Virginia governor vetoes more energy storage despite data centers roaring for more power

Virginia Gov. Glenn Youngkin used his last veto powers to eliminate most of the General Assembly’s efforts to meet the state’s energy demands and regulate the state’s energy-intensive data center market, the largest data center market in the world. According to Virginia’s Joint Legislative Audit and Review Commission (JLARC), Northern Virginia constitutes 13% of all reported data center operational capacity globally and 25% of capacity in the Americas.

The legislation would have tripled the amount of energy storage capacity the state requires its two public utilities to procure under the Virginia Clean Economy Act (VCEA). The bill required Appalachian Power to petition for at least 780 MW of short-duration capacity by 2040 and 520 MW of long-duration energy storage capacity by 2045 and for public utility Dominion Energy to petition for at least 5,220 MW of short-duration energy storage capacity and 3,480 MW of long-duration energy storage capacity by 2045.

Virginia became a state to watch before Youngkin took office. When the former Gov. Ralph Northam signed the VCEA in 2020, it became the seventh state to establish a procurement mandate for energy storage. The VCEA requires the state to switch to 100% clean energy by 2050 and to procure 16 GW of solar and onshore wind, accompanied by 3.1 GW of energy storage by the end of 2035, among other things. The bill also gave Dominion until 2045 and Appalachian until 2050 to supply electricity from only carbon-neutral sources.

However, despite its strong legislation set by the former governor, Virginia’s energy storage market is experiencing slow movement, according to Solar Energy Industries Association (SEIA). Virginia has about 1 MW of energy storage in service, according to SEIA.

Gov. Youngkin actively criticized Virginia Clean Economy Act throughout his tenure as governor, which is now in its final year. Virginia governors are barred from serving consecutive terms.

The governor initially sent the bills back to the General Assembly with his recommendations, which removed Appalachian and Dominion’s renewable energy requirements, essentially repealing the Virginia Clean Economy Act. The legislators did not accept the governor’s recommendations, so he vetoed the bill.

“The Virginia Clean Economy Act (VCEA) is failing Virginians,” the governor said in a statement. “Adding in requirements for the petitioning of additional storage technologies will not change the fact that the law is misguided and does not work. Long-duration energy storage is an expensive technology and if utilities believed it to be the best technology to meet demand, they would be actively seeking permission to build them.”

Dominion, however, has been actively seeking permission to build more energy storage. Dominion’s proposed construction of long-duration energy storage facilities was approved by Virginia’s utility regulator in 2024. In April, Dominion was approved to purchase electricity from third-party storage suppliers. Dominion said its plan for a combination of solar and the storage projects would “result in fuel savings of approximately $6.6 billion over the period of 2022 through 2035. Fuel savings for the full lives of all resources in this Development Plan, which extend through 2073, are approximately $118.5 billion.”

In the company’s integrated resource plan required by the VCEA, Dominion said accelerating data centers, along with economic growth and electrification, “are driving the most significant demand growth in the Company’s history and they show no signs of abating.” Dominion said it serves the largest data center market in the world, larger than the next five biggest U.S. data center markets combined.

“It is apparent under any reasonable set of planning assumptions that maintaining reliability and affordability will require an ‘all of the above approach,” Dominion said.

To meet the growing demand from data centers, JLARC said the amount of new battery storage would be several times the small amount currently in place in Virginia and a significant number of new natural gas peaker plants would have to be constructed. The report recommended the General Assembly “consider expanding Virginia’s statutory Accelerated Renewable Buyers program, which effectively encourages large utility customers to invest in solar and wind projects, to include battery storage.”

After the bill unanimously passed the Senate, the governor’s veto is a blow to the state as its high energy demands are compounded with its low production in energy.

Utilities in Virginia imported more electricity than any other state in 2023, which made up 36% of the state’s total electricity supply, according to the U.S. Information Administration (EIA). Both California and Virginia utilities have consumed more electricity than they produce for decades, but California utilities decreased the electricity it brought in from other states over the past five years, while Virginia’s utilities increased by 61%. EIA attributed the Virginia’s increase to the growing commercial-sector demand, such as data centers. The increase in California, EIA said, “is due to a combination of increased rooftop and net-metered solar installations and investment in energy efficiency programs.”

The governor vetoed most of the General Assembly’s clean energy legislation, such as a bill to increase rooftop solar and other forms of distributed power, and another to establish a renewable-energy workforce program.

However, the governor signed off on legislation for Dominion to create a virtual power plant (VPP) pilot program. VPP programs don’t generate power in themselves, so the legislation won’t lessen the state’s surging energy needs, but it will help reduce strain on the grid by enabling utilities to tap into distributed energy resources, such as solar panels and battery storage, during peak demand periods.

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