Virginia environmental regulators drop plan to allow data centers to rely on diesel generators

Virginia’s environmental regulators have dropped a proposal to allow Northern Virginia data centers to disconnect from the electrical grid and run on their diesel generators during power shortages after the idea ran into a firestorm of criticism.

On Wednesday, April 12, the state Department of Environmental Quality issued a public notice saying it is no longer pursuing a variance to state law that would have lifted restrictions on data centers’ generators to allow them to run for longer periods of time than would normally be allowed. 

The idea was opposed by many environmental groups, government watchdogs and citizens from Prince William, Loudoun and Fairfax counties who were mainly concerned about the effects on air pollution from hundreds, if not thousands, of commercial-grade diesel generators running day and night for extended periods of time. 

More than 50 people spoke in opposition to the proposal at public hearings in Woodbridge in late February and again last week, on Thursday, April 6. Hundreds more sent comments to the DEQ -- nearly all in opposition.

“It's a remarkable outcome if you think of where we started,” said Chris Miller, president of the Piedmont Environmental Council, which had alerted its members and the public to the proposed variance.

“But what we're concerned about is, what they're trying to do is find a use for these generators, as opposed to what we really should be doing, which is finding a better source of backup energy and providing for a better planned energy system.”

At the hearing on Feb. 27, Josh Levi, the president of the Data Center Coalition, said his group appreciated the proposed variance as a tool to “help address the transmission constraints in eastern Loudoun County.” But he surprised many in the audience when he asked that the variance, which at the time applied to Prince William and Fairfax counties as well, be limited to just eastern Loudoun.

The DEQ rewrote the proposal last month to limit it to eastern Loudoun, but on March 27, Levi sent a new letter to DEQ Director Mike Rolband. Citing “important and unresolved technical, federal regulatory and operational challenges” with the variance, he said “no DCC member” had indicated they would use it.

He noted that the DEQ itself had said it did not anticipate that any data centers would need to use it, calling it precautionary and redundant. He also wrote that the proposal did not ensure data center compliance with federal air-quality regulations and asked that the DEQ withdraw the variance.

Shortly thereafter, the Loudoun County Board of Supervisors sent a letter to the DEQ expressing its dismay that it had not been notified by the DEQ while the proposal was being drafted, citing the likely result of increased air pollution and generator noise. 

In its Wednesday, April 12 release, the DEQ said the idea behind the variance was to allow data centers to serve their customers and maintain the quality of the internet, while alleviating demand on the grid during periods of extreme stress. But it said these issues were now being addressed by the data centers, the electric utilities and PJM Interconnect, which is the administrator and operator of the part of the grid that encompasses Virginia.

The origins of the variance proposal remain murky. In mid-2022, Dominion Energy, which serves more than 100 data centers in Loudoun, Prince William, Fairfax and Fauquier counties, said it was having transmission difficulties serving the region -- especially in and around “data center alley,” an area west of Dulles International Airport which hosts many of the buildings. 

At the same time, the grid’s operator, PJM, increased its notices to users that indicate stress on the grid -- usually in small and defined segments. 

The PEC, which counted 4,632 generators on 101 sites in the region, noted that these alerts and warnings had doubled in number from the previous year, from about 40 to 80.

The original variance was drafted to allow data centers to go off the grid and run on their generators under such alerts. But the DEQ also said such action was voluntary and did not explain how many data centers should go offline and how they would be notified.

Dominion Energy has said the idea for the variance came from meetings between affected parties – including PJM, the DEQ and data center operators. But PJM has lately stepped back from the idea. It said in a statement to the Loudoun Times-Mirror that PJM “did not initiate this proposal.”

The DEQ’s role in this is important because the agency issues permits for data center generators to operate. Under a typical permit, a data center is allowed to run its generators for short periods of time for maintenance and testing, and for longer periods only during emergency power failures. The permits limit generators to 500 hours of operation for all purposes – about 21 days in a year. 

During the public hearings, the DEQ came under especially fierce criticism, given that a sign in the hearing room cited DEQ’s vision for the future as including “improved air quality.” 

“As far as I can tell, your purview is not power delivery,” said Elena Schlossberg, director of the Coalition to Protect Prince William County,  

Mike Dowd, director of the DEQ’s air and renewable energy division, said in a brief interview last week, “I do know that Dominion has had trouble meeting demand. That’s the origin.” 

He declined to explain exactly how the idea for the variance came about, but said, “We are not energy planners.” 

The PEC’s Miller said the variance was no substitute for a true demand response program, in which energy users cut back on their usage when the grid is in trouble. He added, “The most difficult issue is getting people to come to grips with the scale and the scope of the energy demands that data is putting on Virginia as a whole. That’s our recurring theme.”

Reach Peter Cary at news@fauquier.com