1043-00002 · Ironhaven Data Centers LLC · Power & Utility

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MEMORANDUM

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

TO: Douglas Fairchild, Esq. (Calderwood & Harkness LLP); Leonard Castellano (EVP, Development, Ironhaven Data Centers LLC); Diane Prescott (Kestrel Infrastructure Advisors, LLC)

FROM: Grace Nakamura (Calderwood & Harkness LLP)

DATE: May 19, 2025

RE: Stonebridge Data Center Campus — Backup Power Strategy and Generator Procurement

MATTER NO.: 1043-00002

I. Purpose and Executive Summary

The purpose of this memorandum is to analyze the backup power strategy for the Stonebridge Data Center Campus (the "Campus" or "Project"), located at the intersection of Belmont Ridge Road and Stonebridge Boulevard, unincorporated Loudoun County, Virginia 20148, being developed by Ironhaven Data Centers LLC ("IHDC") through its single-purpose subsidiary, Stonebridge Campus Holdings LLC (to be formed as a Virginia limited liability company). This memorandum is intended to provide the project development team and outside advisors with a comprehensive assessment of the legal, regulatory, contractual, and practical considerations attendant to the backup power program, including generator procurement, fuel storage, environmental permitting, and integration with the broader contractual and financing framework for the Project.

The Campus will consist of four data center buildings (Buildings A through D), each rated at 24 MW of critical IT load, totaling 96 MW of critical IT load across approximately 480,000 square feet of gross floor area. Each building will comprise approximately 120,000 square feet of shell space. The facilities are being designed to serve hyperscale and enterprise tenants requiring the highest levels of power availability and infrastructure redundancy.

Primary utility power will be supplied by Vantage Power Cooperative ("VPC") under the Large Load Service Agreement (VPC Service Application No. LSA-2025-0091) at 120 MVA of contracted demand — encompassing the 96 MW of critical IT load plus mechanical, cooling, lighting, and site overhead loads — for a ten-year term commencing upon substation energization.

The backup power strategy employs a 2N diesel generator configuration for each building, providing full redundancy. Under this architecture, each building will be equipped with two complete, independent sets of diesel generators (an "A-side" and a "B-side"), each capable of independently carrying the building's full critical and mechanical load. This is the most robust form of backup power redundancy available and is consistent with market-standard design for Tier III+ and Tier IV mission-critical data center facilities.

Generator procurement falls within the scope of the Engineering, Procurement, and Construction Agreement (the "EPC Agreement") with Titan-McAllister Construction Group, LLC ("TMCG") and is included in the $412,000,000 Guaranteed Maximum Price ("GMP"). Generator procurement, installation, testing, and commissioning are expressly within TMCG's contractual obligations, and no separate procurement vehicle is required for the generator systems themselves.

This memorandum addresses the following topics: (1) the 2N redundancy architecture and its role in the overall campus design; (2) generator sizing and configuration on a per-building and campus-wide basis; (3) on-site fuel storage requirements and regulatory compliance; (4) environmental permitting considerations, including air quality, noise, and stormwater; (5) integration of generator procurement within the EPC Agreement and the GMP; (6) coordination with the Project's power infrastructure, insurance, and financing documents; and (7) specific recommendations and next steps to support the Project's development timeline.

II. Project Power Architecture Overview

A. Primary Utility Supply

Primary electrical power for the Campus will be provided by Vantage Power Cooperative ("VPC"), a member-owned electric cooperative serving portions of Loudoun County and adjacent jurisdictions. IHDC has applied for and is in the process of negotiating a Large Load Service Agreement ("LLSA") with VPC under VPC Service Application No. LSA-2025-0091. The LLSA will govern the terms and conditions of VPC's provision of primary utility power to the Campus for a ten-year term commencing upon substation energization.

The contracted demand under the LLSA is 120 MVA, which is sized to accommodate the Campus's 96 MW of critical IT load plus approximately 24 MW of mechanical and electrical overhead — including cooling (CRAC/CRAH units, chilled water plants, cooling towers), lighting, fire protection systems, security systems, building management systems, and other ancillary loads. The 120 MVA contracted demand reflects a power factor assumption of approximately 0.80, which is consistent with industry-standard data center electrical design.

To serve the Campus at this scale, VPC will construct a dedicated 230kV/34.5kV step-down substation to be located on the Meridian Parcel (Loudoun County Tax Map Reference Number /95-4A-2///, comprising 19.4 acres, situated adjacent to the Stonebridge Parcel on the east). The substation will be owned and operated by VPC following construction completion but will be constructed by VPC's designated contractor with IHDC funding a line extension contribution of $18,500,000 under the Line Extension Funding Agreement to be executed between Stonebridge Campus Holdings LLC and VPC. The substation easement will be granted by Stonebridge Campus Holdings LLC in favor of VPC on a designated portion of the Meridian Parcel, the precise boundaries of which are to be established by survey and incorporated into the easement instrument prior to commencement of substation construction.

The target date for substation energization is June 1, 2027. This date is a critical path milestone for the Project, as it must precede or coincide with the Substantial Completion date for Building A (August 1, 2027) in order to allow for integrated systems testing and commissioning of the primary electrical distribution system.

The rate structure under the LLSA includes a demand charge of $8.42 per kW per month for years one through five, escalating at 2.5% annually thereafter for the remainder of the ten-year initial term. Energy charges are structured as an at-cost pass-through based on PJM Interconnection day-ahead locational marginal pricing ("LMP") at the applicable pricing node, plus applicable transmission and ancillary service charges. At full contracted demand, the estimated annual utility demand charges alone are calculated as follows: 120,000 kW × $8.42/kW/month × 12 months = $12,124,800 per year. This figure excludes energy charges, which will fluctuate based on actual consumption and prevailing LMP rates, as well as any applicable demand ratchet provisions, power factor adjustment charges, or regulatory surcharges that may be incorporated into the final LLSA.

B. Backup Power — Role in Campus Design

While primary utility power from VPC will serve as the principal source of electricity for the Campus under normal operating conditions, backup diesel generators serve as the critical secondary power source in the event of a utility outage, planned maintenance of VPC's transmission or distribution infrastructure, VPC system failure, or other disruption to the primary utility supply. In the data center industry, uninterrupted power availability is the single most critical performance requirement, and the loss of power to IT equipment — even for a period of seconds — can result in catastrophic data loss, service interruption, and significant financial liability to tenants and their end-users.

Data center industry standards for Tier III+ facilities, as established by the Harborview Corporation and other industry classification bodies, require on-site backup generation capable of sustaining the full critical IT load and associated mechanical systems for extended periods. The 2N generator configuration selected for the Stonebridge Campus represents the highest standard of generator redundancy deployed in the market, ensuring that no single point of failure exists in the backup power path and that the facility can withstand the concurrent failure of an entire generator plant on one side without any loss of power to the IT load.

The backup generator systems complement the uninterruptible power supply ("UPS") systems that will be installed in each building. The UPS systems provide bridging power — typically through battery energy storage — during the brief transition period between the loss of utility power and the full engagement of the diesel generators. Modern UPS systems are designed to provide between five and fifteen minutes of battery-backed power, depending on configuration and load, which is more than sufficient to bridge the gap during generator startup, synchronization, and load transfer. UPS procurement is also within the EPC Agreement's GMP scope and is addressed separately in the electrical infrastructure specifications within the EPC Agreement's Exhibit A (Scope of Work and Technical Specifications). The coordination between UPS systems and generator systems is a critical design interface that TMCG is responsible for managing under the EPC Agreement.

