Virginia's Tax Crack-Up Hands Texas a $73 Billion Recruiting Pitch

Virginia's $1.9 billion data center tax exemption fight is the most consequential policy story in the industry today. The state's Democratic-controlled legislature deadlocked Thursday, with Senate Democrats pushing to kill exemptions outright on January 1 while House Democrats want to preserve them with conditions. Virginia hosts 575 data center facilities, more than any other state or nation besides the U.S., and any weakening of its tax framework will redirect capital flows to competitor states, Texas chief among them.

Senate President Pro Tempore Louise Lucas (D-Portsmouth) isn't bluffing: "We will not pass a budget that puts data centers tax breaks ahead of hard working Virginia families." House Appropriations Chairman Del. Luke Torian (D-Prince William) fired back that elimination "would cost Virginia far more than lost tax revenue."

The timing compounds the pressure. Stack Infrastructure subsidiary SAC III Acquisition just won unanimous approval to acquire up to 3,000 acres at the Southern Virginia Megasite at Berry Hill in Pittsylvania County, a deal worth up to $737.8 million in land alone, with $73 billion in planned capital over 30 years. Stack already operates six Virginia campuses totaling over 700MW. The purchase is contingent on sourcing 299MW from Appalachian Power by end of 2028.

If Virginia kills its exemptions, Stack and every other operator with Virginia pipeline recalculates. Texas, Georgia, and Ohio are watching closely. Bottom line: site selectors should model Virginia scenarios with and without exemptions before committing new capital to the state.

The PUC's $13-14 billion Permian Basin Reliability Plan calls for 260 transmission lines by 2038, anchored by three 765 kV lines, the highest-capacity in the state. One critical east-to-west route through the Hill Country has triggered organized opposition from the Hill Country Preservation Coalition and sympathetic lawmakers.

The oil and gas industry isn't subtle about the stakes. Ben Shepperd, president of the Permian Basin Petroleum Association, told regulators the "greatest risk of failure" is delay. The Permian Basin Petroleum Association says available electrical infrastructure is "years behind" demand.

West Texas transmission capacity has direct datacenter implications. Every megawatt that doesn't get built is a megawatt unavailable for datacenter loads in emerging Texas markets. The PUC is in final administrative review. Route modifications or cost allocation fights could push construction starts past next year's target. Bottom line: datacenter developers eyeing West Texas sites should track PUC docket activity on the Permian plan as a leading indicator of regional power availability.

Three separate stories paint the same picture: communities are organizing faster than developers anticipated.

- Fort Worth: Black Mountain's $10 billion campus hit its third rezoning delay. Fort Worth City Council member Chris Nettles questioned whether the additional 80 acres are genuinely needed. A zoning commission hearing is set for April 8, with council vote May 12. CEO Rhett Bennett hosted a town hall, but residents from Forest Hill and Echo Heights want the site relocated entirely. - Columbus: City Council held a four-hour hearing. Central Ohio's datacenter market grew 1,800% between 2020 and 2025. Of 28 written testimonies, 16 explicitly opposed development. Employment numbers drew fire: facilities employ roughly 60 permanent workers post-construction. - Scranton: The city is amending its zoning ordinance to regulate datacenters. Lackawanna County already hosts 12 proposed projects in seven municipalities. Eight municipalities have adopted standards including prohibitions on on-site generation.

The pattern is clear: transparency gaps and process shortcuts generate organized opposition that delays projects by months or years. Can developers who front-load community engagement still move fast? Bottom line: community relations strategy is now a critical-path item, not a nice-to-have.

PJM has paused new project reviews in Northern Virginia's Data Center Alley until next year. Georgia Power says transmission upgrades take so long hyperscalers could build three 800MW campuses elsewhere before they complete. SMRs are the response: Oklo's Aurora at Idaho National Laboratory and TerraPower's Natrium in Wyoming have broken ground, offering 50-300 MW on-site without grid interconnection.

A podcast discussion from Energy Impact Partners flagged four competing power pathways: on-grid, off-grid, edge, and orbital. The hosts expressed skepticism that edge compute can absorb meaningful load, which keeps pressure squarely on centralized generation solutions. ERCOT's constrained interconnection queue makes Texas ground zero for the off-grid pivot.

Manufacturing supply chains for SMR components remain nascent. First projects will validate timelines and costs; any slippage cascades across the sector. Bottom line: operators betting on grid connection timelines under five years should be modeling SMR or behind-the-meter gas as parallel tracks.