DATA CENTERS AND OUTAGES
AI’s ROLE IN CREATING STRESS AND COSTS ON THE GRID AND ITS CLIMATE CHANGE IMPLICATIONS
In July 2024 a transmission line failure in Virginia produced a 1.5 Gigawatt near blackout, potentially affecting the leading region in the U.S. for AI-Data Center development. This momentary incident in turn revealed a hidden risk in AI Infrastructure, its “grid fragility,” as one AI industry-related website put it.
Then a year later, in the summer of 2025, a fire knocked out an electrical substation right in the heart of Data Center Alley in Loudoun County, VA. The outage caused data centers served by that station to use backup power for several days in late June and early July, according to the Virginia Department of Environmental Quality, another indicator of stresses on the grid and its customers.
The utility serving that region, Dominion Energy, has been heavily invested in the expansion of AI-related Data Centers, including the massive hyperscalers that have made Dominion’s service area in northern Viriginia the trend setter in Data Center development. At the same time, it has also become a utility prone to an increased risk of power outages as well as large rate increases and climate-related impacts due to this AI-induced grid fragility.
Dominion, like much of the utility industry, recognizes that its capacity to meet the increased demand on the grid, primarily due to the new and Proposed Data Centers, is at an inflection point. Without new energy sources, Data Center-induced power outages and grid failures will no longer be seen as rare ‘Acts of God,’ but instead will come to be recognized as “foreseeable operational events,” as industry analysts characterize such a future.
In response, the utilities and the AI Data Center investors now seek to:
· Build new power plants, such as a proposed Chesterfield Energy Reliability Center, a 1.47-billion-dollar natural-gas plant designed in part to support data-center development in Virginia.
· Plan for rate increases to meet the huge power needs and additional costs of serving the power-hungry Data Centers, and that will primarily impact utility rate payers.
· Ignore, deflect, or dismiss pollution impacts from new or retired power plants and energy sources, including for the most vulnerable communities.
· Develop and wage public relations campaigns that suggest an AI future is inevitable, and that new energy plants and Data Center developments serve the public interest rather than serve as a potential source of profit, whether for investor-owned utilities or for Data Center developers.
Dominion’s situation is revealing regarding each of those points. Its proposed Chesterfield Energy Reliability Center (CERC) is located at a site where there had been an aging coal-fired plant, two of whose boilers had shut down in 2019, with the remaining units shut down in 2023. Since then, the site has remained idle.
Yet just the current Data Centers in Loudoun and Prince William counties served by Dominion alone draw 30–60 MW of power each, orders of magnitude higher than the industrial facilities the region’s substations had been designed for. With these types of demands for power only going to increase astronomically, Dominion has moved forward its CERC plan to develop a natural gas and low distate fuel sourced plant on that same abandoned site, along with several diesel generators.
At the same time, still fearful of the potential for continuing outages due in part to their own plans to add more stress on the system, the AI Data Center owners and investors have begun to explore their own strategies to enable them to stay open a lengthier stretch of time, even perhaps as much as six months, during an extended outage. These strategies include the Data Centers relying on their own backup generators rather than depending on the utility’s system.
Such strategies would enable the AI facilities to essentially decouple themselves from the load which they have already stressed and which they will do so even more into the future. In addition, the likelihood of climate impacts such as the heat wave in the summer of 2025 or the cold bomb cycles like the one that just occurred in January 2026, will extend disruptions to the system, including an overextended load and increased outages. However, with their decoupling strategies in place, the Data Centers would have their power, even while residents and local businesses go dark.
This potential scenario has led to increased opposition to such plans. In the case of Dominion’s proposed new natural gas plant, state regulators, sympathetic to the plans of the utility and to the AI Data Center developers, quickly moved to approve the plans for the CERC natural gas power plant.