III. 2N Diesel Generator Configuration

A. Redundancy Architecture Explained

The term "2N" refers to a power redundancy architecture in which two fully independent power generation systems are deployed, each individually capable of powering the entire critical IT load and associated mechanical overhead of the building it serves. In this nomenclature, "N" represents the minimum generator capacity required to support the building's full load; "2N" therefore means that twice the minimum required capacity is installed, providing complete redundancy.

For each building on the Stonebridge Campus (each rated at 24 MW critical IT load, with approximately 6 MW of mechanical overhead for a total load of approximately 30 MW), the 2N configuration calls for two independent generator plants — designated the "A-side" and "B-side" — each rated at or above 30 MW of generation capacity. Under normal backup conditions (i.e., a utility outage without concurrent generator failure), only one side is required to carry the full building load; the second side provides complete redundancy and is available as a backup to the backup.

This architecture eliminates single points of failure in the backup power system and delivers several additional operational advantages. First, it allows for maintenance, testing, and repair of one entire generator side while the other remains fully operational and ready to respond to a utility outage. This is a significant operational benefit, as diesel generators require periodic maintenance, oil changes, coolant replacement, and load-bank testing, all of which can be performed on one side without reducing the facility's backup power capability. Second, the 2N configuration provides protection against the scenario in which a utility outage occurs simultaneously with a generator failure — a low-probability but high-consequence event that a lesser redundancy architecture (such as N+1 or N+2) might not fully address. Third, the 2N architecture supports the dual-bus electrical distribution topology that is a hallmark of mission-critical data center design.

Each generator side connects to independent electrical distribution paths — commonly referred to as a "dual-bus" or "A/B bus" architecture — that feed independent UPS systems, power distribution units ("PDUs"), and ultimately deliver power to the IT load through redundant power feeds. This means that each server rack, cabinet, or cage within the data hall receives power from both the A-side and B-side distribution paths, ensuring continuous power availability even in the event of a complete failure of one distribution path, including the generator, UPS, switchgear, and cabling associated with that path.

B. Generator Sizing Per Building

The generator sizing for each building is driven by the total electrical load that the generators must support during a utility outage. This total load comprises the critical IT load plus the mechanical and electrical overhead loads necessary to sustain the IT environment.

For each building on the Campus:

• Critical IT Load: 24 MW

• Mechanical and Electrical Overhead: Estimated at approximately 25% of the critical IT load, equating to approximately 6 MW per building. This overhead includes chilled water plant operation, cooling tower fans, computer room air conditioning/air handling units, lighting, fire suppression systems, security and access control systems, building management systems, and other ancillary loads.

• Total Per-Building Load to be Supported by Generators: Approximately 30 MW.

Under the 2N architecture, each "N" side (A-side and B-side) must independently provide generator capacity of approximately 30 MW. This figure is preliminary and will be refined during detailed electrical design by TMCG's engineering team, taking into account diversity factors, demand factors, power factor corrections, and specific equipment selections. However, for purposes of this memorandum and for contractual planning, the 30 MW per-side figure serves as the baseline design parameter.

The anticipated configuration for each generator side is multiple generator sets operating in parallel, rather than a single monolithic generator unit. For example, each side might comprise six generator sets rated at approximately 5 MW each, or an equivalent modular configuration (e.g., five units at 6 MW each, or eight units at 3.75 MW each). The specific number, sizing, and manufacturer of generator sets will be determined by TMCG during detailed design and will be documented in the generator procurement specifications within the EPC Agreement's Exhibit A. Parallel operation of multiple generator sets is standard practice in data center design, as it provides additional internal redundancy within each generator side (if one set within a side fails to start, the remaining sets can still carry a substantial portion of the load), and it allows for modular procurement, installation, and maintenance.

Each generator side will be equipped with automatic transfer switches ("ATS") that detect utility power failure and initiate the generator start sequence automatically, without human intervention. The ATS systems are the critical interface between the utility power feed and the generator plant and must be designed, procured, and commissioned as an integrated system with the generators and the broader electrical distribution infrastructure.

The total generator capacity on a per-building and campus-wide basis is summarized as follows:

The total campus-wide generator capacity of approximately 240 MW is a substantial installation and represents one of the largest backup power deployments in the Northern Virginia data center market. This scale underscores the importance of the procurement, permitting, and commissioning workstreams discussed in this memorandum.

C. Generator Equipment Specifications (Preliminary)

The following preliminary equipment specifications establish the baseline technical requirements for the diesel generator systems. These specifications are subject to refinement during TMCG's detailed design phase and will be formally documented in the generator procurement specifications within Exhibit A to the EPC Agreement.

Fuel Type. All generators will operate on #2 ultra-low sulfur diesel ("ULSD"), which is the standard fuel for stationary diesel generators in the United States. ULSD has a maximum sulfur content of 15 parts per million and is required under EPA regulations for all on-road and most off-road diesel applications. The use of ULSD facilitates compliance with EPA Tier 4 Final emission standards and is compatible with exhaust aftertreatment systems, including diesel particulate filters and selective catalytic reduction systems.

Engine Type. The generator engines will be either high-speed diesel engines (typically 1,800 RPM, common for generator sets in the 1–3 MW range) or medium-speed diesel engines (typically 900–1,200 RPM, common for larger generator sets in the 3–6+ MW range). The selection between high-speed and medium-speed engines will be made by TMCG during detailed design based on factors including unit capacity, fuel efficiency, maintenance requirements, noise characteristics, footprint, weight, and manufacturer availability. Medium-speed engines generally offer superior fuel efficiency, longer service life, and lower noise output per unit of power but are physically larger and heavier, which has implications for foundation design, building structural loading, and equipment access.

Emissions Standards. All diesel generators installed at the Campus must comply with EPA Tier 4 Final emission standards for compression-ignition internal combustion engines, as codified in 40 CFR Part 1039. Tier 4 Final represents the most stringent federal emission standard currently in effect and imposes significant reductions in allowable emissions of particulate matter ("PM"), nitrogen oxides ("NOx"), carbon monoxide ("CO"), and hydrocarbons ("HC") relative to prior emission tiers. In addition, all generators must comply with all applicable Virginia Department of Environmental Quality ("VDEQ") air quality requirements, including any state-level emission standards, permitting conditions, or operational limitations imposed through the air quality permit process. The implications of these emission standards for equipment cost, aftertreatment systems, and permitting strategy are discussed further in Section V of this memorandum.

Automatic Start Capability. All generators must be capable of achieving full rated load acceptance within ten (10) seconds of receiving a utility power failure signal from the automatic transfer switch system. This start-to-load time is a critical performance parameter that directly affects the duration for which the UPS battery systems must bridge the gap between utility power loss and generator power availability. A ten-second response time is consistent with Tier III+ and Tier IV data center design standards and is achievable with modern diesel generator sets equipped with battery-powered electric starting systems and pre-lubrication systems.

Noise Attenuation. All generators will be housed in weather-protective, sound-attenuated enclosures designed to reduce noise emissions to levels compliant with the Loudoun County noise ordinance at the property boundaries of the Stonebridge Parcel. The specific noise attenuation requirements will be confirmed during detailed design and proffer negotiations in connection with the ZMOD application (discussed in Sections V.C and IX.B below). Typical sound-attenuated enclosures for large diesel generators achieve noise reductions of 25–40 dBA relative to the unattenuated engine noise output, bringing the noise level at one meter from the enclosure to approximately 75–85 dBA (compared to 85–105 dBA for unattenuated engines of similar capacity). Additional noise mitigation measures, such as sound barrier walls, exhaust silencers, and setback distances, may be required depending on the results of the acoustic study recommended in Section X below.

