A new data center efficiency bill has been proposed in the Virginia House of Delegates.

The new year saw Democrat Delegate Rip Sullivan of Fairfax County propose HB 116: Retail Sales and Use tax; exemption for data centers.

The bill would amend the state’s existing tax rules to require data center operators to meet certain energy efficiency standards in order to be eligible for the sales and use tax exemption for data center purchases.

Under the bill, most data center operators would only be eligible for the exemption if they have a power usage effectiveness (PUE) score of no greater than 1.2. Data centers located in buildings with other commercial uses are only required to achieve an energy efficiency level that would put them in the top 15 percent of similar buildings constructed in the previous five years.

The bill would also require operators to procure carbon-free renewable energy and associated renewable energy certificates from facilities equal to 90 percent of their data centers' electricity requirements by 2027.

It also notes that in no case shall a qualifying data center use diesel fuel for on-site power generation, effectively forcing data centers seeking tax breaks to adopt HVO fuel or switch to an alternative backup technology such as fuel cells.

DCD has reached out to Delegate Sullivan for comment.