County can attract more data centers

Wise County’s Lonesome Pine Regional Business and Technology Park is one of three prime sites in the coalfield region that could host a large job-creating data center.

That is one of the conclusions reached in a study released Monday by Project Oasis, a yearlong investigation of the prospects for attracting more data centers to Southwest Virginia. The study was produced by OnPoint Development Strategies LLC.

The business and technology park already hosts DP Facilities Mineral Gap, one of three data centers that currently operate in the coalfield region.

Along with the Wise County park, Dickenson County’s Red Onion industrial site and the Sunbright mine site in Scott County are among six locations in the study area that could accommodate a 36-megawatt data center. Other sites are in Washington, Wythe and Carroll counties.

The Wise County site is 388 acres. It already is the location of an ongoing study on the potential to use recycled water from former mine sites to help reduce the cost of cooling data center equipment, providing a competitive advantage.

The mine water cooling study took place at the Upper Banner mine near the town of Wise, the data center study notes. It includes a suggested design that would use plate heat exchangers and pumps that would circulate 51-degree mine water.

The availability of billions of gallons of water at that temperature “could potentially provide a sustainable and cost-effective cooling solution for a data center operator,” according to the study. Based on the Upper Banner results, using mine water “could reduce the electricity required for cooling the data center by 90 percent.” Also, it would “substantially eliminate the need for the purchase of large volumes of municipal water that would be evaporated through cooling towers in a conventional mechanical cooling system.”

The annual savings would be more than $1 million, the study asserts. The capital cost for a mine water cooling system is expected to be about $7 million more than for a conventional system, but “factoring in savings for avoided maintenance and other costs for the conventional system, the mine water system would provide a favorable return on investment and result in net annual savings” for a data center, it states.

The Lonesome Pine site’s electric power access is rated as “strong,” with the ability to quickly serve a 10-megawatt data center. However, construction of a 69 kV line to an Old Dominion Power Co. substation would be required to accommodate a 36-megawatt center.

The Lonesome Pine park’s digital connectivity includes access to Point Broadband 1,152 feet away and access to SCTC’s network 1,200 feet away.

The general readiness of the site is rated Tier 2, meaning it needs additional infrastructure and other preparations, on a scale that rises to Tier 5, meaning the site is ready for a construction permit.

REGIONAL DETAILS

Project Oasis is funded with support from GO Virginia Region One and the Virginia Department of Mines, Minerals and Energy. Its objectives include examining the feasibility of using mine pool water as a data center cooling source and providing a preliminary design for such cooling systems; analyzing the data center industry market to determine current trends, types of facilities and site selection criteria; evaluating sites in the 13-county GO Virginia Region One; and providing a competitive assessment of the region’s potential sites compared to other locations.

A 36-megawatt data center could provide about $464 million in capital investment and create about 40 high-income jobs, according to the study.

The study also examined a second level of sites that could support a data center of up to 10 megawatts. Those include Project Intersection, now under construction in Norton as part of a regional initiative that includes the city and four counties; the Southern Gap site in Buchanan County; the Bluestone business park in Tazewell County; and an unspecified Scott County site.

A large data center could create more than 2,000 jobs during construction. Along with about 40 direct data center jobs, it would create nearly 60 additional permanent jobs, providing $233 million in economic activity during construction and more than $50 million in economic activity annually afterward.

GO Virginia Region One now hosts three data centers: DP Facilities Mineral Gap center in Wise County, Northrop Grumman in Russell County and OnePartner ATAC in Duffield.

Significant growth is projected for the data center industry over the next five years, the study notes, adding that Virginia “is the world’s most significant data center market” and the commonwealth is “well positioned to capture a sizeable portion of this new investment.”

Data center real estate is becoming more scarce and costly in northern Virginia, presenting opportunities for the rest of the commonwealth. However, the study notes, this may require changes in local property tax and depreciation rates that would help attract them. Local government officials have indicated willingness to review potential tax structure changes, according to the report.

Existing incentives in Region One include opportunity zones, which offer tax breaks for specified corporate investments; Tobacco Region Opportunity Fund grants and loans; the governor’s Commonwealth Opportunity Fund; workforce training incentives; and others.

As for filling jobs, “there is a reasonable pool of workers in the region with skills and training that are potentially transferrable to a data center environment,” it states. “However, some key positions would likely be filled from outside of the region.”

Information technology wages in Region One are 17 percent less than the national average, according to the study.

The University of Virginia’s College at Wise and area community colleges provide strong information technology programs and resources, and customized training programs can be offered, the report states.

Another selling point for Southwest Virginia is its low risk from natural and manmade disasters, according to the study.