Day Tanks and Fuel Transfer Systems. Each generator set will be equipped with an integral day tank (typically 500–1,000 gallons capacity) that provides an immediate fuel supply for engine operation. Day tanks are automatically refilled from the building's bulk fuel storage tanks via electrically powered fuel transfer pumps. The fuel transfer system design, including piping, pumps, controls, leak detection, and overfill prevention, will be specified by TMCG during detailed design and must comply with all applicable building code, fire code, and environmental regulatory requirements.

IV. Fuel Storage Requirements

A. On-Site Fuel Storage Capacity

Adequate on-site fuel storage is essential to the backup power program, as the generators' utility is limited by the quantity of fuel available on-site at the time of a utility outage. The design standard for the Stonebridge Campus is a minimum of 48 hours of continuous runtime at full load per building, consistent with industry best practice for mission-critical data center facilities and with the anticipated requirements of the construction and permanent lenders.

The 48-hour runtime target is based on the assumption that fuel resupply will be available within that period under most foreseeable outage scenarios. It provides a substantial buffer beyond the typical utility outage duration (which, in the Northern Virginia market, is generally measured in minutes to hours for planned maintenance and in hours to days for severe weather events or equipment failures) and allows sufficient time for IHDC to activate emergency fuel resupply agreements. The 48-hour standard is also consistent with the requirements of major hyperscale and enterprise data center tenants, who typically mandate minimum fuel storage durations of 24 to 72 hours as a condition of their lease agreements.

The fuel consumption estimate for each building at full load (with one "N" side of generators operating and carrying the full approximately 30 MW building load) is approximately 5,500 to 6,500 gallons per hour. This estimate is based on typical fuel consumption rates for modern diesel generator sets of the anticipated capacity, which generally consume between 55 and 75 gallons per hour per megawatt of output, depending on engine type, load factor, and efficiency. The precise fuel consumption rate will be confirmed during detailed design based on the specific generator equipment selections made by TMCG.

Using a midpoint consumption estimate of approximately 6,000 gallons per hour, the required fuel storage per building is calculated as follows:

48 hours × 6,000 gallons/hour = 288,000 gallons per building

The total campus fuel storage capacity, across all four buildings, is therefore approximately:

288,000 gallons × 4 buildings = 1,152,000 gallons (approximately 27,429 barrels)

This represents a very substantial quantity of diesel fuel and triggers a number of federal, state, and local regulatory requirements, as discussed in Sections IV.B and V below.

The fuel storage infrastructure will consist of above-ground steel tanks with secondary containment, in accordance with VDEQ and federal EPA Spill Prevention, Control, and Countermeasure ("SPCC") requirements. The tanks will be either double-walled (with integral secondary containment) or single-walled within diked containment areas providing 110% of the tank's capacity. The specific tank configuration, sizing (number and capacity of individual tanks per building), and placement will be determined during detailed design by TMCG in coordination with Lumen Ridge Engineering, PLLC and will be subject to review and approval by the Loudoun County Fire marshal and VDEQ.

B. Fuel Storage Regulatory Compliance

The on-site storage of diesel fuel in the quantities contemplated for the Stonebridge Campus triggers several overlapping layers of federal, state, and local regulatory requirements.

Federal SPCC Requirements. An SPCC Plan is required under 40 CFR Part 112 for any facility that stores more than 1,320 gallons of oil (including diesel fuel) in above-ground containers or more than 42,000 gallons in underground storage, and that could reasonably be expected to discharge oil to navigable waters or adjoining shorelines. The Campus will far exceed the above-ground storage threshold — by a factor of approximately 870 — and an SPCC Plan must therefore be developed, certified by a licensed Professional Engineer, and fully implemented prior to the delivery of any diesel fuel to the Campus. The SPCC Plan must address, at a minimum: facility description and oil storage inventory; potential discharge locations and drainage pathways; containment and diversionary structures; inspections, testing, and recordkeeping; personnel training; security measures; and discharge prevention and response procedures. The SPCC Plan must be reviewed and updated at least every five years, or whenever a material change occurs in the facility's oil storage capacity or configuration.

Virginia Uniform Statewide Building Code and Virginia Fire Prevention Code. The storage and handling of diesel fuel on the Campus must comply with the Virginia Uniform Statewide Building Code (13 VAC 5-63) and the Virginia Fire Prevention Code (13 VAC 5-51, incorporating NFPA 1 and the International Fire Code by reference). These codes establish requirements for tank construction and labeling, tank spacing and setback distances from buildings and property lines, fire suppression and detection systems for fuel storage areas, emergency venting, spill containment, and electrical classification of areas adjacent to fuel storage. Compliance with these codes is enforced through the building permit process administered by Loudoun County, and the fuel storage installation must be inspected and approved prior to use.

Loudoun County Fire marshal. The Loudoun County Fire marshal's Office has jurisdiction over the permitting, inspection, and approval of fuel storage installations within unincorporated Loudoun County. The Fire marshal's review will encompass tank placement, fire protection systems, access for fire apparatus, emergency shutoff and containment, and compliance with the Virginia Fire Prevention Code. Early coordination with the Fire marshal is recommended to identify any site-specific requirements or concerns that could affect generator pad and fuel tank layout.

Coordination with Environmental Consultants. Pendleton Environmental Associates, Inc. (Dr. Renata Volkov, Principal) has been engaged to provide environmental consulting services for the Project, including Phase I and Phase II Environmental Site Assessments, environmental compliance review, and SPCC Plan preparation. The fuel storage regulatory compliance workstream should be closely coordinated with Dr. Volkov's team to ensure that all applicable requirements are identified and addressed in a timely manner.

C. Fuel Supply and Delivery Logistics

IHDC will need to arrange fuel supply contracts with one or more regional diesel distributors to provide initial fuel fill and ongoing replenishment for the Campus's fuel storage systems. Fuel supply procurement is outside the scope of the EPC Agreement with TMCG and will be managed directly by IHDC, with advisory support from Kestrel Infrastructure Advisors, LLC (Diane Prescott).

Campus access for fuel delivery trucks — typically large tanker trucks with capacities of 7,500 to 9,000 gallons each — must be accommodated in the site civil design. This includes access road pavement design sufficient to support loaded truck weights (approximately 80,000 pounds gross vehicle weight for a fully loaded tanker truck), turning radii adequate for tractor-trailer combinations, and routing that avoids conflicts with other campus operations and minimizes disruption to occupied data center buildings. Coordination with Lumen Ridge Engineering, PLLC (Carlos Esteban, PE), the civil engineering firm for the Project, is required to ensure that the site civil design — including access roads, drive aisles, and fuel delivery staging areas — meets these requirements. Mr. Esteban's team should also confirm that the weight-bearing capacity and turning radius specifications for the access roads and internal campus circulation routes are consistent with the dimensions and weight of the fuel delivery vehicles to be used.

