Don’t Panic! Virginia Doesn’t Need a Data Center Moratorium

Data centers are increasingly unpopular. Nationwide, 63% of voters support pausing AI data center construction for at least a year, including majorities in both parties. Virginia hosts the world’s largest concentration of data centers, prompting calls for a statewide moratorium from legislators, newspapers, and advocacy groups.

While data center opposition is often rooted in legitimate worries about AI, the buildout’s effects on utility costs and water use are smaller than assumed. Regardless, moratoriums are neither effective nor appropriate as a policy tool for addressing concerns about AI. Given the enormous tax benefits Virginians receive from data centers, a moratorium would do more harm than good.

One concern about data centers is that they use large amounts of electricity, raising utility costs for everyone. There is some truth to this: Virginia’s data centers draw as much power as about 60% of the state’s households. Still, surging demand does not directly translate to higher energy costs. National econometric research has found zero or negative causal effects of data centers on electricity prices, and JLARC, Virginia’s nonpartisan legislative watchdog, confirmed that as of 2024, customers were not subsidizing data centers in their utility bills. Despite being the data center capital of the world, Virginia’s cost per kilowatt-hour remains below the national average.