Facebook project

Earlier this year, construction was advancing on the first two buildings and a power substation at Facebook’s data center in eastern Henrico County.

Nothing is virtual about the data center that Facebook is building in eastern Henrico County.

It’s real structural steel rising from a 175-acre site in White Oak Technology Park, as the California-based social media giant races to complete the first two of five buildings planned on a campus that ultimately will cover more than 300 acres.

“They’re rolling big-time,” said Gary McLaren, executive director of the Henrico Economic Development Authority.

Facebook also is moving ahead with plans to offset the electricity it will need to power the data center by working with Dominion Energy to build solar facilities under a new, experimental rate tariff that the State Corporation Commission approved in late March.

“With this tariff in place, we are working closely with Dominion Energy to identify solar projects in the area,” company spokeswoman Melanie Roe said last week. “We will announce our renewable energy solution once the projects are finalized.”

Roe said construction at the Henrico Data Center is advancing quickly on the first two buildings and an electric substation. “We anticipate the structural steel will be completed for both buildings in the very near future,” she said.

Projecting 250 jobs

The project, which then-Gov. Terry McAuliffe announced in October, includes a $750 million investment by Facebook to build a center that initially will cover 970,000 square feet and ultimately will expand to 2.5 million square feet. The company projects it will create 100 full-time jobs initially and 250 by full buildout.

“I’m amazed how quickly they’re building the facility,” said McLaren, who estimated that the initial phase of the project should be completed in the first half of next year.

Facebook also is preparing to invest $250 million through the newly approved tariff in renewable energy facilities that Dominion will build to fully offset the electricity that the data center will take off the utility power grid. The center is expected to use up to 132 megawatts of electricity, or enough to serve about 520 typical residential customers, but Dominion plans to build solar facilities that can generate up to 300 megawatts to offset the load because the renewable energy won’t be available at all times.

The new renewable facility, or RF, tariff, that the SCC authorized on March 26, is central to the social media company’s plan for the center. “Their decision to build a facility in Virginia is really dependent on their having a renewable option,” said Dianne Corsello, Dominion’s director of business development for power generation.

Solar tariff

The new tariff is a voluntary rate that Facebook and potentially other big electricity customers will pay Dominion in addition to the actual rate for the power it takes off the grid. The rate represents the difference between the cost of building solar facilities to offset the center’s electricity use and buying it from the PJM wholesale power system that operates in Virginia and the Mid-Atlantic region.

Scout Development LLC, a subsidiary of Facebook, told the SCC that the tariff “will provide a tool for both existing customers and new or potential customers, such as Facebook, that wish to increase their use of solar and other renewable generation in meeting their electricity needs and achieving their goals for use of renewable energy supplies.”

The SCC approved the tariff as an experimental program with an initial five-year enrollment period, although participants will make a long-term contractual commitment to Dominion for the new renewable energy facilities.

The order does not commit regulators to approve applications to build specific projects, the negotiated price for the “environmental attributes” the program will provide, or any associated rate adjustment clause to allow Dominion to recover the cost of building the facilities.

In testimony before the commission, the SCC staff suggested that the commission require Dominion to develop a method that ensures other ratepayers are held harmless if the price of the renewable energy facilities doesn’t fully cover the cost of building them.

Facebook is the only customer for the tariff now, but Corsello said, “We’re having conversations with other customers.”

For Henrico, Facebook is the biggest payoff yet for the county’s strategy to lure data centers and other technology companies to build there.

The county is preparing to take advantage of legislation the General Assembly approved this year to let localities offer a different schedule to data centers for depreciating computer equipment that they generally replace every two to three years.

$19M in tax exemptions

The county landed the Facebook project in part by a prescient decision early last year to create a separate personal property tax category for data centers with a drastically reduced rate. The new legislation, effective July 1, will allow the county to offer a similar incentive for depreciating the value of equipment vital to data centers.

Statewide, data centers have become a major source of tax breaks, accounting for at least $222 million in exemptions from Virginia sales and use taxes from fiscal 2010 through 2016, according to the Joint Legislative Audit and Review Commission. Facebook will receive about $19 million in tax exemptions for the data center it is building at White Oak.

Legislators considered, but then carried over for future consideration, a proposal this year to take a hard look at sales and use tax exemptions, with a particular focus on data centers. JLARC, the legislature’s watchdog agency, is examining nine incentives for data centers in a study expected to be completed in mid-2019.

Henrico considers the incentives worthwhile for a project that will generate new jobs and a total capital investment of $1 billion, including the new solar facilities.

McLaren was silent on other potential economic development prospects that may be interested in coming to White Oak, but he’s optimistic.

“We’re getting a lot of attention,” he said.

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