Additionally, IHDC should negotiate and execute emergency fuel resupply agreements with one or more diesel distributors to ensure priority fuel delivery in the event of an extended utility outage exceeding the 48-hour on-site fuel supply. Extended outage scenarios, while infrequent, can arise from severe weather events (hurricanes, ice storms, derechos), widespread grid failures, or prolonged equipment failures at the utility level. Emergency resupply agreements typically provide for guaranteed response times (e.g., delivery within 4–8 hours of request), pre-negotiated pricing, and priority allocation during periods of high demand (when multiple facilities in the region may be competing for limited fuel supply). The negotiation and execution of such agreements should be initiated well in advance of Campus energization and generator commissioning.

V. Environmental Permitting Considerations

A. Air Quality Permitting — Virginia Department of Environmental Quality (VDEQ)

The diesel generators to be installed at the Stonebridge Campus are classified as stationary internal combustion engines and are subject to air quality permitting under the Virginia Air Pollution Control Law (Virginia Code § 10.1-1300 et seq.) and the Virginia Air Pollution Control Board regulations (9 VAC 5). The applicable permitting requirements depend on the intended use of the generators and the aggregate emissions from the facility.

Generators that are used exclusively for emergency standby purposes — defined as operation during actual utility power outages and limited testing and maintenance — may qualify for exemption from minor New Source Review ("NSR") permitting, provided that the generators are operated less than 500 hours per year for non-emergency purposes (i.e., testing and maintenance). This exemption is critical to the Project's permitting strategy and cost structure, as the process for obtaining a minor NSR permit or a state operating permit is significantly more time-consuming, costly, and operationally burdensome than the alternative of qualifying for the emergency-standby exemption.

However, if the generators will be used for purposes beyond emergency standby — including, for example, demand response programs (in which generators are operated during periods of high grid demand to reduce the facility's utility consumption and earn demand-response payments), peak shaving (in which generators are operated during high-cost pricing periods to reduce utility energy charges), or islanding for testing purposes in excess of the 500-hour annual limitation — a more rigorous permit application may be required. Depending on the aggregate potential-to-emit from the generator fleet, this could involve a minor NSR permit, a state operating permit, or, in extreme cases, a major NSR permit under the federal Prevention of Significant Deterioration ("PSD") program. Given the total installed generator capacity of approximately 240 MW campus-wide, the aggregate potential-to-emit — if the generators were operated on an unrestricted basis — would likely exceed major source thresholds for one or more criteria pollutants, particularly NOx. Maintaining the emergency-standby classification is therefore essential to avoid triggering major source permitting requirements.

Recommendation: Generator use should be strictly restricted to emergency standby and limited maintenance and testing operations to maintain the favorable emergency-standby permitting classification. IHDC should not participate in demand response or peak-shaving programs using the diesel generators unless and until a thorough analysis of the permitting implications has been completed and any necessary permits have been obtained. This restriction should be reflected in the Campus's operational procedures and, if applicable, in the terms of any lease agreements with tenants that address backup power operations.

In addition to state-level permitting requirements, the generators are subject to the National Emission Standards for Hazardous Air Pollutants ("NESHAP") for Reciprocating Internal Combustion Engines ("RICE"), codified at 40 CFR Part 63, Subpart ZZZZ. This regulation applies to stationary reciprocating internal combustion engines (including diesel generators) and imposes operational limitations, maintenance requirements, and recordkeeping obligations. For new emergency-standby diesel engines that meet EPA Tier 4 Final emission standards, the Subpart ZZZZ requirements are generally manageable and consist primarily of operational hour limitations (consistent with the emergency-standby use restriction discussed above), periodic maintenance in accordance with manufacturer recommendations, and maintenance of operating records. Compliance with Subpart ZZZZ should be incorporated into the Campus's environmental management system and operational procedures.

B. EPA Tier 4 Final Emissions Compliance

As noted in Section III.C above, all new diesel generators installed at the Campus must meet EPA Tier 4 Final emission standards for compression-ignition internal combustion engines, as codified in 40 CFR Part 1039. Tier 4 Final standards represent the most stringent federal emission limits currently applicable to diesel engines and impose the following approximate emission limits (values vary by engine power category):

• Particulate Matter (PM): 0.02 g/kW-hr (approximately 90% reduction from Tier 1 standards)

• Nitrogen Oxides (NOx): 0.40 g/kW-hr (approximately 90% reduction from Tier 1 standards)

• Carbon Monoxide (CO): 3.5 g/kW-hr

• Hydrocarbons (HC): 0.19 g/kW-hr

Achieving Tier 4 Final compliance typically requires exhaust aftertreatment systems, which may include diesel particulate filters ("DPF") to reduce PM emissions, selective catalytic reduction ("SCR") systems to reduce NOx emissions (using diesel exhaust fluid, also known as urea or "DEF"), and diesel oxidation catalysts ("DOC") to reduce CO and HC emissions. These aftertreatment systems add to the capital cost of the generator equipment (typically 10–20% above the cost of a comparable Tier 2 generator set), increase ongoing maintenance requirements (including DPF regeneration, SCR system fluid replenishment, and catalyst replacement), and increase the physical footprint and weight of each generator set (which has implications for foundation design and enclosure sizing).

TMCG is responsible for confirming engine manufacturer compliance with Tier 4 Final standards and specifying the aftertreatment systems and associated infrastructure (exhaust piping, DEF storage and delivery systems, control systems, etc.) in the detailed generator design. The EPC Agreement's Exhibit A should include specific language requiring Tier 4 Final compliance and should allocate responsibility for aftertreatment system procurement, installation, commissioning, and warranty to TMCG.

C. Noise Permitting and Mitigation

Diesel generators, particularly large generator sets operating at full load, produce significant noise. Typical noise output for a large diesel generator set is 85–105 dBA at one meter from the unattenuated engine, depending on engine size, speed, and configuration. This noise level substantially exceeds residential and commercial noise standards and, if unmitigated, could create significant nuisance and regulatory compliance issues for the Campus.

The Loudoun County Zoning Ordinance includes noise performance standards that establish maximum permissible noise levels at property boundaries, with different limits applicable to different zoning districts, times of day, and noise sources. The specific noise limits applicable to the Campus will depend on the zoning classification of the Stonebridge Parcel (currently agricultural, to be rezoned to a data center-appropriate zoning district through the ZMOD application) and the zoning classification of adjacent parcels. Given the Campus's location in an area that is transitioning from agricultural and rural uses to industrial and data center use, the noise standards at the property boundaries may be particularly sensitive, especially along boundaries adjacent to parcels that retain residential or agricultural zoning.

Generator noise must be mitigated through a combination of engineering controls, including sound-attenuated enclosures (as discussed in Section III.C), exhaust silencers, sound barrier walls, strategic generator placement (maximizing setback distances from property boundaries and noise-sensitive receptors), and, potentially, landscaping buffers or earthen berms. The specific mitigation measures required will depend on the results of an acoustic study that models generator noise propagation at the property boundaries and compares projected noise levels to applicable regulatory standards.

Proffer commitments submitted in connection with the ZMOD application (expected Docket No. ZMOD-2025-0038, with a filing target of May 30, 2025) may include specific noise-level caps or noise mitigation commitments related to generator operations. These proffer terms should be carefully negotiated to ensure that they are achievable with commercially available noise attenuation technology and do not impose unreasonable operational constraints on the Campus. Coordination with Thomas Ashcroft of Ashcroft & Wynn, P.C. ("A&W"), the land use counsel for the Project, and Alan Mercer of Cornerstone Land Use Consulting, LLC, the land use planning consultant, is essential to ensure that the noise-related proffer terms are appropriately drafted and that the generator locations and noise mitigation measures depicted on the site plan submitted with the ZMOD application are consistent with the detailed generator design.

