Supporters of plans to build a major data center in New Castle County say it would create jobs, boost the economy, and contribute millions of dollars to local tax revenue while advancing Delaware’s part in a national surge of data-center construction for Artificial Intelligence (AI).
But critics of Project Washington near Delaware City argue that it would drive up residential electric rates by using half as much energy as that recently drawn by the whole state; strain water supplies by taking millions of gallons for cooling, and would expose nearby residents to round-the-clock noise from thousands of computer servers.
Since being announced in June, the six-million-square foot project – which would be one of the biggest in the country – has prompted a proposed ordinance in New Castle County Council, a large load tariff proposal at the Public Service Commission, a bill in the Legislature, and expressions of concern at the Energy Stakeholders Group, a legislative panel that includes energy executives, consumer advocates and environmentalists.
Opponents say Delaware residents will pay more for their electricity because of the huge 1.2-gigawatt power demand the center will make on the grid when it is fully operational in around eight years. Its developer, Miami-based Starwood Digital Ventures, plans to draw from the regional grid rather than generating its own power as some data centers in other states plan to do. But unless capacity increases, critics fear the new center will lead to higher individual costs for residents who are already facing higher electric bills.
“The effect of the data center’s draw of energy from the grid without new energy being brought into the grid from some place else is going to have a tremendous impact on our Delaware energy bills,” said state Sen. Stephanie Hansen, (D-Middletown), who chairs the Energy Stakeholders Group. “The rising cost of energy is a huge issue for Delawareans, and it is driven by the market force of supply and demand. We do not have enough supply of energy in our regional market, and our demand for energy continues to rise so the cost of that energy continues to increase,” she told DPM.
Hansen wants the data center to generate all or “a substantial portion” of its own power, said Sarah Fulton, a spokeswoman for the Senator.
Starwood declined to rule out a possible rise in residential electric rates in response to the data center but said it would work to minimize any increase.
“Residential rates are influenced by a number of factors. The Project Washington team does not expect the data center to result in a significant long-term impact to residential rates,” the company told DPM in a statement. “In fact, once operational, the data center’s electricity payments will help pay for future needed infrastructure upgrades to keep Delaware’s electric grid healthy and reliable – upgrades that are generally needed and the data center is not inducing and otherwise would solely be borne by existing ratepayers.”
Starwood CEO Anthony Balastrieri told DPM the project will connect with a current power line with a 55-kilovolt capacity, typically that which moves power from a utility within a local area. The presence of that existing electrical infrastructure helps to explain Starwood’s decision to locate the new project in New Castle County, he said.
“Having access to that level of infrastructure that already exists is very beneficial,” he said in an interview. “It means it’s very low cost to service this project because you are taking advantage of something that was already built and planned to be able to handle a project of this size.”
Balestrieri also argued that data centers like Project Washington will stimulate the addition of electrical capacity that the country needs. “The entire U.S. grid needs more power so when you need to build things, you need to know there’s demand out there. In the long run, we believe data centers have a very positive impact on the communities from an electricity standpoint,” he said.
The site was chosen also because it is in a corridor that has industry to the south, chemical manufacturers to the east, and a major road, Route 1, separating the data center from a residential area to the west. Only one house is within 1,500 feet of the site, Starwood officials said.
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Worries about Project Washington reflect a boom in construction of the giant plants across the country. Critics’ concerns are highlighted by the experience of residents in northern Virginia, the U.S. epicenter of data center development, where the industry’s explosive growth has driven up electric rates in some areas, and antagonized some residents with round-the-clock low-frequency noise.
“In places where these have been built … the lights haven’t gone off; the water that residential customers rely on hasn’t been destroyed. The new ones will be more efficient as the learnings from all of this continue to evolve."Mike Quaranta, president of the Delaware State Chamber of Commerce
In Delaware, the project will create 3,500 construction jobs, boosting the economy by $9.7 billion during the early phase. When fully operational, the center will employ about 700 people in jobs that pay more than $100,000 a year on average, the developer says, quoting an independent study by an economic consultant. It is expected to pay $75 million a year in local taxes.
