Former Virginia energy director: data centers brought revenue but require strict planning and cost allocation

Glenn Davis, who led Virginia’s energy office during a period of rapid data-center growth, told Delaware legislators that the industry can be transformative for local budgets but demands careful regulatory and planning frameworks.

"The economic benefit is real and is transformative to localities," Davis said, citing Loudoun County examples where data centers became a major source of tax revenue used for schools and transportation. But he cautioned that data centers bring unusual planning requirements: they need reliable high-voltage delivery, fiber connectivity, and clear rules on who pays for transmission and interconnection upgrades.

Davis described tools Virginia used or considered: fiscal audits (JLARC reviews) to track rate and fiscal impacts, negotiated large-load tariff and interconnection cost allocation provisions, requiring data centers to bear substation and related infrastructure costs, and insisting on community engagement and clear siting standards. He also recommended thinking about the size and type of data centers Delaware wishes to attract and whether to prioritize local jobs, tax revenue, or environmental constraints.

He warned that incentives commonly used elsewhere (sales and use tax exemptions, property tax approaches) make Delaware attractive by default — but stressed that states can, and have, adjusted incentives or added guardrails such as wage, environmental, or water-use thresholds on incentive eligibility.

Davis emphasized tradeoffs: while some Virginia localities used data-center revenue to reduce property taxes and invest in schools, the long-term fiscal balance and environmental impacts require guardrails and contingency planning. He urged Delaware to define the desired scale of projects and cost-allocation rules before signaling a broad welcome to hyperscalers.

The committee did not vote; members followed with technical questions about congestion costs, behind‑the‑meter generation, and whether local infrastructure can be required or secured through developer commitments.