D. Stormwater and Containment

The fuel storage areas associated with the backup generator systems require careful stormwater management design to prevent diesel fuel from entering the stormwater management system and, ultimately, receiving waters. Diesel fuel is a regulated pollutant under the Clean Water Act and Virginia's water quality regulations, and even small quantities of diesel in stormwater runoff can create significant environmental liability and regulatory enforcement exposure.

Stormwater management for fuel storage areas must be coordinated with Lumen Ridge Engineering, PLLC (Carlos Esteban, PE), which is responsible for the overall site civil engineering design, including the stormwater management facility design and the Stormwater Management Facility Easement and Maintenance Agreement. The fuel storage areas should be designed to segregate stormwater runoff from areas that may come into contact with diesel fuel (e.g., tank containment areas, fuel transfer piping corridors, and truck unloading areas) from the general site stormwater system. This is typically accomplished through the use of diked containment areas, covered fuel storage enclosures, oil-water separators, and dedicated stormwater treatment systems for fuel storage areas.

All fuel tanks must be equipped with secondary containment capable of holding at least 110% of the capacity of the largest tank within the containment area, consistent with SPCC requirements and Virginia Fire Prevention Code requirements. Secondary containment may be provided through double-walled tank construction (providing integral containment within the tank structure), concrete dike walls surrounding single-walled tanks, or a combination of these approaches. The secondary containment system must be designed to be impermeable and must be equipped with drainage controls that allow accumulated rainwater to be tested and released only after confirmation that it is free of petroleum contamination.

VDEQ requires the preparation and implementation of a Stormwater Pollution Prevention Plan ("SWPPP") for the Campus during both the construction phase (as a condition of the Construction General Permit for land-disturbing activities) and the operational phase (if the facility is subject to the Industrial Stormwater General Permit). The SWPPP must specifically address fuel storage and handling areas and must include best management practices ("BMPs") for spill prevention, containment, and cleanup, as well as inspection and monitoring procedures for fuel storage areas.

E. Phase I/Phase II ESA Considerations

The environmental due diligence program for the Project is being conducted by Pendleton Environmental Associates, Inc. (Dr. Renata Volkov, Principal), and includes Phase I and Phase II Environmental Site Assessments ("ESAs") for both the Stonebridge Parcel and the Meridian Parcel. The Phase I ESA completion target is June 1, 2025; the Phase II ESA completion target for the Stonebridge Parcel is July 1, 2025.

The Phase I ESA addresses existing environmental conditions on the site, including historical land uses, potential sources of contamination, and recognized environmental conditions ("RECs"). A known issue identified during preliminary environmental investigation is the potential for residual pesticide contamination in the northwest quadrant of the Stonebridge Parcel — an area of approximately 4.2 acres — attributable to former agricultural use of the property. This potential contamination area requires further investigation through the Phase II ESA, which will include soil and groundwater sampling to delineate the nature and extent of any contamination and to assess the potential need for remediation or engineering controls.

The potential presence of residual pesticides in the northwest quadrant of the Stonebridge Parcel is directly relevant to the backup power system design, as the placement of generator pads, fuel storage tanks, and associated infrastructure in an area with known or suspected soil or groundwater contamination could complicate construction (due to the need for special handling and disposal of contaminated soils excavated during foundation construction), create additional environmental liability (due to the commingling of diesel fuel storage operations with pre-existing soil contamination), and trigger additional regulatory requirements (such as site remediation or the implementation of engineering controls as conditions of building permits or environmental permits).

Recommendation: Generator pads and fuel storage tank locations should be sited away from the northwest quadrant of the Stonebridge Parcel — the approximately 4.2-acre area identified as having potential residual pesticide contamination — pending the completion and review of the Phase II ESA results. The final locations of generator pads and fuel tanks should be determined only after the Phase II ESA results are available and any necessary remediation measures or engineering controls have been identified and incorporated into the site design. This recommendation should be communicated to TMCG and Lumen Ridge Engineering to ensure that it is reflected in the detailed site plan and generator layout drawings.

VI. EPC Contract Integration — Generator Procurement Within GMP

A. Confirmation of Scope Inclusion

The EPC Agreement with Titan-McAllister Construction Group, LLC (GMP: $412,000,000) expressly includes within the GMP scope the procurement, delivery, installation, testing, and commissioning of all backup diesel generators and all associated equipment, including but not limited to: generator sets and engines; enclosures and sound attenuation systems; exhaust systems and aftertreatment equipment (DPF, SCR, DOC); fuel day tanks and bulk fuel storage tanks; fuel transfer piping, pumps, and controls; automatic transfer switches and paralleling switchgear; generator control systems and monitoring equipment; and all structural foundations, electrical connections, and site improvements necessary for the installation and operation of the backup power systems.

The scope inclusion is documented in the following EPC Agreement exhibits:

• Exhibit A (Scope of Work and Technical Specifications): The generator systems are included under the "Electrical Infrastructure and Backup Power" division of the scope of work. Exhibit A establishes the baseline technical specifications for the generator systems, including minimum capacity, redundancy configuration (2N), fuel type, emissions compliance standards, start-to-load time requirements, and noise attenuation requirements.

• Exhibit B (GMP Schedule and Budget): Generator procurement is a specifically identified line item within the per-building cost allocation of $103,000,000 per building ($412,000,000 ÷ 4 buildings). The GMP budget allocates costs across major work categories, and the backup power systems (generators, fuel storage, switchgear, and ATS) are separately identified to facilitate cost tracking, draw request documentation, and budget variance analysis.

Because the generator systems are fully within the GMP scope, IHDC is not required to procure generators through a separate contract or procurement process. TMCG bears full responsibility for generator procurement, including manufacturer selection, specification development, purchase order issuance, quality assurance and quality control, factory acceptance testing, delivery coordination, installation, and commissioning. Any cost overruns on generators are absorbed within the GMP unless the scope is modified through an approved change order process in accordance with the change order provisions of the EPC Agreement.

B. Procurement and Lead Time Considerations

Large diesel generator sets in the 2+ MW capacity range currently have manufacturer lead times of approximately 40 to 52 weeks from order placement to delivery. These lead times reflect ongoing supply chain constraints in the generator manufacturing industry, driven by high demand from the data center sector (particularly in Northern Virginia, which is the largest data center market in the world), semiconductor supply limitations affecting engine control systems, and limited manufacturing capacity for Tier 4 Final compliant engines and aftertreatment systems. Lead times for certain manufacturers and product lines may be even longer, depending on current order backlogs and manufacturing schedules.

Given the target date for issuance of the Notice to Proceed ("NTP") under the EPC Agreement of November 1, 2025, and the Substantial Completion target for Building A of August 1, 2027 — representing a 21-month construction window for the first building — generator procurement orders must be placed promptly after NTP and potentially even earlier to ensure that generator equipment is delivered and available for installation within the construction schedule.

Specifically, if NTP is issued on November 1, 2025, and generator lead times are 40–52 weeks, generator equipment would not be delivered until August 2026 through October 2026 at the earliest. This delivery timeline is consistent with a 21-month construction schedule for Building A (Substantial Completion August 1, 2027), but it leaves very little margin for procurement delays, manufacturing defects, shipping damage, or other supply chain disruptions. If generator delivery is delayed beyond October 2026, it could jeopardize the Building A Substantial Completion milestone and trigger liquidated damages exposure under the EPC Agreement.

