Data Centers and a New Era for the Dickerson Industrial Property
Updated September 3, 2024
The siting, construction, and operation of data centers have become contentious issues in the mid-Atlantic area. Northern Virginia is home to the highest concentration of data centers in the country (31 million square feet!), with residents increasingly concerned about the economic and environmental impact. Virginia lawmakers have recently hinted that the data center boom in that state may have run its course.
That has data center companies and developers eyeing the other side of the Potomac River. Two large-scale data center projects in Maryland—one in Montgomery County and the other in Frederick County—are now in various stages of development.
What is a data center?
Data center buildings contain tens of thousands of computers called servers that receive, store and transfer data. The internet could not function without data centers; they are “the cloud.” Data centers serve the needs of IT companies, tech-heavy industries and government—and everyone who uses the internet, smart phones, streaming services and the like. They are essential to the modern economy and modern life. A data center will also have sophisticated electrical, safety and cooling equipment. Data centers require an enormous amount of energy; they currently account for approximately 2% of all electricity use in the U.S. That’s expected to double by 2030, in large part due to the growth of artificial intelligence (AI).
The Montgomery County project
This project is located in Dickerson at the site of the old Gen-On coal-fired power plant. That plant went into service in 1959 and was shuttered in 2020. In August 2022, a company called Terra Innovations bought 740 acres that includes the decommissioned power plant and surrounding area. About 255 of those acres are zoned “heavy industrial” (where the power plant stood). Most of the remaining 485 acres is zoned “AR” for Agricultural Reserve. None of that land has been farmed for decades, however, and not since the Ag Reserve was created in 1980. Indeed, both the industrial and AR zone areas have a mix of support buildings, utility infrastructure, access roads, and railroad tracks. Nearby, on other industrial zoned property, are the County’s incinerator, a natural gas power plant, and a 100-acre compost facility. About 73 of the 740 acres is forested.
Notably, the entire area’s access to electrical infrastructure makes it highly desirable for industry. And that’s especially true for data centers which operate 24/7/360.
To their credit, Terra’s owners have kept SCA and Montgomery Countryside Alliance (MCA) apprised of their plans. Those plans have evolved over the past two years and may continue to evolve as Terra deals with regulatory requirements and seeks approval for the project from state and county officials. Terra is the property’s landlord. The company does not itself plan to build or own a data center or any other business on the property. Instead it will lease the land to other companies.
As of August 2024, here are the company’s plans:
Demolition of the power plant. This will include tearing down the power plant’s smoke stacks—which have been part of the landscape in the Dickerson area for decades. Asbestos abatement, salvage and recycling have preceded demolition over the past 2 years. Once final state and county approval is obtained, demolition and site clearing will take an estimated 12 to 18 months. County officials will oversee the process. SCA and MCA will be monitoring it as well.
A data center campus. Terra is in discussions with a single data center company to build an as yet unspecified number of buildings. The campus will be phased in, with a smaller number of initial 2-story buildings (possibly five). The final number will be dictated primarily by energy availability and decisions by utility regulators and state authorities. The data center will take up much of the industrial-zoned 255 acres, to include infrastructure, space between buildings, parking areas, and buffer zones. The buildings will be cooled with water from the Potomac, as was the case with the power plant. Details are still to come on the exact cooling system to be used. No diesel generators will be used, as is (controversially) the case for some data centers (see below).
An energy storage facility. Terra has contracted with RWE Clean Energy LLC (rwe.com), the third largest renewable energy company in the U.S., to build a state-of-the-art, utility-scale battery energy facility. The facility would take energy from the regional electricity grid and store it in Tesla-made batteries. That energy would then be provided to utility companies as needed. The facility’s physical footprint is still to be determined but it would be much smaller that the data center. As currently proposed, the batteries would be contained in dozens of shipping container-sized structures set side by side. The purpose of the facility—and it could be among the largest of its kind in the country—is to stabilize the supply of energy for peak-use times. Notably, the facility will also power the data center in the event of a grid power outage. If all goes according to plan, the construction of this facility would be completed by the end of 2025 or beginning of 2026, and become operational in the spring of 2026.
Public hearings on the data center and battery storage projects will occur beginning this fall. In addition, Terra has agreed to hold a public forum to answer questions and receive community input. SCA and MCA will be involved in organizing the public forum. We will keep you apprised.
The Frederick County project
This project has two elements: (a) a 2,100-acre data center campus located near Adamstown, and (b) 43 miles of underground fiber optic cable crossing beneath the Potomac River in two locations and the Monocacy River in one location.
Proposed Adamstown data center
The Monocacy River location is at the border of Dickerson and Frederick County in an area off Mouth-of-Monocacy Road. Near Adamstown, the 2,100 acres is at the former site of the Alcoa Eastalco aluminum smelting plant.
