Executive Summary
Market Overview & Risk Profile
Northern Virginia is the largest data center market in the world, representing 13% of all reported data center operational capacity globally and 25% of capacity in the Americas. With 663 operational data centers and nearly 600 more under construction or planned, the Commonwealth is experiencing unprecedented infrastructure expansion driven by AI and cloud computing demand.
This expansion introduces significant climate and operational risks that require continuous monitoring. Virginia is currently facing drought conditions across 78% of its land area, a rapidly changing energy regulatory landscape driven by grid capacity strain, and evolving wildfire and seismic risk profiles that directly impact facility operations, insurance costs, and long-term investment viability.
Drought Coverage
78%
Of Virginia land area currently under drought conditions (Feb 2026)
Energy Demand Growth
183%
Projected increase in Virginia energy demand by 2040
Data Centers
663
Operational facilities with ~600 more planned or building
Capacity Price Increase
833%
PJM capacity auction price increase for 2025-2026
💧 Drought & Water Availability
Source: U.S. Drought Monitor (NOAA) • Virginia DEQ • Updated weekly
HIGH RISK
Virginia is experiencing critical drought conditions that have direct implications for data center cooling infrastructure. As of February 2026, approximately 78% of the state is under drought conditions, with an additional 13% classified as abnormally dry. The Virginia Department of Environmental Quality has issued drought warning advisories for 22 counties and 13 cities, including much of Northern Virginia where data center density is highest.
Water Cooling at Risk
Data centers consume significant water for evaporative cooling systems. With precipitation forecasts showing a 40-50% chance of below-normal rainfall through spring 2026, water availability and pricing pressure is expected to intensify. Facilities relying on municipal water systems in drought-affected regions face both supply constraints and potential use restrictions.
Virginia Drought History: Not Uncommon
January 2026
DEQ issues drought warnings for 22 counties and 13 cities. Only 12 counties and 7 cities not under any drought advisory. Precipitation deficits continuing with streamflow and groundwater well below normal.
2023
High-impact drought during late summer and fall was a primary factor in several major wildfires, including the Matts Creek Fire. Fifteen Virginia localities qualified for USDA emergency loans.
2010-2012
Multi-year drought period affecting water supplies statewide.
2007-2008
Extended drought with significant agricultural and municipal water impacts.
1999-2002
Record-breaking multi-year drought. Virginia's most severe drought in modern records.
Design Consideration
Microsoft's Mount Pleasant, Wisconsin data center uses a zero-water evaporation system with closed-loop cooling, saving over 33 million gallons annually. Virginia operators evaluating new builds should weigh closed-loop or air-cooled designs against the state's demonstrated vulnerability to multi-year drought cycles.
🌊 Seismic Activity
Source: USGS Earthquake Hazards Program • Virginia Tech Seismological Observatory • Real-time monitoring
MODERATE RISK
Virginia has three identified seismic zones: the Central Virginia Seismic Zone (between Charlottesville and Richmond, following the James River fault), the Giles County Seismic Zone (New River Valley), and the Eastern Tennessee Seismic Zone along the Tennessee border. Virginia averages a magnitude 5+ earthquake every 50 years, and the state overall is rated as Medium-Low seismic hazard.
Largest Recorded Event
M5.8
August 2011, Mineral, VA. Most widely felt earthquake in U.S. history. Forced nuclear reactor shutdown at Lake Anna.
2025 Activity
7 events
Magnitude 2.0+ earthquakes in Virginia, below the annual average of 6.1
Most Recent Significant
M3.0
May 6, 2025, near Dillwyn. Over 2,000 USGS reports from people feeling the tremor.
Eastern Quake Propagation
Unlike western U.S. earthquakes, eastern seismic events travel much farther because bedrock is harder and less fragmented. The 2011 Mineral earthquake was felt from New York City to Richmond, triggered building evacuations across Washington D.C., and caused Northern Virginia highway gridlock. Data center infrastructure in the region must account for this wider impact radius in structural and operational planning.
🔥 Wildfire Exposure
Source: NIFC • Virginia Department of Forestry • NASA FIRMS • Updated daily
ELEVATED RISK
Virginia's wildfire profile is changing. The state's 30-year average is 1,449 fires burning 8,338 acres per year. However, recent years have seen significant spikes. The 2024 spring season alone burned nearly 20,000 acres, the largest area burned in 30 years for that period and nearly ten times the 2023 spring total.
Recent Fire Season Comparison
Acres burned during Virginia spring fire season (Feb 15 – Apr 30)
The 2025 spring season saw 437 wildfires burning 8,100 acres and destroying 66 structures including 22 homes. While acreage was below the extreme 2024 levels, the number of individual fire starts was higher (437 vs 328), indicating more frequent ignition conditions. Escaped debris burns remain the leading cause of wildfires in Virginia.
Drought-Fire Feedback Loop
Virginia's current drought conditions (78% of state) create elevated wildfire risk, particularly during spring and fall fire seasons. The 2023 drought directly triggered several major wildfires, and the pattern is repeating. Data center operators in secondary corridors such as Fredericksburg and Caroline County, which are closer to forested areas than urban Northern Virginia sites, face elevated exposure to both air quality degradation and physical fire proximity.
