Data center boom fuels Loudoun Water revenue surge, cuts borrowing needs by $124m

Data center boom fuels Loudoun Water revenue surge, cuts borrowing needs by $124mA faster-than-expected influx of hyperscale data centers and reclaimed water constraints has driven connection revenues well above budget, prompting the Virginia utility to revise its five-year financing plan.

Loudoun Water has increased its 2026 Equivalent Residential Connections (ERC) projection from 2,580 to 4,600, largely driven by data center development.

The revenue windfall will allow the utility to reduce its planned borrowing in 2028 by $92 million, cutting total five-year borrowing by $124 million.

Data centers currently account for roughly 10% of the utility's potable water usage, a figure projected to exceed 20% by 2050.

Utility staff are working with Loudoun County to update the emergency water management ordinance to address how data centers will be prioritized during drought conditions.

A surge in data center development in Ashburn, Virginia, is delivering a massive revenue windfall for Loudoun Water, allowing the utility to slash its projected borrowing by $124 million over the next five years. During an August 26, 2026 Finance Committee meeting, staff presented mid-year financial results showing that non-operating revenues are significantly outpacing budget estimates. The increase is driven by a spike in Equivalent Residential Connections (ERCs). While the utility originally budgeted for 2,580 ERCs in 2026, the mid-year reforecast has increased that projection to 4,600. In July alone, data centers accounted for 58% of the utility's 682 new connections. Sally Dehler reported that the financial upside has been rolled into the utility's preliminary five-year financing plan, reducing total planned borrowing by $124 million, including a $92 million reduction slated for 2028. The connection boom is being driven by hyperscale data centers coming online faster than anticipated, combined with capacity limits on the utility's reclaimed water system. Because reclaimed water availability is maxing out, some data center developers are shifting to potable water for cooling. Currently, the cooling technologies used by data centers in Loudoun Water's system are split between potable water (40%), air-cooled systems (40%), and reclaimed water (20%). The shift toward potable water prompted board members to question the long-term impact on the region's supply. Staff confirmed that data centers currently account for roughly 10% of Loudoun Water's total potable water usage. According to a recently completed water master plan, that figure is projected to exceed 20% by 2050. Board members raised concerns about how data centers would be treated during a severe drought or contamination event, questioning whether the facilities would be prioritized as critical infrastructure or subjected to restrictions. A staff member noted they are actively working with the Loudoun County Attorney's Office to update the local emergency water management ordinance to establish a clear hierarchy for water restrictions, including how data centers will be categorized. Despite the rising industrial demand, staff emphasized that the utility's long-term capacity remains secure. The Potomac Water Supply Program, which expanded the utility's capacity to 90 million gallons per day, is still projected to meet total system demand through 2050. Furthermore, data center developers pay availability fees based on their maximum daily use, ensuring the utility is fully funded to build and plan for peak capacity constraints.