How a New Data Center Could Impact Your Electric Bill
The proposed New Castle County data center project—known as Project Washington and backed by developer Starwood Digital Ventures—could significantly affect Delaware's electricity supply and pricing. The project plans to buy power from Delmarva Power, with only limited on-site diesel or natural gas backup.
The developer has not provided a full forecast of electricity demand. However, at a July 24 public forum, Starwood estimated the project would require 1.2 gigawatts of capacity. That translates to 7.4 to 10.5 million megawatt-hours per year, depending on the energy source—roughly double Delmarva Power's current demand, or about the same as the entire state's usage.
Delaware's Energy Dependence and Rising Costs
Delaware already imports nearly 60% of its electricity, up from just 20% in 2016. A major reason is the rising cost of carbon taxes under the state's Regional Greenhouse Gas Initiative mandate, which has made Delaware-based natural gas-fired power plants uncompetitive in the daily PJM regional grid auction. Efforts to repeal the tax failed this year, so it is expected to remain in place.
Importing so much power raises costs and adds stress to the grid. The farther electricity travels, the more is lost, and customers pay for those line losses. Starwood emphasized the benefit of locating near the 500-kilovolt regional power line. What it did not mention is that this line already faces serious congestion near York, Pennsylvania, which adds further transmission fees.
The added demand would also increase the cost of keeping power plants on standby. Capacity prices in Delaware rose this June from $179 per megawatt-day to $269.92 due to a shortage of baseload capacity.
Virginia Offers a Warning
Other states provide a preview of what Delaware could face. In Virginia, where new data centers are proliferating, capacity prices reached $444.26. A report commissioned by the Virginia legislature estimated that residential bills may rise $168 to $444 annually as more data centers come online. That estimate does not include the cost of needed infrastructure, and the report highlighted other risks tied to rapid growth in the sector.
Regional Lessons from Maryland and Pennsylvania
These concerns aren't just theoretical. Neighboring states have already faced tough choices with major energy projects. In Maryland, the Public Service Commission's consultant recommended against approving the US Wind offshore Momentum Wind project unless congestion issues were resolved, warning that power could not be reliably delivered otherwise. At the same time, Pennsylvania regulators considered a $250 million to $470 million plan to ease the York bottleneck but rejected it weeks after Maryland approved the project. With Project Washington's demand, the same bottleneck must be addressed. The question remains: Will Starwood help pay?
Reliability on the Line
PJM representatives testified in the Delaware legislature this year that the state could soon face brownouts and blackouts during extreme weather. They warned that the risk could begin as early as this year and will grow as more baseload plants retire early. A project of this size could accelerate those risks.
Recommendations for County Council:
- Require detailed demand estimates: Starwood should project its use in megawatt-hours, not just megawatts of capacity. That's like asking not only how big a car's gas tank is, but how many miles it will drive.
- Protect existing customers: Delmarva Power should seek approval from the Public Service Commission for a special data center rate. This would ensure higher costs tied to the project are not shifted to Delaware households and businesses.
Project Washington may promise growth, but its true test is whether Delaware's power grid—and its people—can handle the cost and reliability challenges it brings.