⚡ Energy Grid & Regulatory Landscape
Source: EIA • Dominion Energy • PJM Interconnection • Virginia SCC
HIGH RISK
Energy is the defining operational challenge for Virginia's data center market. The explosive growth of data centers has created grid constraints, regulatory backlash, and significant cost pressure that will reshape the economics of operating in the state.
Virginia Energy Generation Mix (Dominion Energy, 2025)
Grid Constraint Alert
Dominion Energy's contracted data center capacity increased 185% between July 2023 and July 2025. The utility plans to invest $50.1 billion in capital projects between 2025-2029 including new transmission lines, substations, and generation resources. Despite this, two-thirds of Loudoun County substations remain constrained, with some new facility connections delayed up to four years.
Key Regulatory Developments
November 2025
Virginia SCC approved new GS-5 rate class for large electricity users (25+ MW) including data centers, effective January 2027. Requires minimum payment of 85% of contracted distribution/transmission demand.
2025-2026
PJM capacity auction prices increased 833% for 2025-2026 delivery year driven by data center demand. Residential bills in the region increased by an estimated $10-21/month due to capacity cost spikes.
2026 Session
Virginia General Assembly considering bills to limit local government power over data center zoning and to require data centers to pay for grid infrastructure upgrades. Tax exemptions now tied to renewable energy procurement commitments.
Projected 2027
Dominion's proposed 14% residential rate increase citing data center growth and AI demand. New bulk power transmission line through Ashburn expected to alleviate some constraints by 2028.
⚠️ Severe Weather Profile
Source: National Weather Service (NOAA/NWS) • Real-time alerts
MODERATE RISK
Virginia is exposed to a range of severe weather events including tropical systems, severe thunderstorms, flash flooding, and winter storms. Northern Virginia's location in the Mid-Atlantic corridor means facilities must account for remnants of Atlantic hurricanes, derecho-type wind events, and significant ice storms that can impact power distribution infrastructure.
Primary Threats
Tropical / Flood / Wind
Hurricane remnants, flash flooding, severe thunderstorm complexes, and winter ice storms
Annual Precipitation
40+ in
Virginia typically receives over 40 inches per year, though drought cycles create significant variance
Operational Awareness
TWOCLICKS monitors active NWS alerts in real time across all Virginia weather zones. A custom portal configured for Virginia data center operations would surface tornado warnings, severe thunderstorm alerts, flash flood warnings, and heat advisories specific to facility locations, providing immediate operational awareness without manual monitoring of government sites.
🌡️ Climate Trajectory & Long-Term Outlook
Source: NASA GISS • NOAA Mauna Loa Observatory • EPA
LONG-TERM ELEVATED
Global temperature anomalies and rising atmospheric CO2 have direct cost implications for data center operations. Each degree of warming increases cooling energy demand. Virginia's energy mix is currently 58% natural gas, making facilities vulnerable to both carbon pricing regulations and fossil fuel price volatility as the state targets increased renewable penetration.
Global Temp Anomaly
+1.3°C
Above pre-industrial baseline. Each degree increases cooling infrastructure costs.
Atmospheric CO2
427 ppm
Highest level in 800,000 years. Leading indicator of regulatory direction.
Dominion 2045 Target
~80%
Renewable energy share of total capacity under forced retirement scenario
Dominion Energy's 2025 Integrated Resource Plan projects that renewable energy (solar, wind, battery storage) will grow from 14% to approximately 54-80% of total installed capacity by 2045, depending on the scenario. Coal will be completely phased out. However, Dominion has stated it does not currently see a viable path to full retirement of all carbon-emitting resources by 2045. This transition path has direct implications for the carbon intensity of Virginia-hosted data center operations and the ESG reporting obligations of tenants.
Risk Summary Matrix
Compiled from all data sources • February 2026
| Risk Category |
Current Level |
Data Source |
Key Factor |
| Drought / Water |
HIGH |
NOAA Drought Monitor |
78% of state in drought, forecast for continued below-normal precipitation |
| Energy / Grid |
HIGH |
EIA / Dominion / PJM |
833% capacity price spike, new rate class, 2/3 Loudoun substations constrained |
| Wildfire |
ELEVATED |
NIFC / VA Dept of Forestry |
2024 was worst spring in 30 years; drought-fire feedback loop active |
| Seismic |
MODERATE |
USGS |
Three active seismic zones; M5.8 precedent; wider propagation than western quakes |
| Severe Weather |
MODERATE |
NWS |
Tropical systems, flash flooding, winter storms affect power distribution |
| Climate Trajectory |
ELEVATED |
NASA GISS / NOAA / EPA |
Rising temps increase cooling costs; regulatory/carbon pricing pressure growing |
| Regulatory |
HIGH |
Virginia SCC / GA |
New rate class, tax exemption conditions, zoning legislation in flux |
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Data Sources & Methodology: All data in this report is sourced from authoritative government agencies including NOAA (U.S. Drought Monitor), USGS (Earthquake Hazards Program), EPA (emissions data), EIA (energy generation), NWS (severe weather alerts), NIFC (wildfire statistics), NASA GISS (global temperature), and NASA FIRMS (active fire detection). Market data is sourced from Dominion Energy filings, PJM Interconnection, Virginia SCC proceedings, JLARC reports, and industry analysis. This report is provided for informational purposes and does not constitute investment, legal, or engineering advice. Climate conditions change rapidly and should be verified against current government sources before making operational decisions. This is a sample report demonstrating the type of analysis available through TWOCLICKS Custom Portals.