Henrico County’s Big Data Center Growth Sparks Electricity Rate Hike

Henrico County is facing a major jump in electricity costs. Starting July 1, the local government and schools will pay 25% more for electricity. This increase will add about $5 million in expenses next fiscal year. County officials expect rates to rise again in the coming years.

The reason behind this surge partly lies in Henrico’s booming data center industry. The county already hosts 37 data centers, with plans to add 17 more soon. These centers require massive amounts of power to run their servers and cooling systems.

Meta opened a data center in Henrico back in 2017. Since then, the demand for data processing and storage has grown rapidly. New data centers may rely on over 300 diesel generators temporarily to handle their energy needs. This raises concerns about emissions and environmental impact.

County employees received an email from Henrico’s County Manager, John Vithoulkas, urging them to conserve electricity. He asked staff to turn off lights and computers when not in use, adjust blinds to reduce heat, unplug devices, and limit space heater use. Vithoulkas said, “Each dollar we can save by conserving electricity is another dollar the county can reinvest into staff and services.”

Virginia’s Changing Energy Landscape

The electricity rate increase in Henrico follows a statewide change. Virginia’s legislature approved a 24.9% hike in electricity rates starting July 1. Along with this, the state introduced a new enterprise power consumption tax of $0.011 per kilowatt-hour. This tax is expected to generate around $600 million annually, totaling $1.2 billion over two years.

Data centers have been a big focus of Virginia’s energy policies. The state offers a sales tax exemption on data center equipment, valued at about $1.6 billion for fiscal year 2025. This exemption supports the industry but also means the state is balancing incentives with new taxes.

The new consumption tax will increase operational costs for data centers. A hypothetical 100 MW center could face nearly $9.6 million a year in these taxes alone. Despite these changes, Virginia’s utility rates remain competitive compared to other states. The state is also restructuring energy infrastructure to better serve high-demand data centers, including creating a special rate class for them.

Voices and Concerns Around Data Centers

Environmental and community concerns have grown with the spread of data centers. Some new centers run on diesel generators, which cause pollution. Damian Pitt, an associate professor, pointed out that permitted emissions from these generators could be 10 to 20 times higher than current levels. He said, “Let’s bring relief as quickly as we can, and as clearly as we can, to the folks that live near these things.”

Legislators are getting involved. Delegate John McAulliff introduced a bill targeting backup generator emissions. He said this is the first time the state has regulated data centers this way and that the work won’t stop here.

Nearby counties are watching these trends closely. Loudoun County collects about 38% of its General Fund revenue from data center taxes. Hanover County recently approved a 1,200-acre data center project. Their tax rate on data centers remains at $0.45 per $100 of assessed valuation, but officials are considering raising it to as high as $3.

The energy industry is adjusting too. NextEra Energy proposed acquiring Dominion Energy for $66.8 billion. This deal aims to meet rising power demands as data centers and other industries grow.

Henrico County’s population tops 350,000 people. The county is trying to balance economic growth from data centers with rising energy costs and environmental impact. Officials want residents and employees to do their part by saving electricity. This effort reflects a mix of fiscal responsibility and concern for the environment.