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The Washington region’s explosive data center growth is delivering major tax revenue while intensifying concerns about electricity costs, land use and development near homes.

Local leaders examined those competing effects during a March 11 meeting of the Metropolitan Washington Council of Governments, where Loudoun County Board of Supervisors Chair Phyllis Randall warned against treating the industry as entirely beneficial or harmful.

“It’s a very double-edged sword,” Randall said, acknowledging that Loudoun made significant mistakes, particularly in its land-use decisions.

Loudoun has become the center of both data center construction and the public resistance surrounding it. The wider D.C. region is now the world’s largest data center hub, with nearly three times the capacity of second-place Beijing.

“We are the epicenter of this,” said Jeff King, a COG staff member specializing in climate, energy and air quality.

Electricity demand reaches across local borders

More data centers are planned, placing additional pressure on the regional electric grid. King said Dominion projects that it will need to double its capacity over the next five years.

The expense of building that infrastructure can affect customers far beyond the communities where data centers operate.

D.C. Council member Charles Allen said residents of the District may never see a data center on the horizon but will still encounter its effects in their monthly power bills.

COG has organized a series of meetings about the industry. Its final discussion, expected after Virginia and Maryland lawmakers finish their 2026 sessions, will focus partly on costs.

COG General Manager Clark Mercer said officials want a measured conversation involving the appropriate stakeholders. He hopes it will clarify how much of an energy bill reflects data center demand and how much comes from other customers’ electricity use.

Fairfax weighs siting and neighborhood concerns

Fairfax County has experienced less data center development than farther-out suburbs, but several projects remain underway or under consideration. They include a possible land sale in Chantilly, a CoreSite expansion in Reston and a proposed Lincolnia facility opposed by neighbors.

Franconia District Supervisor Rodney Lusk said local governments must improve how they work with residents, especially when data centers are proposed beside residential communities.

A 2024 review by the Virginia Joint Legislative Audit and Review Commission found that more than half of Fairfax County’s 20 data centers at the time stood within 200 feet of a residential neighborhood. That was the highest share of any Virginia locality.

The Fairfax County Board of Supervisors approved stricter rules earlier that year, including a minimum 200-foot separation from homes. Those requirements did not apply to projects already moving through the planning process.

Lusk urged regional officials to consider the appearance of data centers as well as their location. The buildings generally have little visual appeal, he said, leaving governments with the challenge of demonstrating their value to residents.

For local governments, that value is most evident in tax revenue.

Randall said Loudoun has spent no local money recruiting data centers and receives $26 in tax revenue for every $1 in local costs associated with them. She credited that return with helping Loudoun maintain what she described as the lowest property taxes in the D.C., Maryland and Virginia region.

The financial benefits have not erased public anxiety. Randall said traffic was the leading complaint when she took office 10 years ago, but data centers are now residents’ biggest concern by a wide margin.

She also argued that rejecting all future development is not a workable option. State and federal officials could preempt local authority, she said, leaving municipal leaders and residents with less influence over decisions.

The debate is also unfolding in Richmond. Virginia Senate leaders have proposed helping finance the state budget by eliminating tax breaks for data center developers, an approach met with skepticism from the House of Delegates and Gov. Abigail Spanberger.

The General Assembly is expected to require a special session to complete the spending plan after its regular session concludes Saturday, March 14.