Why Should Delaware Care?
A massive data center project near Delaware City could impact the energy bills of homeowners if the grid is not prepared to handle it. The developer of the project has undertaken a PR campaign to influence the debate and now enlisted the help of influential labor unions.
As New Castle County and state energy regulators prepare to begin discussing potential restraints on the burgeoning data center industry in coming weeks, the developer behind a controversial Delaware City project lined up a significant ally: the region’s labor unions.
Last week, Starwood Digital Ventures, which wants to build a 6-million-square-foot data center dubbed Project Washington, signed a project labor agreement that promises to use 20 local unions, most of which are based in Delaware, to build the campus.
“This agreement solidifies Project Washington’s commitment to working alongside high-skilled, local, and organized trade members throughout the construction of its campus,” the company said in a statement announcing the deal.
Starwood CEO Anthony Balestrieri said his company negotiated the agreement with James Maravelias, former president of the union coalition Delaware AFL-CIO and current president of the Delaware Building Trades.
Maravelias did not respond to several requests for comment, but he posted on Facebook celebrating the deal. He also criticized unspecified organizations and politicians for perpetuating “lies or fear mongering” about the data center.
Starwood is currently trying to win support from local residents, many of whom have raised concerns that the large data center would increase electric bills and harm the local environment. The data center that would consume the same amount of electricity from the grid as nearly 1 million homes at a time when supply constraints are dramatically raising energy costs.
The project still faces two major hurdles before it can be built: convincing New Castle County Council to rezone part of the land slated for the project and getting the massive amount of power needed to run the center.
Both the county council and Delaware’s Public Service Commission, the state body charged with regulating utility services, will soon hold public hearings on imposing stricter regulations on the data center industry.
County Council to consider zoning regulations
To begin construction, Starwood first has to convince New Castle County Council to rezone some of the land needed for the project.
While the council is not currently scheduled to consider the rezoning request, it will soon consider an ordinance that would impose stricter regulations on data center operations.
How the county council ultimately votes on these regulations could give insight into the members’ willingness to rezone the property to allow the development of Project Washington.
On Tuesday, the council’s Land Use Committee will consider Councilman Dave Carter’s proposed legislation that would impose a broad swath of restrictions on where and how data centers can operate.
The ordinance saw broad support at a recent county Planning Board meeting, with almost all of the residents speaking in favor of the regulations, saying they would help mitigate some of the feared impacts of the data center.
“If you want more, if you want better, put it in code or it ain’t gonna happen,” said Dustyn Thompson, chapter director for Sierra Club Delaware, the leading environmental advocacy group. “That’s what this ordinance is about. It’s not about stopping data centers. It’s about common sense. It’s about demanding better.”
But the ordinance has some notable critics.
Pam Scott, a land use lawyer representing Starwood, said at the meeting that the ordinance is too restrictive.
“Regulation is one thing, but overregulation is something entirely different,” she said.
New Castle County Chamber of Commerce’s lobbyist Joe Fitzgerald has also spoken against proposed regulations of data center operations, saying it “sends the wrong message” to the business community by targeting a single industry.
The planning board ultimately voted unanimously to recommend that the county council approve the ordinance. The council does not have to follow the commission’s recommendations, but its endorsement is often a key consideration in its rezoning decisions.
When asked if Starwood could move forward with the project on only the part of the property that is currently zoned for industrial use, Starwood CEO Anthony Balestrieri said, “We haven’t considered that.”
Regulators to consider cost of power
By far the biggest point of criticism for the proposed Delaware City data center is its electricity usage. If nothing changes, its energy demand will likely increase resident power bills that have already been surging over the past year.
In response, the Public Service Commission voted last month to stop “large-load consumers,” such as energy-hungry data centers, from connecting to the electric grid until the commission can create a new “tariff,” or electricity rate, for them.
Delmarva Power is now in charge of figuring out what that new rate will be, and the Public Service Commission will decide whether to approve it.
Commission spokesman Matt Hartigan said he expects Delmarva Power will present their proposed rate to the commission by the end of the year.
The public will then be able to comment on the proposed rate through public hearings with a hearing examiner, who will act like a liaison between the public and the commission.
But some think this new rate will not go far enough.
State Sen. Nicole Poore (D-South New Castle), who represents the Delaware City area where the data center would be built, said she will not support the project until Starwood agrees to generate most of the power it needs to operate.
Delaware House Speaker Melissa Minor-Brown (D-New Castle), who also represents Delaware City, told Spotlight Delaware that she also will not support the project until she is confident the massive amount of energy it would need would not raise local residents’ power bills.
“I will fight tooth and nail against this building going live if we are not doing what needs to be done to meet the demand,” Minor-Brown said.
Balestrieri, Starwood’s CEO, has repeatedly said his company would not generate its own energy. He said he is considering putting solar panels on the roof but said they would provide “a very small portion” of what the data center would need to operate.