To mitigate this supply chain risk, we recommend that the EPC Agreement include a specific provision allowing early-release procurement of generators and other long-lead electrical equipment. An early-release procurement authorization would permit TMCG to issue purchase orders for generators and selected long-lead equipment promptly after NTP (or, potentially, even prior to NTP subject to appropriate contractual protections), without waiting for the completion of all detailed design and engineering work. Early-release procurement is a common practice in data center EPC contracting and is specifically contemplated by the construction schedule in Exhibit C to the EPC Agreement.

TMCG's designee for generator procurement coordination is Michelle Tran, SVP of Data Center Programs. Ms. Tran's team should be requested to provide a detailed generator procurement schedule — including manufacturer selection milestones, purchase order dates, factory acceptance testing dates, delivery dates, installation milestones, and commissioning milestones — within the overall construction schedule documented in Exhibit C to the EPC Agreement.

C. Cost and GMP Allocation

The generator and backup power systems represent a significant component of the per-building GMP. Based on industry benchmarks and preliminary cost estimates provided by TMCG during the GMP negotiation process, the generator and backup power systems (including generators, enclosures, switchgear, ATS, fuel storage, and emissions control equipment) are estimated to constitute approximately 8% to 12% of the per-building hard costs. Applied to the per-building GMP allocation of $103,000,000, this yields an estimated per-building generator and backup power cost range of approximately $8,200,000 to $12,400,000.

On a campus-wide basis, the total estimated cost of the generator and backup power systems across all four buildings is approximately $33,000,000 to $50,000,000. This cost is fully included within the overall $412,000,000 GMP and does not represent an additional capital budget requirement. The precise cost breakdown will be detailed in the Exhibit B line items once TMCG completes its detailed cost estimate during the early design phase.

On a per-MW basis, the estimated cost of backup power capacity (including both generator equipment and associated infrastructure but excluding fuel costs) ranges from approximately $137,500/MW to $208,333/MW of installed generator capacity (based on the 240 MW total campus-wide generator capacity and the $33M–$50M estimated total cost). This is generally consistent with current market pricing for Tier 4 Final compliant diesel generator installations in Northern Virginia, though actual costs may vary based on manufacturer selection, aftertreatment system requirements, site-specific installation conditions, and prevailing market conditions at the time of procurement.

As noted above, any cost overruns on generators or other backup power system components are absorbed within the GMP. TMCG bears the cost risk on generator procurement and installation, and IHDC's exposure is limited to the GMP (subject to approved change orders). Conversely, if generator costs come in below the estimated allocation, the savings remain within the GMP and may contribute to reducing the overall project cost to within the GMP ceiling, or may offset cost overruns in other budget categories.

D. Liquidated Damages and Generator Commissioning

The EPC Agreement provides for liquidated damages in the event that TMCG fails to achieve Substantial Completion by the specified milestone dates. The liquidated damages rate is $125,000 per calendar day per building, capped at 10% of the per-building GMP allocation — i.e., a maximum of $10,300,000 per building ($103,000,000 × 10%). These liquidated damages reflect IHDC's estimated actual damages from delay, including lost rental income, increased financing carrying costs, and reputational harm, and have been negotiated as a reasonable pre-estimate of such damages.

Critically, the definition of "Substantial Completion" under the EPC Agreement requires the commissioning and testing of all backup power systems, including the diesel generators, ATS equipment, paralleling switchgear, fuel storage and transfer systems, and the integrated operation of these systems with the UPS systems and the overall electrical distribution infrastructure. A building cannot achieve Substantial Completion — and the liquidated damages clock does not stop running — until the backup power systems have been fully tested and are demonstrated to be operational and capable of performing their intended function.

The required commissioning and testing program for the backup power systems includes, at a minimum:

• Individual generator set testing: Each generator set must be started, run, and verified to achieve rated output and to meet Tier 4 Final emission standards.

• Load-bank testing: Each generator side (A-side and B-side) must be tested under full rated load using resistive load banks to verify capacity, voltage regulation, frequency stability, and fuel consumption rates.

• Integrated systems testing: The complete backup power system (generators, ATS, switchgear, UPS, and electrical distribution) must be tested in an integrated fashion to verify that the automatic transfer sequence operates correctly — i.e., that a simulated utility power failure triggers generator start, ATS transfer, and seamless load transfer from utility to generator power, and that the reverse transfer (from generator back to utility power upon utility restoration) also operates correctly.

• 2N redundancy verification: Testing must verify that each generator side can independently carry the full building load and that the failure of one complete side does not affect power availability to the IT load through the other side.

The Substantial Completion milestone dates under the EPC Agreement are as follows:

Any delay in generator procurement, delivery, installation, or commissioning that causes TMCG to miss these Substantial Completion dates will expose TMCG to liquidated damages. This creates a strong contractual incentive for TMCG to manage the generator procurement timeline aggressively and to prioritize generator commissioning within the overall construction schedule.

E. Performance and Payment Bonds

Generator procurement and installation are covered under the performance bond and payment bond issued by Great Basin Surety & Insurance Corp. in connection with the EPC Agreement. Both bonds are in the penal amount of $412,000,000 — equal to the full GMP.

The performance bond guarantees TMCG's faithful performance of the EPC Agreement, including the procurement, installation, and commissioning of all backup power systems. In the event that TMCG fails to perform its obligations with respect to the generator systems (e.g., fails to procure generators, fails to install them in accordance with the contract specifications, or fails to commission them by the Substantial Completion date), Great Basin Surety & Insurance Corp. is obligated under the performance bond to step in and either complete the work or compensate IHDC for the cost of completing the work using an alternative contractor.

The payment bond guarantees payment to all subcontractors, suppliers, and laborers providing work, materials, or equipment in connection with the EPC Agreement. This includes generator equipment manufacturers, generator installation subcontractors, and all other parties in the generator procurement supply chain. The payment bond protects IHDC against the risk that TMCG fails to pay its generator suppliers or subcontractors, which could result in mechanics' lien claims against the Project property and disruptions to the construction schedule.

VII. Insurance Considerations for Backup Power Systems

A. Builder's Risk Coverage

During the construction phase, the diesel generators and all associated backup power equipment are covered under the builder's risk insurance policy for the Project. The builder's risk policy has been procured through Northgate Insurance Brokerage, LLC (William Keane, Account Executive) and is underwritten by Great Basin Surety & Insurance Corp. with a policy limit of $412,000,000 and a per-occurrence deductible of $250,000. The builder's risk policy provides all-risk coverage for property damage to the work in progress, including materials, equipment, and supplies delivered to the Project site or in transit to the site.

Given the extended lead times for generator equipment and the possibility that generators may be stored at the manufacturer's facility, a staging location, or a warehouse prior to delivery and installation at the Campus, it is important to confirm that the builder's risk policy includes coverage for equipment in transit and in storage prior to installation. This is typically provided through an inland marine extension or endorsement to the builder's risk policy. We recommend that IHDC instruct Northgate Insurance Brokerage (William Keane) to confirm that the builder's risk policy includes adequate inland marine coverage for the generator equipment — which may represent $33,000,000 to $50,000,000 or more in aggregate value — during the period from manufacturer shipment through installation at the Campus.

