The rich keep getting richer.
You knew that already, of course. Here’s some new evidence. It comes in the form of real estate records and construction permits — in Loudoun County.
The pandemic has put some people out of work and sent others to work — or study — from home. We are now living in the Age of Zoom. The implications of that ripple all across the economy, but eventually they show up in Northern Virginia. That’s because Northern Virginia has what is described as the world’s largest concentration of data centers — the massive computers that make everything on the internet go. If you’re reading this story online, that means somewhere between our office in downtown Roanoke and your phone, it’s bounced off a data center. By some accounts, 70% of the world’s internet traffic flows through Northern Virginia. That figure is almost certainly wrong, according to Tim Stronge, vice president of research at TeleGeography, a Washington, D.C.-based telecommunications company. He debunked that figure in a blog post last year. By his estimates, only about 9% of domestic internet traffic goes through Northern Virginia.
Still, whatever the exact figure is, Northern Virginia still has all those data centers —and every year it gets more. In 2018, Northern Virginia added more data center capacity than anyplace else in the world — more than the next five cities put together. Those next five, by the way, were London, Phoenix, Frankfurt and Dallas-Fort Worth. Northern Virginia that year accounted for 35% of the world’s new data center capacity; second-place London was less than 9%.
As more and more of the economy (and our social life) moves online, that fuels demand for more data centers. Of the new data center capacity built in the U.S. last year, 64% was in Northern Virginia, according to the commercial real estate firm BBG.
And that was before the pandemic turned Zoom into a verb and Zoomer into a noun.
Here’s what happened since, according to the website Data Center Frontier: “The COVID-19 pandemic is driving demand for more data centers in the world’s largest cloud cluster. Developers are racing to build new IT capacity in Northern Virginia to meet extraordinary demand for cloud computing resources due to the rapid societal shift to online services.”
The website quotes Loudoun County’s top economic development official: “We’ve never been as busy as we are right now with the data center industry. It’s quite amazing.” Northern Virginia already has more than 100 data centers; now at least seven more have applied for “fast track” construction permits. There are more in the pipeline after that. The Washington Business Journal reports that Microsoft has bought 66 acres in Loudoun County for a new data center operation — at a cost of $1.4 million per acre. Data Center Frontier says that pandemic has “been a defining moment” for the internet. “The sudden shift to digital work has driven a 30 percent surge in internet traffic, with some video conferencing services like Zoom seeing much larger increases in demand.” So us here in this part of Virginia? Lots of reasons.
First, anything that helps drive the Northern Virginia economy is good for us — at least indirectly. We like to think of ourselves as a sturdy, independent people, but we’re not — we rely on the state government to subsidize our school systems. In Arlington, the state pays just 8% of the cost of the school system. In Scott County, the state pays 65%. What’s the single biggest source of those state revenues? Northern Virginia. This is trickle-down economics in action: The better Northern Virginia does, the more tax revenue the state can collect, which means there’s more to pay for our schools. If you think the state is still short-changing rural schools, you’re right, but that money has to come from somewhere and Northern Virginia is the somewhere.
Now, that’s the upside. Here’s the downside. Why aren’t we getting those data centers? Microsoft wouldn’t have to pay $1.4 million an acre in Southwest or Southside Virginia. Part of the answer goes back to your experiences in school: All the cool kids sat at the same table because that’s where cool kids sat. Same here. Northern Virginia is the trendy place to be. It’s also the practical place to be. It’s got the technical infrastructure and the workforce. The tech companies could build the former here, but we simply don’t have the same kind of labor pool that Northern Virginia does. We can make a “build it and they will come” argument but that’s not how these companies think. They see 13,000 people working in data centers in Northern Virginia already so rest assured they can likely find the workers they need. Danville and Wise County have been at the forefront of pitching themselves as data center locations but Loudoun County remains Data Center Alley. (That’s a real slogan it uses, by the way).
There are other implications to all this data center growth — implications that stretch all the way to the coalfields. These data centers aren’t running on coal-fired furnaces. Data centers are electricity hogs — and increasingly those tech companies want that electricity produced by renewable energy. Northern Virginia is served by Dominion Energy. Who’s pressuring Dominion to add more renewable energy? Not just environmentalists. Last year nine data center companies sent a letter to Dominion “opposing its plan to build more gas-fueled power plants to meet growing energy demand — growth these companies and their peers have been largely responsible for. Instead, they want the utility to meet the demand with the combination of renewable energy generation and energy storage.” (That quote, by the way, comes from the website Data Center Knowledge). The list of those companies reads like a who’s who from the tech industry: Amazon Web Services, Apple, Microsoft, LinkedIn, Salesforce, Equinix, Akamai, Iron Mountain, and QTS.
As a result, the growth of data centers in Northern Virginia has led to the growth of solar farms, mostly in the eastern part of the state which are, admittedly, the most convenient place to put them. Amazon has at least seven in Virginia; Facebook eight.
We’ve argued that these companies should feel a moral obligation to build some of those renewable energy facilities in Appalachia — to replace the jobs lost to coal. So far they haven’t felt the same sense of obligation. The rich keep getting richer and, well, you know the rest.