Then, unexpectedly for them, at a December 2025 meeting to move those plans forward, the regulators, the utility, and the AI developers were startled to discover an intense outpouring of opposition that has caused a temporary delay on the plans moving forward. This included challenges to CERC on four grounds: environmental justice (yet another source of pollution impacts for an already vulnerable community), the cost of the gas plant compared to alternatives (such as less expensive solar), the burden of proof on reliability (including the problem of Data Center decoupling), and the legal mechanism for cost recovery (including the impact on rate payers already suffering from the rising cost of electricity).
They shouldn’t have been surprised. As I discussed in an earlier substack (https://bobgottlieb.substack.com/p/ai-data-center-opposition), and others have also written, opposition to projects like CERC and the massive Data Center developments have led to new opposition movements that were unexpected. There are already today nearly 200 activist groups nationwide, with the largest clusters in the Midwest and mid-Atlantic regions, including notably Virginia, according to Data Center Watch.
As these groups have begun to organize, the AI industry has struck back. Public relations campaigns have increasingly become a tool utilized by both the largest AI companies like Meta and the coalitions that the AI industry has created, such as the Virginia Data Center Coalition and its p.r. arm, “Virginia Connects.”
Yet the problems are not going to disappear. Despite the soft images and rosy claims of the pr campaigns, there are already and will continue to be a huge jump in AI-related energy (and water) demands on the grid. Nationally, regulators increasingly expect continuing impacts, with estimates of peak demand nearly tripling from 85 GW to 218 GW by 2031, as one regulator, the Electric Reliability Council of Texas estimated, with nearly 78 GW of that coming from data centers alone. Without proactive redesign, as one AI-industry organization argued, the next Virginia-style disturbance could trigger not a near-miss, but a multi-state blackout.
These AI Data Center energy-related developments also have crucial climate change implications: continuing reliance and expansion of fossil fuel sources, like the CERC facilities; load stresses and resilience strategies due to AI Data Center expansion that impact entire electricity infrastructure systems; and public relations campaigns that deflect climate goals and ultimately strengthen climate deniers.
The opposition to these energy-related AI Data Center developments, while limited in resources to contest the power-hungry AI behemoths and their various enablers, have nevertheless become an important counterforce that can strengthen the broader environmental and climate justice arguments and movements. These battles are only going to intensify.
LINKS
Eli Tan, New York Times, “Meta Aims to Get People to Embrace Data Centers.” Feb. 3, 2026. https://www.nytimes.com/2026/01/27/technology/meta-data-center-ads.html.
Virginia Connects. https://www.virginiaconnects.com/
Virginia Data Center Reform Coalition. https://www.pecva.org/region/regional-state-national-region/general-assembly/virginia-data-center-reform-coalition/
Patrick Larsen. “Regulators to consider appeal against Dominion Energy natural gas plant,” VPM News. December 18, 2025, https://www.vpm.org/news/2025-12-18/scc-chesterfield-energy-reliability-center-appeal-dominion-selc-holmes
Whitney Pitkin, “The AI Energy Crisis: Data Centers Strain Chesapeake’s Power and Water,” The Bay Journal, October 5, 2025. https://thebaynet.com/the-ai-energy-crisis-data-centers-strain-chesapeakes-power-and-water/
Global Data Center Hub. “When 1.5 Gigawatts Vanished: What the Virginia Near-Blackout Revealed About the Future of AI Infrastructure,” Nov. 5, 2025,
Maeve Allsup, “AEP, Dominion argue there’s no such thing as ‘isolated’ colocation for data centers.” Latitude Media, March 31, 2025. https://www.latitudemedia.com/news/aep-dominion-argue-theres-no-such-thing-as-isolated-colocation-for-data-centers/#:~:text=The%20group%20of%20power%20providers,connected%20to%20the%20wider%20system.
Paul Cobler and Camila Maia. Texas Tribune. “Texas’ power grid weathered another winter storm. Is it ready for the future?.” January 29, 2026. https://www.texastribune.org/2026/01/29/texas-winter-storm-uri-anniversary-power-grid-ercot/