Additionally, the builder's risk policy should be reviewed to confirm that it includes coverage for testing and commissioning activities, including load-bank testing, integrated systems testing, and the initial operation of the generators under load. Generator commissioning involves the first operation of newly installed equipment under real-world conditions and carries inherent risks of mechanical failure, fire, or property damage. The builder's risk policy should explicitly cover these risks without any exclusion or limitation for testing and commissioning operations.

B. Operational Property Insurance

Following the issuance of the certificate of occupancy for each building and the transition from construction to operational status, the diesel generators and fuel storage systems must be included in the Campus's operational property insurance program. The target replacement cost value for the Campus-wide operational property insurance program is $600,000,000, which reflects the full replacement cost of all buildings, improvements, equipment, and infrastructure on the Campus.

The operational property insurance program should include, at a minimum, the following coverages applicable to the backup power systems:

• All-risk property coverage for the generators, enclosures, switchgear, ATS equipment, fuel storage tanks, and all associated infrastructure against risks of physical loss or damage, including fire, explosion, windstorm, flood (if available), vandalism, and accidental damage.

• Equipment breakdown / boiler and machinery coverage specifically including the diesel generators, engine control systems, exhaust aftertreatment systems, and associated electrical switchgear. Equipment breakdown coverage provides protection against mechanical and electrical breakdown of equipment, including failures caused by electrical arcing, mechanical failure, operator error, and other causes that may not be covered under standard property insurance forms. Given that the Campus will have approximately 240 MW of diesel generator capacity, with individual generator sets in the multi-megawatt range, equipment breakdown coverage is a critical component of the insurance program.

• Business interruption / loss of income coverage to protect against revenue loss in the event that a generator failure or damage to the backup power system renders a building or portion of a building unable to operate or unable to meet the redundancy requirements of tenant leases.

C. Environmental Liability

The storage of over one million gallons of diesel fuel on the Campus creates meaningful environmental liability exposure. A fuel spill, tank failure, or containment breach could result in soil and groundwater contamination, regulatory enforcement action, third-party claims, and significant remediation costs. This environmental liability must be addressed through a combination of contractual indemnification and insurance.

From a contractual perspective, the Environmental Indemnity Agreement that will be delivered to the construction lenders (Summit National Bank, N.A. as Administrative Agent, Cascade Commercial Lending Corp., and Harborview Trust Company) as a condition of loan closing should be reviewed to confirm that it expressly contemplates fuel storage operations on the Campus. The Environmental Indemnity Agreement typically requires the borrower (Stonebridge Campus Holdings LLC) and the guarantor (IHDC) to indemnify the lenders against any environmental liabilities arising from the Project, including liabilities related to the release of hazardous substances or petroleum products. Given the scale of the fuel storage program, the lenders may require specific representations, warranties, and covenants related to fuel storage compliance, including compliance with SPCC requirements, maintenance of seco

