New West Va. Law Grants Sweeping Exemptions to Attract Data Centers

WASHINGTON, May 2, 2025 – West Virginia Gov. Patrick Morrisey, R, has signed legislation to attract data centers to the state by offering fast-tracked permitting, special tax treatment, and access to fossil-fuel-powered microgrids.

The new law – the Power Generation and Consumption Act – creates a program to lure energy-intensive data centers by establishing special microgrid districts or areas where developers can build and operate private energy systems, such as coal- or gas-fired power plants, largely exempt from state and local oversight.

The new law builds on a 2022 statute that originally authorized microgrid development for a single renewable energy industrial project in Jackson County.

The new legislation expands the program significantly: It opens the door to additional districts statewide and allows microgrids to be powered not only by solar and wind, but also by coal, natural gas, and nuclear, as long as at least 70 percent of the electricity generated is consumed by one or more data centers.

“West Virginia is America’s energy state, and this law is going to demonstrate it to the whole country,” Morrisey said, during a bill-signing ceremony near the site of a $2 billion data center project by Fidelis New Energy.

While the governor touted the bill’s potential to elevate West Virginia’s role in the global tech economy, many local officials raised alarms when the bill passed the state legislature in April.

Microgrids within these new districts will be exempt from the jurisdiction of the state Public Service Commission regarding rates, certificates of convenience, service conditions, complaints and [solar] net metering, and interconnection standards.

“These microgrid districts are heavy industrial districts that would include not just data centers, which could be loud or have other impacts, but also power plants; they could include coal or gas or nuclear plants, and they could also include solar and wind,” Delegate Evan Hansen, D-Monongalia, said in opposition. 

Hansen had attempted to amend the bill to preserve local zoning authority – a proposal that was ultimately defeated.

The final version of the bill exempts qualifying data centers from local land use rules, including municipal zoning, permitting, and noise and lighting regulations. Certified developments would not be subject to county or municipal building permitting, inspection or code enforcement.

“This wipes [counties’] feet out from under them in the 11th hour,” Morganne Tenney, executive director of the Putnam County Development Authority, said last month.  

The new law redirects 50 percent of property tax revenue from certified data centers and microgrid developments to a state-managed income tax reduction fund. Only 30 percent goes to the host county.

Another 10 percent is distributed across all 55 counties on a per capita basis. The remaining 10 percent is split between a state economic enhancement grant fund and an electric grid stabilization fund.

Morrisey said the revenue model could transform the state’s finances.

“If revenue comes in – even at a conservative estimate – we have an ability to lop off a large percentage of our state’s income tax,” Morrisey said. “Maybe… over half the amount we’re currently paying.”

He said the sweeping exemptions were necessary to make West Virginia more competitive and appealing to large-scale developers.

“We have some unbelievable things we’re doing. We’re streamlining the process,” he said. “If you’re looking for speed to build and you want to have flexibility, we’re going to provide that option to you... to build in 24 to 30 months instead of six to eight years.”