be secured from the grid.
Why it matters:
Operational Cost Increases: Data centers may face higher operational costs as they become responsible for substantial infrastructure expenses, potentially affecting their financial planning and expansion strategies.
Regulatory Precedent: This legislation could set a precedent for other states, leading to similar regulatory measures that hold data centers accountable for their significant energy consumption.
California Lawmakers Propose Crackdown on Data Center Energy Costs
California lawmakers have introduced several bills to address the allocation of energy costs associated with data centers. These proposals aim to adjust how electricity expenses are distributed among ratepayers and data center operators.
Assemblymember Rebecca Bauer-Kahan (D-San Ramon) has proposed mandatory energy disclosures and efficiency standards for data centers. State Senator Steve Padilla (D-Chula Vista) has introduced a plan for a separate electricity rate structure, along with tax incentives for data centers that create at least 20 jobs and use 70% clean energy.
Bill information
AB 222: Requires mandatory energy disclosures and efficiency standards for data centers.
Sponsor: Assemblymember Rebecca Bauer-Kahan (D-San Ramon)
SB 57: Proposes a separate electricity rate structure for data centers.
SB 58: Offers tax incentives for those data centers that create at least 20 jobs and use 70% clean energy.
Sponsor: State Senator Steve Padilla (D-Chula Vista)
Projects in the area
In California, there are currently multiple projects under development that could be impacted by this proposed legislation:
Cal Ethos California DC, 1260 MW.
Cyrus One Santa Clara 132.9 MW.
Amazon Web Services, Santa Clara, and Gilroy combined 123 MW.
Microsoft San Jose1 92 MW.
Why it matters:
Costs & Regulations: If passed, these laws could impose new financial and regulatory burdens on data centers, requiring greater energy efficiency and transparency.
Anti-data center activism: Groups like The Utility Reform Network (TURN) and the Center for Biological Diversity support these regulations. They warn that residential and small business customers could bear the brunt of rising infrastructure costs and the growing environmental impact of data centers.
Big picture :
Similar legislative efforts to regulate data center power consumption are underway in Virginia, Texas, Oregon, and Ohio. This trend signals broader state-level action to address the issue. As data centers expand, their increasing energy demands are prompting legislation to adjust how energy infrastructure costs are allocated. These changes could potentially raise energy expenses for data center operators.
Links
How to build data centers without raising grid costs and emissions https://www.canarymedia.com/articles/utilities/how-to-build-data-centers-without-raising-grid-costs-and-emissions
Data centers' electricity use is booming, but at what cost to the power grid? https://www.marketplace.org/2025/02/24/data-centers-electricity-ai-boom-growth-power-grid-energy/
Inside the Nuclear Race for Data Center Energy with Aalo Atomics CEO Matt Loszak
Data centers may hold key to future nuclear energy in Illinois
Join the Data Center Watch Briefing and stay ahead of growing political risks for data centers.