AI Data Centers Rush Into Appalachia — Opportunity or Extraction?

The data center land grab has reached the mountains

Tech companies need power. Appalachia has it. That equation is reshaping communities from Tucker County, West Virginia, to Wise County, Virginia, as data center developers race to secure land, energy contracts, and tax incentives across the region’s former coalfields.

Approximately 92 gigawatts of data center capacity are in the U.S. pipeline, with traditional hubs like Northern Virginia’s “Data Center Alley” approaching saturation. Developers are looking to rural Appalachia for what they’ve always looked there for: cheap land, existing energy infrastructure, and fewer regulatory hurdles.

The question every business owner in the region should be asking is whether this wave will actually benefit the communities it lands in — or whether it’s coal all over again, dressed in fiber optic cable.

What’s happening on the ground

The projects are real and growing fast. In Wythe County, Virginia, developers announced a 99-acre AI computing campus called Solis Arx that promises $10 million in annual tax revenue by 2028. In Tucker County, West Virginia, Fundamental Data LLC is proposing a 1,656-megawatt complex on 500 acres — with potential expansion to 10,000 acres — that would include a gas-fired power plant and 30 million gallons of diesel fuel storage on-site. Pulaski County, Virginia, has a $3 billion data center investment in the works from an undisclosed developer.

The appeal for developers

Large tracts of inexpensive land sit near transmission lines originally built for coal plants. Natural gas infrastructure already runs beneath many counties. Cooler mountain air reduces cooling costs. Southwest Virginia has positioned itself with the state’s lowest regional property tax rate on data center equipment at 24 cents per $100 of assessed value.

The tax revenue pitch

Proponents point to Loudoun County, Virginia — the nation’s data center capital — where these facilities generate 35 to 40% of General Fund revenue. Fiscal contributions there jumped from $1 million in 2018 to $875 million in 2024, projected to reach $1.1 billion by 2026. A PricewaterhouseCoopers study found data centers contributed $54.2 billion to Virginia’s GDP between 2017 and 2021.

Those numbers are real. The question is whether rural Appalachian counties will see anything close to that scale.

Why small businesses should pay attention

This isn’t just a real estate story. The data center boom has direct consequences for the businesses already operating in these communities.

Rising utility costs

Data center demand has already driven wholesale electricity prices through the roof. The cost to secure adequate power in the PJM Interconnection’s annual capacity auction jumped from $2.2 billion to $14.7 billion in a single year — a 500% increase. Data centers accounted for 63% of that price surge. Regional rate increases followed: 13% in Virginia, 16% in Illinois, 12% in Ohio. If you run an HVAC company, a restaurant, or a retail shop, your electricity bill is going up regardless of whether you benefit from the data center next door.

Very few permanent jobs

A Microsoft data center built in Illinois created just 20 permanent jobs despite more than $38 million in sales tax exemptions. Construction phases are robust — up to 1,500 workers on large projects — but operational staffing typically lands around 40 to 50 full-time positions. For communities hoping for the kind of employment base coal once provided, the math doesn’t work.

Water and environmental strain

A medium-sized data center withdraws roughly 110 million gallons of water annually. Large facilities can pull 5 million gallons daily. Appalachian watersheds, defined by small headwater streams, are particularly sensitive to these withdrawals — especially in a region that already experienced drought conditions in recent summers.

Local control is shrinking

West Virginia passed House Bill 2014, which strips local governments of zoning authority over data center projects. Counties receive 30% of the tax revenue while the state takes the rest. Seven Virginia counties lack zoning ordinances governing where data centers can be built at all. For small businesses that depend on the character of their communities — tourism operators, restaurants, Main Street retailers — this loss of local control matters.

Our take

Data centers are not inherently bad for Appalachia. The tax revenue potential is real, the infrastructure investment is needed, and the region deserves a seat at the table as the AI economy grows. We’ve written about how AI is already at the center of Appalachian economic development strategy and how digital transformation is closing the gap for businesses across the region.

But the pattern is familiar. Outside companies arrive promising revival. They negotiate tax breaks that 21 states don’t even publicly report. They consume shared resources — power, water, land — while creating minimal local employment. And the communities that host them have less say than ever about how their own land gets used.

The bottom line: Appalachia should benefit from the AI infrastructure boom, but only if communities negotiate from a position of knowledge, not desperation.

What’s missing from the conversation

• Workforce development tied to operations, not just construction. Data centers need technicians, security professionals, and network engineers. Rural workforce programs should be training for these roles now.
• Small business spillover plans. How do local contractors, suppliers, and service providers actually win work from these projects? That pipeline doesn’t happen by accident.
• Cumulative impact studies. One data center is manageable. Five in a county changes everything — grid capacity, water tables, housing markets, road infrastructure.

What local businesses should do

1. Track development proposals in your county. Attend planning meetings. Read the environmental impact assessments. Know what’s coming before it arrives.
2. Understand your utility exposure. If your energy costs rise 12 to 16%, what does that do to your margins? Budget for it now.
3. Position your business for spillover work. Construction crews need lodging, food, supplies, and services. Operational facilities need maintenance, security, and IT support. If a project is confirmed in your area, get in front of those procurement pipelines.
4. Advocate for community benefit agreements. These are legally binding commitments from developers to invest in local infrastructure, workforce training, or small business funds. They only happen if communities demand them.

Watch for

• Whether WV’s HB 2014 model spreads to neighboring states like Kentucky and Virginia
• PJM grid capacity auction results for the 2026-2027 cycle — another spike means more rate pressure
• Federal policy on data center siting standards (currently minimal)

The road ahead

The AI data center rush in Appalachia is not a question of if — it’s happening. The question is whether small businesses and communities will shape the terms or simply absorb the consequences.

Appalachian businesses have always been resourceful. The same resilience that carried communities through coal’s decline can inform a smarter approach to this new wave — one that demands real local benefit, not just promises.

If you’re navigating how AI infrastructure changes affect your business, explore our AI infrastructure services or get in touch to talk through your situation.