Since the beginning of the digital age, most of the world's internet data has flowed through massive data centers in Northern Virginia. The area is known as "Data Center Alley" because it's home to the world's largest concentration of data centers. Some call the area 'spy country' because of the number of data centers used by the Central Intelligence Agency and other intelligence agencies.
Given the exponential proliferation of smartphones, streaming services, smart devices, and now generative artificial intelligence, the power demanded by data centers in Northern Virginia will need nuclear reactors worth of power, if not much more, according to utility Dominion Energy.
On Thursday, Chief Executive Officer Bob Blue told investors on a company earnings call that "economic growth, electrification, and accelerating data center expansion" is boosting power demand across the area.
Blue said, "The data center industry has grown substantially in northern Virginia in recent years," noting, "We've connected 94 data centers with over 4 gigawatts of capacity over the last approximately five years."
Blue expects his utility company to connect another 15 data centers to the local power grid this year.
He said, "This growth has accelerated in orders of magnitude, driven by one, the number of data centers requesting to be connected to our system, two, the size of each facility, and three, the acceleration of each facility's ramp scheduled to reach full capacity."
He provided some context about rising power demand, pointing out:
"A single data center typically had a demand of 30 megawatts or greater. However, we're now receiving individual requests for demand of 60 to 90 megawatts or greater, and it hasn't stopped there. We get regular requests to support larger data center campuses that include multiple buildings and require total capacity ranging from 300 megawatts to as many as several gigawatts."
Blue told analysts that Loudoun County is home to the "largest data center market in the world, and we have had an opportunity to work with our data center customers for 15 or more years."
He said the electrification of the economy, in combination with data centers, will only mean "substantial load growth driven by electrification in data centers for the foreseeable future."
With substantial load growth coming down the pipe, the local media outlet The Frederick News-Post reported earlier this year that billions of dollars in "regional power grid upgrades" are being proposed to "increase data center power demands in Northern Virginia."
Recently, media outlet LoudounNow reported that "hunger for energy continues to grow, especially in the data center industry with new large-scale projects adding hundreds of megawatts of demand." The paper said that this has led government officials to propose "small modular reactors."
Putting this all together plays into our latest investing theme, 'powering up America' and the upgrade of the nation's grid for AI data centers, electrification of the economy, and reshoring of manufacturing. We titled the notes "The Next AI Trade" and "Everyone Is Piling Into The Next AI Trade." Nuclear will be a big part of power generation as it's the only clean and reliable source for data centers, as Blackrock's Larry Fink pointed out last week.
Poster Comment:
When Civil War 2 starts, the first thing that should be done is to blow up the electrical power lines going into DC, Baltimore, NYC and Boston.
