West Virginia expands microgrid access for high impact data centers

The 2022 Act

In 2022, West Virginia passed into law the Certified Industrial Business Expansion Development Program (the “Act”), to be administered by the state's Department of Economic Development.  The purpose of the Act was to encourage investment in, and expansion of, high impact industrial facilities in the state that have a demonstrated need to be served by renewable power.  Under the Act, the Department was authorized to certify up to two  “high impact industrial business districts” where the expansion of industrial activity would have a significant and positive impact on the state.  Each district was limited to 2,250 acres, and was required to be located on land sold or leased by the state or on land previously used for coal mining operations. 

Any renewable power generated in the district would be used either to serve industrial customers in the district or sold at wholesale, and the generator would largely be exempt from utility regulation by the state's Public Service Commission (the “Commission”).  In order to be eligible for the program, an industrial facility had to be considered new electric load – in other words, it could not be an existing retail power customer of a local, state-regulated utility.  The Act also gave high impact industrial businesses located in a district the option of negotiating special rates to be supplied power by the local utility (i.e., rates not available to the utility's other customers).

The Act was significant because West Virginia is not a “retail choice state” – in other words, retail power customers are generally required to obtain their electric service from one of the state-regulated utilities.  The Act gave certain qualifying high impact industrial facilities in certain areas the ability to procure from third party, non-utility generators.

The 2025 Amendment

The 2025 amendment renamed the “certified industrial business expansion program” to the “certified microgrid development program and renamed “high impact industrial development districts” to “microgrid districts.”  The amended law applies to high impact data centers rather than high impact industrial facilities.  “High impact data centers” are defined as having a critical IT load of at least 90MW and being placed in service after July 1, 2025.

The amendment eliminates the requirement that a district be located on land sold or leased by the state or that was used for coal mining.  The amendment also expands the program by lifting the cap of two microgrid districts, provided that at least 60% of the power produced in any additional district be consumed by one or more high impact data centers in the district.  It also eliminates the requirement that power generated on site must be renewable.  However, in an effort to ensure increased power consumption by high impact data centers from the on-site generation, the amendment limits a generator's wholesale sales to 10% of its production in order to be exempt from Commission utility regulation.

The amendment adds a new provision to the Act that prevents the customers of the state's regulated utilities from bearing any costs related to the generation and sale of power in a microgrid district or from any transmission facilities that would need to be built to accommodate such electric service; all of the costs must be borne by the industrial customer.   This provision reflects a general movement by legislatures and utility commissions in a number of states across the U.S. to ensure that retail ratepayers are not subsidizing the costs of generation and transmission infrastructure necessary to supply power to data centers.

Authored by Chip Cannon.