Electricity demand in Virginia can be expected to grow fairly rapidly between now and 2035. It will likely continue to grow even more quickly between 2035 and 2050 as the state accelerates its efforts to eliminate carbon emissions from the economy. Most of the shorter-term growth comes from increased sales to data centers in Virginia. In the longer-run, electric vehicles will become an increasingly important contributor to growth in electricity sales.
Electricity demand could rise even faster, depending on how quickly the state moves to decarbonize its energy economy. A more rapid decarbonization pathway would imply increased electricity use beyond what is included in the forecast presented here. That increased use will occur in transportation, industry and buildings.
The Covid-19 pandemic reduced Virginia electricity use in 2020 by a little over 2%. Large reductions in commercial and industrial demand were partially offset by increases in residential and data center sales. But total electricity sales have returned to the levels that were forecasted pre-Covid-19 by the end of the year.
Forecast summary: Most electricity use sectors in Virginia are not growing. Commercial and industrial demand for electricity in Virginia have both been falling for several years, and we can expect this to continue for some time. Residential sales are growing very slowly due to slower population growth and improved energy efficiency. The one growing sector of electricity demand in Virginia is sales to data centers. Data center use is growing nationally, and Virginia is a particularly attractive location for data center services. So data center electricity use is growing faster here than in most other states.
In 2020, electricity sales amounted to 115,585 GWh. Given a continuation of recent experience, we estimate that annual electricity sales will grow between 17% (20,000 GWh) and 38% (44,000 GWh) from 2020 to 2035. Our mid-range estimate is for a 30% (32,800 GWh) increase in electricity sales by 2035. This increase does not include increased electric vehicle sales but rather is nearly all due to increased data center use. The lower growth figure of 17% assumes a rapid reduction in the rate of growth of data center sales, well-below what the state has experienced in the last several years.
To put this increased demand in context, in 2020, Virginia’s four nuclear reactors generated approximately 30,000 GWh of electricity, about a quarter of all electricity generated in the state.
Data Centers: Continued data center sales growth on their recent trajectory would imply an increase in electricity use of around 44,000 GWh/year between 2020 and 2035 which would imply a nearly 40% increase between 2020 and 2035. Recent experience notwithstanding, it seems unlikely that this accelerating growth is sustainable over the next 30 years. We develop three alternative scenarios for data center sales growth. These imply a 71%, 56% and 22% growth respectively in electricity sales by 2050, all primarily due to growth in data center sales alone.
The actual sales data through 2020 do not show any “saturation” in the Virginia data center market. Some growth is likely to continue through the forecast period. Given this, we expect non-transportation electricity sales to be between 137,000 GWh/year and 162,000 GWh/year by 2035 and between 144,000 GWh/ year and 198,000 GWh/year by 2050.
Electric Vehicles: The increased use of EVs (light-duty cars and trucks) will add to these totals. Assuming that Virginia’s new Zero Emission Vehicle standard is in place, we can expect to add about 5,000 GWh per year to these totals in 2035. Light-duty EVs will likely add between 25,000 and 32,000 GWh to demand by 2050, assuming that these vehicles are battery electric vehicles.
Covid-19 and Electricity Sales in 2020: The Covid-19 pandemic reduced total electricity sales in Virginia by 2.1% during 2020. An increase in sales to residences and to data centers compensated partially for significant and persistent drops in industrial and commercial sales.
After correcting for the effect of weather on residential electricity sales, it appears that the pandemic resulted in a 5.5% increase in residential electricity sales during the months of the pandemic. An 8% drop in April was followed by a 6.8% increase in residential electricity use in the last 8 months of 2020 compared to what was expected.
Commercial and industrial sales fell 20% during the heart of the pandemic compared to the weather adjusted forecast. Industrial sales had not recovered appreciably by the end of the year. Commercial sales ended the year with a 13% reduction for the April through December period. Data center sales increased 4% during the months of May through December, compared to what was otherwise expected.
Because its overall effect on electricity sales was small, the pandemic did not have a significant effect on the 2035 and 2050 demand forecasts. These remained remarkably stable after adding observations for 2020 to prior data.