Data centers are causing significant economic growth in Virginia. According to a 2018 Northern Virginia Technology Council (NVTC) report, data centers are strengthening and diversifying innovation in Virginia — with the largest impact being in Northern Virginia. Virginia is now the top location for data center investments in the U.S., surpassing New York and New Jersey.

Google, Amazon Web Services and Facebook are planning to build data centers in the Commonwealth state, with Google and Amazon both eyeing property in Loudoun County.

“Loudoun County has more than 75 data centers and it supports over 3,000 technology companies that are housed within those data centers,” said Josh Levi, vice president of policy at NVTC, in an interview with DC Inno.

Google has acquired two sites for its data center for $89 million. Amazon’s data center announcement comes as the company is considering building its second headquarters in the D.C. area.

Facebook is investing $1 billion to build a 970,000 square-foot data center in Henrico County, The Richmond Times-Dispatch reported in October. Facebook’s center is expected to open in 2019 and will hire more than 100 full-time employees.

According to the NVTC report, data centers have experienced employment and wage growth four times the statewide average across all private sector industries in the last five years.

“Data centers are a high performing industry that drive significant capital and human investment, while also promoting innovation,” said NVTC President and CEO Bobbie Kilberg in the report. “As the backbone of the modern technology economy, data centers are crucial to promoting diversification in Virginia’s economy.”

In 2016, data centers created more than 43,000 jobs. The industry also had $3.2 billion in labor income and $10.2 billion in economic output for that year.

Virginia’s state sales tax laws may be the biggest attraction for companies searching for data center locations, but the state’s competition has grown rapidly.

When the state first entered the arena for data center tax incentives in 2009, only eight other states had sales tax exemptions on data center equipment. Now, more than 30 states have the tax exemptions in an effort to catch the eyes of data center investors.

Tax incentives are critical in the competition between states to attract data center investments and Virginia currently offers sales tax exemptions on equipment purchases to qualifying data centers through 2035. Facebook is expected to receive about $19 million in state tax exemptions for its data center through that year. And in the 2017 fiscal year, Virginia reportedly lost out on upwards of $65.2 million in sales tax from its data centers, according to its annual Comprehensive Annual Financial Report.

Facebook Investing $1 Billion to Build New Data Center in Virginia

Data centers have also emerged as a catalyst for developing renewable energy resources in Virginia. In Facebook’s case, the company is using $250 million of its budget to construct solar facilities that will power its data center. The company and Dominion Energy Virginia’s new renewable energy tariff ensure that the $250 million goes toward powering the data center with 100 percent renewable energy.

“Data centers continue to offer immense opportunities for Northern Virginia and the entire Commonwealth,” said Kilberg in the report. “Maintaining Virginia’s incentives for this valuable industry will be critical to ensuring Virginia remains a top global destination for tomorrow’s technology companies.”