Why Should Delaware Care?
A proposal to build one of the largest data centers in the country near Delaware City has sparked concerns from the public over its significant power and water needs, which could end up raising rates for consumers, if unaddressed. If built, it could bring hundreds of well-paying jobs and raise Delaware’s tech profile.
A town hall about a massive proposed data center near Delaware City left residents and officials with more questions than answers, which left Delaware House Speaker Melissa Minor-Brown in opposition – a significant vote of no confidence.
“I’m calling on my county council to say no,” said Minor-Brown, who represents the area and co-organized the town hall.
Her statement was met with applause and cheers from the audience. Most people who spoke during the meeting expressed strong concerns about the 1.2 gigawatts of electricity the data center could use every hour, its job creation and environmental impact.
The first phase of the project, however, is allowed “by right” in the county, meaning that if the proposal meets all the county’s requirements, the county council cannot legally deny it.
“If they meet the requirements of the existing code, she’s telling me to break the law,” New Castle County Councilman Dave Carter told Spotlight Delaware.
“I’ll have to figure that out,” Minor-Brown said when asked about the by-right phase of the project. “Laws can change things.”
Both state and county lawmakers, including Carter, are already drafting new laws that may help the state avoid the worst-case-scenario impacts of that project that many residents fear.
Starwood Digital Ventures, a developer backed by private-equity investment firm Starwood Capital Group, is proposing to develop the project. In a letter to the county, Starwood wrote it anticipates construction of the first phase would begin in the summer of 2026, and the data center would begin operating in early 2028.
But Kevin Caneco, the New Castle County councilman for the district where the data center is planned, said that’s not a realistic timeline.
“They’re not breaking ground next summer,” Caneco said. “That is not happening. I can tell you that with full confidence, this is a long ways off, and we’ve got a long ways to go.”
Not generating original power
The data center, dubbed “Project Washington,” would consume more than a third of the power the state uses on average per year — about 11.3 million megawatt hours.
Starwood Digital Ventures CEO Anthony Balestrieri confirmed that the company is not currently planning to generate any of its own power for the data center, saying “the power would be purchased on the open market.”
That means the power would come from the PJM grid, which has already seen increased electricity prices as the development of new power plants continues to fall behind the increased demand for power in the region – in part from other data centers.
To make matters worse, annual energy prices reached a new all-time high following a July 22 auction that will set the rates for next year. The wholesale capacity price will rise 22% – reaching a cap set by a settlement among PJM and states last year.
PJM wrote in a press release that it expects that increase to translate to a potential year-over-year increase of 1.5% to 5% in some customers’ bills.
The total investment of the Starwood project would be $10 billion, according to Starwood’s presentation at the town hall. It also could bring 500 to 900 jobs once it is fully operational, as well as 3,800 construction jobs.
Pam Scott, the lawyer representing Starwood, emphasized at the beginning of the meeting that they are early in the process, so plans could change.
Starwood Digital Ventures has only submitted a “sketch plan” for their project. Sketch plans are basic outlines for their projects that developers submit to governments so they can get feedback before submitting a much more detailed preliminary plan.
Confusion, anger at the town hall
Rob Bullock was one of many residents who raised concerns about the impact of this project.
“We just got through fighting Delmarva and Exelon on the utility increases,” Bullock said. “We like jobs, but the jobs that you dangle in front of us… it’s not commensurate with what you are proposing.”
Starwood representatives said they did not believe their project would have a negative impact on the grid, but they referred specific questions to Delmarva.
Delmarva representatives could not attend the meeting “on short notice,” Minor-Brown said. State Sen. Nicole Poore, who co-organized the meeting and also represents the Delaware City area, added that Delmarva would answer any questions forwarded to them from the meeting.
Several union members asked if Starwood would commit to using union jobs from the state. Balestrieri said it is too early in the process to know.
“I can tell you the typical data center projects that we have performed in other states in the country, specifically Virginia, approximately 70% of all the jobs are union jobs,” Balestrieri said.
Delaware Building Trades President James Maravelias said he would keep fighting for Starwood to use all union labor on the project.
Other residents asked about the exact amount of water the project would consume, but representatives responded that it was too early in the process to answer.
Audience members began to groan after hearing that response.
Delaware resident and retired DuPont Engineer Robert Lee was one of the few people in the crowd who said he supported the project during the question-and-answer period.
“I welcome $10 billion from Starwood’s venture. And I would ask everybody here to look at this as an opportunity,” Lee said.
“Catering to billionaires isn’t going to get you anything!” someone shouted from the crowd as he spoke.
Delaware City Councilwoman Elizabeth Dilliplane and several others brought up environmental concerns with the project. Dilliplane said the site is on a migratory flyway, or a path that birds usually take while migrating north and south.
Disrupting that path could have a “huge impact” on the ecosystem, Dilliplane said.
Starwood representatives did not present any information about the potential environmental impact of the project but said there will be an environmental review process through the county.
New regulations?
Carter announced Wednesday that he plans to introduce legislation that would add new requirements to the county code for data centers, including noise limits and restrictions for the use of backup generators.
Carter said he based this proposal on the recent regulations passed in Virginia’s “Data Center Alley,” the largest concentration of data centers in the world.
“[The legislation] will have a number of elements that are based on best available practices that were learned in some of the leading places of the country dealing with this issue,” Carter said.
The legislation may not apply to the first phase of the project, since Starwood Digital Ventures might submit the formal land development application before it is passed, Carter conceded.
But Carter also said he thinks that since the data center could have such a large impact, the state government should argue that it counts as heavy industry. It would then be regulated through the Coastal Zone Act, which prevents new heavy industries from being developed in coastal areas.
Rep. Frank Burns (D-Newark) introduced a bill on June 30 that would require energy companies like Delmarva to charge a higher rate for “large energy-use facilities.”
Burns said the costs for system upgrades are usually spread across all ratepayers, but this bill would make sure facilities that use a lot of energy — like data centers — would pay for upgrades that are needed just for them.
“Residential rate payers could be paying for system upgrades that are really just needed for these large data centers,” Burns said. “And these large data centers, the reason so many of them are going up is that they’re quite profitable, and they need to pay their own way.”
Burns said he plans to file more bills to regulate data centers’ environmental impact once the new legislative session starts.
Balestrieri, the CEO of Starwood, said he does not know when the company will submit preliminary plans for the project to the county.