The underground and under-river cables (called the Q-Loop) will connect the campus with data centers in Virginia. The Dickerson data center will also be hooked into Q-Loop.
The project is on a 15-year construction plan, with completion anticipated in 2038. Site preparation started last year. Its initial data centers buildings could start operating in early to mid 2026. Construction is estimated to cost around $2 billion. Total investment in the campus is estimated at $25 billion. This makes it one of the largest industrial projects in the state.
The companies involved in the project are Quantum Loophole, based in Austin, TX; Rowan Digital Infrastructure, based in Denver and Seattle; and Aligned Data Centers, based in Plano, TX.
Quantum Loophole bought the 2,100 acres in June 2021 and in 2023 proposed 17.4 million square feet of data center space and 821,900 square feet of office space. Both Rowan and Aligned are data center companies. Thus, if it gets build out according to plan, it would be among the largest data center sites in the country. Not surprisingly, that has state and county officials salivating over the anticipated tax revenue as well as job growth.
After approvals by state and Frederick County officials, work preparing the site began in early spring 2023. Work on the Q-loop Potomac River crossings had begun in 2022. Problems developed, however. The Maryland Department of Environment (MDE) halted work in May 2023 after finding that Quantum Loophole had illegally dumped thousands of gallons of possibly contaminated ground water into Tuscarora Creek, which flows directly into the Potomac River. MDE further charged the company with failure to get proper permits.
Work at the site resumed in the fall of 2023, with additional environmental oversight. Violations continued, however. In April 2024, an MDE inspector discovered several problems and a Frederick County inspector placed a stop-work order on a drilling operation.
In a May 6, 2024, letter to state and Frederick County officials, 22 regional civic and environmental groups (including SCA) called on regulators to “take action to end this continuing pattern of environmental damage … and demand a higher standard from Quantum Loophole and its subcontractors.”
The infractions have delayed site preparation and construction, initially projected for this fall. In a July 9, 2024 update on its website, Quantum Loophole said preparation of the site was now 46% complete, with the fiber optic cable installation under the Monocacy River being 97% complete. (The two Potomac River Crossings were completed in May 2023.)
The company acknowledged fault for prior environmental violations (which it blamed mostly on subcontractors). It said a new approach has created a “clear roadmap to the full commencement of all work” with “all necessary MDE Environmental Management Plans.”
In May 2024, Rowan expanded its plan for the campus to 11 buildings, and said the company was aiming to break ground this fall on four initial single-story buildings totaling 777,150 square feet on 150 acres—with completion planned for fall 2025. Frederick officials have approved that plan.
Aligned plans an unspecified number of data center buildings on 75 acres of the 2,100 acre site. Aligned’s role in the project has been impactful—some would say disruptive and disturbing. The company was Quantum Loophole’s main partner in 2022-23. But when Aligned’s plans called for 168 back-up diesel generators, Maryland regulators denied approval. Aligned appealed but in October 2023 the Maryland Public Service Commission (PSC) again denied approval. Aligned then backed out of the project, putting Quantum Loopholes plans in jeopardy.
At that point, the issue was propelled into the political arena. Gov. Wes Moore and the Maryland legislature intervened, and in April 2024 lawmakers passed and the governor signed the Critical Infrastructure Streamlining Act of 2024. Put simply, the law makes it a lot easier for data center developers to install backup generators—pretty much as many as they need. Aligned now says it will need only 42 back-up generators for its scaled-back facility. The Frederick County Planning Commission has approved that plan.
In a statement in May, Aligned spokesperson Joanna Soucy told the the Frederick News-Post that the new state law “positions the state as a strategic hub for leading technology companies.”
And on May 9, at the bill signing, Governor Moore said: “This bill is going to supercharge the data center industry in our state so we can unleash more economic potential to create more good-paying union jobs.”
Recognizing that the data center industry posed significant issues and challenges for the county, Frederick County Executive Jessica Fitzwater in late 2023 created a Data Center Workgroup. That group issued its final report in March. The report is essential reading on the many issues raised by the industry’s expansion in Maryland.
Together with Montgomery Countryside Alliance, SCA continues to review and monitor the two projects, with most of our focus on the Dickerson project. We have repeatedly urged Montgomery County officials to closely scrutinize the Dickerson project, and to launch a formal initiative to assess the benefits, risks and environmental impact of data centers in general. At present, no specific county regulations exist that apply to the unique requirements, needs of, and potential impacts of the industry.
A related issue has arisen in recent months. Regional utility companies and regulators are considering a large-scale expansion of power lines so that more energy can be funneled to this area and northern Virginia. The primary purpose: to meet the needs of the data center industry. We will soon post a separate piece on this issue.