Second Major Virginia Data Center Project Dies, Raising AI Site Selection Stakes
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Second Major Virginia Data Center Project Dies, Raising AI Site Selection Stakes Days after QTS abandoned its $30 billion Digital Gateway project, county supervisors unanimously rejected the first planning step for a proposed 43 million-square-foot data center campus. The Prince William Board of County Supervisors has halted another massive Virginia data center proposal, voting 8-0 on Tuesday against initiating Comprehensive Plan Amendment CPA2026-00012 for the Dulles South Innovation Center. The decision stopped a proposed 43-million-square-foot campus before the developer could seek rezoning, days after Data Center Knowledge reported that QTS withdrew its appeals in the Digital Gateway case. QTS’s withdrawal ended plans for a campus that could have brought as much as $30 billion in private investment and up to 27 million square feet of development to Prince William County. Viewed together, the consecutive setbacks suggest that local entities now stand alongside power, fiber, and land as determining factors in whether large AI infrastructure projects move from proposal to construction. As of publication, the county’s online case file confirms a staff report for CPA2026-00012 exists, though it had not yet been posted to the case page for public access. County planning staff recommended against initiating the amendment prior to the Board hearing, and the Planning Commission voted 5–1 to recommend denial in an earlier meeting. A Rural Push Meets a Wall Unlike Digital Gateway, which centered on an established industrial corridor west of Manassas, the Dulles South proposal would have extended large-scale data center development into rural western Prince William County. The application area covered approximately 1,940 acres across 252 parcels in the Gainesville District south of Washington Dulles International Airport. According to county filings and project materials, the CPA sought to redesignate agricultural land for industrial uses, including data centers, an electrical substation, and related facilities, with a total buildout of up to 43 million square feet – one of the largest proposed AI infrastructure campuses in the United States. Public Testimony Residents opposing the plan cited concerns about transmission infrastructure, the placement and scale of electrical substations, groundwater impacts, noise, traffic, and the continued industrialization of the county’s Rural Area during hours of public testimony. Supporters, including several property owners within the project area, argued that data centers offered economic opportunities unavailable through traditional agriculture while generating substantial tax revenue for the county. State and local elected officials also weighed in. Among them, Virginia State Sen. Danica Roem reiterated calls for a statewide pause on new data center approvals while Virginia evaluates cumulative impacts on communities and electric infrastructure. Site Selection Is Repricing Risk, Not Demand The Board’s action is part of a wider recalibration in Northern Virginia site selection, according to Ihab Osman, an independent strategist specializing in data center and other mission-critical infrastructure. “I would not read the two Prince William decisions as a collapse in Northern Virginia AI data center demand,” Osman told Data Center Knowledge. “They are more of a repricing of entitlement risk.” Osman said the region remains strategically important because of its fiber density, cloud ecosystem, utility experience, tax base, and existing operating cluster. But developers are changing the question they ask of new sites. “The constraint is shifting from ‘Can demand be found?’ to ‘Can this specific site survive the full path to deliverable power?’” he said. In his view, developers are moving from land banking to “risk filtering,” favoring jurisdictions where power availability, utility planning, and local political support align before significant capital is committed. “It is no longer enough to ask where power, fiber, and land exist on paper,” he said. “The more serious market screening now asks where those inputs are politically usable.” Grid Planning: Announced vs. Executable Demand The shift in local approvals carries implications for utilities and regional transmission planners. “Northern Virginia’s data center constraint is no longer only power availability. It is now entitlement durability,” Neil Osnato, founder of Persistence Analytics Group, told Data Center Knowledge. For years, he added, the market treated Northern Virginia as the default geography for AI infrastructure because of fiber, cloud concentration, utility planning, land aggregation, and data center precedent. “But these votes show that local governments are no longer automatically converting data center demand into land-use approval.” AI infrastructure projects depend on multiple conditions holding simultaneously, Osnato said, including land-use approvals, power deliverability, transmission timing, substation capacity, water availability, community acceptance, and political support. “If any one of those assumptions breaks, the site is not truly executable,” he said. Utilities and planners continue forecasting rapid electricity demand driven by AI infrastructure while developers race to secure land and capacity. “If large-load demand is real but entitlement approvals become less durable, utilities and planners have to distinguish announced demand from executable demand,” Osnato noted. “Otherwise, there is a risk of building or socializing infrastructure around load that may be delayed, relocated, resized, or rejected.” Transmission Questions Linger Residents who spoke before the Board pointed to several planned transmission projects, including Dominion Energy’s Morrisville–Wishing Star project and other proposed high-voltage lines serving western Prince William County. Whether those plans change following the loss of two major development proposals remains unclear. What’s Next The Board’s vote ends the Comprehensive Plan amendment request and prevents the applicant from moving forward with a rezoning application under the current proposal. Together with the Digital Gateway outcome, the decision signals a new reality for Northern Virginia AI infrastructure proposals: even in the nation’s most mature data center market, local entitlement is now a gating item on par with power, fiber, and land.
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