About 40 percent of the 560-acre site will be left as open space, exceeding a county requirement, and about twice the share seen at other new data center sites. Wetlands will not be disturbed, Starwood officials said.
For cooling, the center would use about 13.5 million gallons of water a year in a closed-loop system, equal to that used by a typical large office building, the developer said.
The project was backed by Mike Quaranta, president of the Delaware State Chamber of Commerce, who said he understood concerns about electric rates and water use, but argued that critics’ worst fears have not been borne out by new data centers in other states.
“In places where these have been built … the lights haven’t gone off; the water that residential customers rely on hasn’t been destroyed. The new ones will be more efficient as the learnings from all of this continue to evolve,” he said during a recent conference on Developing Delaware. “I would hope that the public will stand behind this; let’s build one but let’s see what our experience is before we build a second or a third.”
Concern about electric rates has now surfaced at the Public Service Commission which on Oct. 15 granted a request by PSC staff and the Division of the Public Advocate to develop a “large load tariff” to ensure that energy users of more than 25 megawatts, such as data centers, don’t shift the costs of energy infrastructure on to other ratepayers. The regulator said it will “pause” the connection of any new large load facilities in Delmarva Power & Light territory until the new tariff is set.
The proposed PSC regulation was backed by Gov. Matt Meyer who said he wants to protect ratepayers. “We’re requiring big data centers to pay their fare share when they plug into our power grid,” he said in a statement. “We’re making sure Delaware families don’t foot the bill for the economy of the future.”
Asked to respond to the PSC initiative, Starwood said it hopes residential rate increases will be minimized when the data center becomes operational.
“The Project Washington Team shares the PSC’s commitment to protect all customers and continue to ensure a sustainable, reliable, and efficient electrical grid in Delaware,” the company said in a statement. “Project Washington will be paying for the substation infrastructure on the campus, and the team looks forward to work with the community to keep rates as low as possible in the future.”
PSC spokesman Rony Baltazar said the regulator’s plan is similar to a bill sponsored by state Rep. Frank Burns (D-Pike Creek) which would require the PSC to issue a “Certificate to Operate” for an entity using at least 30 megawatts of electric power. In deciding whether to issue a certificate, the commission would have to determine an entity’s impact on the economy, on electric ratepayers, and whether its activities are consistent with state goals for cutting greenhouse gas emissions.
At New Castle County Council, a draft ordinance by Councilman David Carter would require any data center to have a minimum 1,000-foot setback from residential zones, schools, and daycare centers, with an eight-foot minimum berm for visual and noise buffering; strict limits on noise and lighting impacts, including a 55-decibel noise limit from the sending parcel and zero-footcandle lighting at residential property lines, and a ban on open-loop cooling systems unless reclaimed water is used.
A draft substitute of the ordinance debated in Council on Oct. 11 also proposes that center operators or property owners would be required to notify the Department of Land Use and Planning if they are out of operation for six months or more. Within two years of being abandoned, they would also have to restore the land to its pre-developed condition or submit a land use application to establish a new use for the site.
The ordinance would also hold owners financially responsible, requiring them to show they have 100% of the funds to decommission the site before it's constructed.
The developer accepts most of what Carter wants but wants to discuss changes to the noise requirements, financial assurances for decommissioning, and a proposal to make the ordinance retroactive, said Pam Scott, an attorney for Starwood. She said the company hopes to resolve those issues by reaching out to Carter or the New Castle County Planning Board.
“The effect of the data center’s draw of energy from the grid without new energy being brought into the grid from some place else is going to have a tremendous impact on our Delaware energy bills."State Sen. Stephanie Hansen, (D-Middletown)
For his part, Starwood’s Balastrieri said the New Castle County site is “tailor made” for a data center, given its existing power infrastructure, its industrial nature, and its appropriate distance from residential areas.
“Data centers just can’t go anywhere. They require the right mix of land, a high-skilled work force; fiber connectivity, and power infrastructure,” he said at the DSCC event. “With every job created at a data center, the local community experiences six additional jobs to service the project, making this an important initial step toward a long-term trend of high-paying and high-growth jobs located in Delaware.”
