During the summer of 2025, a fire at an electrical substation in Loudoun County forced dozens of data centers in Northern Virginia onto their backup diesel generators. Some facilities ran diesel for seven hours a day over three consecutive days. One facility, Compass Datacenters’ True North facility in Leesburg, ran its emergency generators continuously for six days and nights. Residents reported visible black smoke from numerous data centers across the county.
The same week, a heat wave pushed PJM Interconnection — the grid operator covering 13 states and 65 million people — to issue Maximum Generation Alerts and activate emergency demand response programs across the Mid-Atlantic, as grid conditions deteriorated to levels requiring DOE emergency orders to keep aging power plants online.
The incident was not an anomaly. Ten miles southeast, in Sterling, a Vantage Data Centers facility had already found a more permanent solution. Vantage II (VA2) has been running on jet turbine power plants, using natural gas, as its primary energy source — not as backup, but as baseload generation — for nearly a year.
Source: Vantage Data Centers.
Local residents reported that the turbines produce a constant 2-kilohertz high-pitched tone audible from more than 1,200 feet away, 24 hours a day, 365 days a year. Nearby residents report headaches, sleep disruption, and wildlife displacement.
Vantage II is not on the grid. It is the grid.
And it is not an isolated case. Across Loudoun County — Northern Virginia’s main data center cluster, with approximately 200 operational facilities consuming over 5.5 GW of electricity, with demand growing at roughly 1 GW per year — data centers are systematically bypassing the utility grid. They are doing it with diesel generators, natural gas turbines, and acquired power plants. They are doing it because Dominion Energy’s power delivery timeline for facilities over 100 MW has stretched from 3–4 years to 4–7 years, with some sites facing waits of up to 17 years. They are doing it because PJM’s own capacity auction failed to meet its reserve standard, and the grid operator has started using the words “brownout” and “blackout” in its planning documents.
And they are doing it in a regulatory vacuum. Virginia’s Department of Environmental Quality (DEQ) classifies onsite data center turbines as “minor” pollution sources. The State Corporation Commission (SCC) has no authority over behind-the-meter generation. Local governments have no established authority to consider energy availability in land-use decisions. Virginia HB 1112 would have granted localities in Planning District 8 the power to deny data center applications where electric energy is insufficient — but after its enforcement provisions were stripped in committee, the bill was continued to the 2027 session.
The result is a shadow power system that is neither metered at the grid level, regulated for aggregate emissions, nor subject to the land use review process that governs every other aspect of data center development.
I. The Grid Delivery Crisis
The core driver of onsite generation is not ideology or preference. It is math.
Loudoun County’s electrical demand grew more than 5× in the 7 years between 2018 and 2025, from 1 GW to 5.3 GW. Current demand stands at over 5.5 GW and is growing at roughly 1 GW per year, with projections reaching 8 GW by 2028 and potentially 13 GW by 2038. AI server racks — which typically operate at 40–80 kW per rack, roughly 5–10× the power density of conventional enterprise racks — are accelerating the trajectory. The scale of the mismatch is best captured not by forecasts but by commitments: as of December 2025, Dominion Energy reported approximately 48.5 GW of contracted data center power in its territory.
Dominion Energy Virginia — Data Center Contracted Capacity
Source: Dominion Energy.
The grid cannot keep up. Multiple new transmission lines are under construction in Loudoun County and will not be sufficient. All existing transmission rights-of-way are full to capacity. Dominion Energy confirmed that all data centers over 100 MW can expect full power delivery timelines of 4–7 years (up from 3–4 years previously); county officials have cited Dominion’s own statements that some sites could wait 17 years.
The most ambitious attempt to compress those timelines is a project to develop a 525 kV high-voltage direct current (HVDC) line. Dominion has proposed a 185-mile HVDC line from Brunswick County in southern Virginia to the Mosby substation in southern Loudoun County, delivering 3–4 GW of new transmission capacity. But even under the most optimistic timelines, the capacity would not arrive before 2029–2032.
The regional picture is equally strained. PJM’s 2026 Long-Term Load Forecast projects the Dominion zone as still PJM’s fastest-growing, with 5.4% compound annual summer peak growth and home to roughly two-thirds of all PJM data center load.
PJM Load Forecast Report — Dominion Virginia Power Zone
Source: PJM.
Data center load adjustments across the zone’s utilities — Dominion Energy, NOVEC, REC, and ODEC — total over 7 GW of demand in 2026, rising to 39 GW by 2046. Notably, PJM’s new firm/non-firm methodology derates speculative projects, yet classifies Dominion Energy’s entire data center pipeline as “Firm” given its full backing by electric service agreements and construction commitments.
Across PJM’s full footprint, summer peak demand is forecast to reach 222 GW by 2036 — up from the 210 GW by 2035 projected in the 2024 forecast — reflecting 3.6% annual growth driven overwhelmingly by data center load, which appears as the primary growth factor in nearly every PJM zone.
Large load adjustment requests filed with PJM total roughly 60 GW of incremental demand by 2030 and 99 GW by 2035, with data center projects accounting for the vast majority.
PJM — Summary of Large Load Demand Requests
Source: PJM.
Winter Storm Fern made the point in real time. During the January 23–31, 2026, cold weather event, PJM lost over 24 GW of generation capacity — a 13% event outage rate — primarily from plant equipment failures exacerbated by extreme cold.
PJM — Generation Performance (January 23–31, 2026)
Source: PJM.
PJM issued pre-emergency load management actions specifically for the BGE, PEPCO, and Dominion zones — the data center corridor — and the Department of Energy issued multiple Section 202(c) emergency orders.
The first granted emissions waivers covering ~39 GW of grid-connected generation; PJM dispatched 15 generators under this order for a total of 1,035 run hours, providing 5.2 GW of capacity.
The second authorized grid operators to conscript behind-the-meter backup generators at data centers and industrial sites — an order PJM did not ultimately need to implement, but one it had proactively requested.
That PJM sought the authority to call on a generation fleet it does not regulate, during the most severe sustained cold event since the 1990s, is itself a signal of how deeply behind-the-meter capacity has become embedded in regional reliability planning.
Real-time electricity prices in the Dominion zone spiked to $1,800/MWh, against $400–$700/MWh across the rest of PJM. The grid operator whose capacity auction had cleared at $269.92/MW-day for the 2025/2026 delivery year required DOE emergency authority to keep the lights on — and had positioned itself to call on the shadow fleet if conditions deteriorated further.
The implication is structural, not temporary. Data center developers who cannot secure grid power within their construction timelines face a binary choice: delay and forfeit revenue, or generate their own. The economics are straightforward:
A hyperscaler generates $10,000–12,000 in revenue per kW annually
Aeroderivative gas turbines cost $1,700–2,000/kW — a ~$1,500 premium over grid interconnection in unconstrained markets
That premium pays back in roughly two months of foregone hyperscaler revenue
From the lease side, multi-megawatt Northern Virginia hyperscale lease rates sit at ~$130/kW/month, so every month of grid delay is direct lost revenue for colocation providers — and the turbine premium pays back in under a year of lease revenue
Self-generation is not a concession. It is an arbitrage.