MEMORANDUM
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
TO: Douglas Fairchild, Esq. (Calderwood & Harkness LLP); Leonard Castellano (EVP, Development, Ironhaven Data Centers LLC); Diane Prescott (Kestrel Infrastructure Advisors, LLC)
FROM: Grace Nakamura (Calderwood & Harkness LLP)
DATE: May 19, 2025
RE: Stonebridge Data Center Campus — Backup Power Strategy and Generator Procurement
MATTER NO.: 1043-00002
I. Purpose and Executive Summary
The purpose of this memorandum is to analyze the backup power strategy for the Stonebridge Data Center Campus (the "Campus" or "Project"), located at the intersection of Belmont Ridge Road and Stonebridge Boulevard, unincorporated Loudoun County, Virginia 20148, being developed by Ironhaven Data Centers LLC ("IHDC") through its single-purpose subsidiary, Stonebridge Campus Holdings LLC (to be formed as a Virginia limited liability company). This memorandum is intended to provide the project development team and outside advisors with a comprehensive assessment of the legal, regulatory, contractual, and practical considerations attendant to the backup power program, including generator procurement, fuel storage, environmental permitting, and integration with the broader contractual and financing framework for the Project.
The Campus will consist of four data center buildings (Buildings A through D), each rated at 24 MW of critical IT load, totaling 96 MW of critical IT load across approximately 480,000 square feet of gross floor area. Each building will comprise approximately 120,000 square feet of shell space. The facilities are being designed to serve hyperscale and enterprise tenants requiring the highest levels of power availability and infrastructure redundancy.
Primary utility power will be supplied by Vantage Power Cooperative ("VPC") under the Large Load Service Agreement (VPC Service Application No. LSA-2025-0091) at 120 MVA of contracted demand — encompassing the 96 MW of critical IT load plus mechanical, cooling, lighting, and site overhead loads — for a ten-year term commencing upon substation energization.
The backup power strategy employs a 2N diesel generator configuration for each building, providing full redundancy. Under this architecture, each building will be equipped with two complete, independent sets of diesel generators (an "A-side" and a "B-side"), each capable of independently carrying the building's full critical and mechanical load. This is the most robust form of backup power redundancy available and is consistent with market-standard design for Tier III+ and Tier IV mission-critical data center facilities.
Generator procurement falls within the scope of the Engineering, Procurement, and Construction Agreement (the "EPC Agreement") with Titan-McAllister Construction Group, LLC ("TMCG") and is included in the $412,000,000 Guaranteed Maximum Price ("GMP"). Generator procurement, installation, testing, and commissioning are expressly within TMCG's contractual obligations, and no separate procurement vehicle is required for the generator systems themselves.
This memorandum addresses the following topics: (1) the 2N redundancy architecture and its role in the overall campus design; (2) generator sizing and configuration on a per-building and campus-wide basis; (3) on-site fuel storage requirements and regulatory compliance; (4) environmental permitting considerations, including air quality, noise, and stormwater; (5) integration of generator procurement within the EPC Agreement and the GMP; (6) coordination with the Project's power infrastructure, insurance, and financing documents; and (7) specific recommendations and next steps to support the Project's development timeline.
II. Project Power Architecture Overview
A. Primary Utility Supply
Primary electrical power for the Campus will be provided by Vantage Power Cooperative ("VPC"), a member-owned electric cooperative serving portions of Loudoun County and adjacent jurisdictions. IHDC has applied for and is in the process of negotiating a Large Load Service Agreement ("LLSA") with VPC under VPC Service Application No. LSA-2025-0091. The LLSA will govern the terms and conditions of VPC's provision of primary utility power to the Campus for a ten-year term commencing upon substation energization.
The contracted demand under the LLSA is 120 MVA, which is sized to accommodate the Campus's 96 MW of critical IT load plus approximately 24 MW of mechanical and electrical overhead — including cooling (CRAC/CRAH units, chilled water plants, cooling towers), lighting, fire protection systems, security systems, building management systems, and other ancillary loads. The 120 MVA contracted demand reflects a power factor assumption of approximately 0.80, which is consistent with industry-standard data center electrical design.
To serve the Campus at this scale, VPC will construct a dedicated 230kV/34.5kV step-down substation to be located on the Meridian Parcel (Loudoun County Tax Map Reference Number /95-4A-2///, comprising 19.4 acres, situated adjacent to the Stonebridge Parcel on the east). The substation will be owned and operated by VPC following construction completion but will be constructed by VPC's designated contractor with IHDC funding a line extension contribution of $18,500,000 under the Line Extension Funding Agreement to be executed between Stonebridge Campus Holdings LLC and VPC. The substation easement will be granted by Stonebridge Campus Holdings LLC in favor of VPC on a designated portion of the Meridian Parcel, the precise boundaries of which are to be established by survey and incorporated into the easement instrument prior to commencement of substation construction.
The target date for substation energization is June 1, 2027. This date is a critical path milestone for the Project, as it must precede or coincide with the Substantial Completion date for Building A (August 1, 2027) in order to allow for integrated systems testing and commissioning of the primary electrical distribution system.
The rate structure under the LLSA includes a demand charge of $8.42 per kW per month for years one through five, escalating at 2.5% annually thereafter for the remainder of the ten-year initial term. Energy charges are structured as an at-cost pass-through based on PJM Interconnection day-ahead locational marginal pricing ("LMP") at the applicable pricing node, plus applicable transmission and ancillary service charges. At full contracted demand, the estimated annual utility demand charges alone are calculated as follows: 120,000 kW × $8.42/kW/month × 12 months = $12,124,800 per year. This figure excludes energy charges, which will fluctuate based on actual consumption and prevailing LMP rates, as well as any applicable demand ratchet provisions, power factor adjustment charges, or regulatory surcharges that may be incorporated into the final LLSA.
B. Backup Power — Role in Campus Design
While primary utility power from VPC will serve as the principal source of electricity for the Campus under normal operating conditions, backup diesel generators serve as the critical secondary power source in the event of a utility outage, planned maintenance of VPC's transmission or distribution infrastructure, VPC system failure, or other disruption to the primary utility supply. In the data center industry, uninterrupted power availability is the single most critical performance requirement, and the loss of power to IT equipment — even for a period of seconds — can result in catastrophic data loss, service interruption, and significant financial liability to tenants and their end-users.
Data center industry standards for Tier III+ facilities, as established by the Harborview Corporation and other industry classification bodies, require on-site backup generation capable of sustaining the full critical IT load and associated mechanical systems for extended periods. The 2N generator configuration selected for the Stonebridge Campus represents the highest standard of generator redundancy deployed in the market, ensuring that no single point of failure exists in the backup power path and that the facility can withstand the concurrent failure of an entire generator plant on one side without any loss of power to the IT load.
The backup generator systems complement the uninterruptible power supply ("UPS") systems that will be installed in each building. The UPS systems provide bridging power — typically through battery energy storage — during the brief transition period between the loss of utility power and the full engagement of the diesel generators. Modern UPS systems are designed to provide between five and fifteen minutes of battery-backed power, depending on configuration and load, which is more than sufficient to bridge the gap during generator startup, synchronization, and load transfer. UPS procurement is also within the EPC Agreement's GMP scope and is addressed separately in the electrical infrastructure specifications within the EPC Agreement's Exhibit A (Scope of Work and Technical Specifications). The coordination between UPS systems and generator systems is a critical design interface that TMCG is responsible for managing under the EPC Agreement.
III. 2N Diesel Generator Configuration
A. Redundancy Architecture Explained
The term "2N" refers to a power redundancy architecture in which two fully independent power generation systems are deployed, each individually capable of powering the entire critical IT load and associated mechanical overhead of the building it serves. In this nomenclature, "N" represents the minimum generator capacity required to support the building's full load; "2N" therefore means that twice the minimum required capacity is installed, providing complete redundancy.
For each building on the Stonebridge Campus (each rated at 24 MW critical IT load, with approximately 6 MW of mechanical overhead for a total load of approximately 30 MW), the 2N configuration calls for two independent generator plants — designated the "A-side" and "B-side" — each rated at or above 30 MW of generation capacity. Under normal backup conditions (i.e., a utility outage without concurrent generator failure), only one side is required to carry the full building load; the second side provides complete redundancy and is available as a backup to the backup.
This architecture eliminates single points of failure in the backup power system and delivers several additional operational advantages. First, it allows for maintenance, testing, and repair of one entire generator side while the other remains fully operational and ready to respond to a utility outage. This is a significant operational benefit, as diesel generators require periodic maintenance, oil changes, coolant replacement, and load-bank testing, all of which can be performed on one side without reducing the facility's backup power capability. Second, the 2N configuration provides protection against the scenario in which a utility outage occurs simultaneously with a generator failure — a low-probability but high-consequence event that a lesser redundancy architecture (such as N+1 or N+2) might not fully address. Third, the 2N architecture supports the dual-bus electrical distribution topology that is a hallmark of mission-critical data center design.
Each generator side connects to independent electrical distribution paths — commonly referred to as a "dual-bus" or "A/B bus" architecture — that feed independent UPS systems, power distribution units ("PDUs"), and ultimately deliver power to the IT load through redundant power feeds. This means that each server rack, cabinet, or cage within the data hall receives power from both the A-side and B-side distribution paths, ensuring continuous power availability even in the event of a complete failure of one distribution path, including the generator, UPS, switchgear, and cabling associated with that path.
B. Generator Sizing Per Building
The generator sizing for each building is driven by the total electrical load that the generators must support during a utility outage. This total load comprises the critical IT load plus the mechanical and electrical overhead loads necessary to sustain the IT environment.
For each building on the Campus:
•  Critical IT Load: 24 MW
•  Mechanical and Electrical Overhead: Estimated at approximately 25% of the critical IT load, equating to approximately 6 MW per building. This overhead includes chilled water plant operation, cooling tower fans, computer room air conditioning/air handling units, lighting, fire suppression systems, security and access control systems, building management systems, and other ancillary loads.
•  Total Per-Building Load to be Supported by Generators: Approximately 30 MW.
Under the 2N architecture, each "N" side (A-side and B-side) must independently provide generator capacity of approximately 30 MW. This figure is preliminary and will be refined during detailed electrical design by TMCG's engineering team, taking into account diversity factors, demand factors, power factor corrections, and specific equipment selections. However, for purposes of this memorandum and for contractual planning, the 30 MW per-side figure serves as the baseline design parameter.
The anticipated configuration for each generator side is multiple generator sets operating in parallel, rather than a single monolithic generator unit. For example, each side might comprise six generator sets rated at approximately 5 MW each, or an equivalent modular configuration (e.g., five units at 6 MW each, or eight units at 3.75 MW each). The specific number, sizing, and manufacturer of generator sets will be determined by TMCG during detailed design and will be documented in the generator procurement specifications within the EPC Agreement's Exhibit A. Parallel operation of multiple generator sets is standard practice in data center design, as it provides additional internal redundancy within each generator side (if one set within a side fails to start, the remaining sets can still carry a substantial portion of the load), and it allows for modular procurement, installation, and maintenance.
Each generator side will be equipped with automatic transfer switches ("ATS") that detect utility power failure and initiate the generator start sequence automatically, without human intervention. The ATS systems are the critical interface between the utility power feed and the generator plant and must be designed, procured, and commissioned as an integrated system with the generators and the broader electrical distribution infrastructure.
The total generator capacity on a per-building and campus-wide basis is summarized as follows:
The total campus-wide generator capacity of approximately 240 MW is a substantial installation and represents one of the largest backup power deployments in the Northern Virginia data center market. This scale underscores the importance of the procurement, permitting, and commissioning workstreams discussed in this memorandum.
C. Generator Equipment Specifications (Preliminary)
The following preliminary equipment specifications establish the baseline technical requirements for the diesel generator systems. These specifications are subject to refinement during TMCG's detailed design phase and will be formally documented in the generator procurement specifications within Exhibit A to the EPC Agreement.
Fuel Type. All generators will operate on #2 ultra-low sulfur diesel ("ULSD"), which is the standard fuel for stationary diesel generators in the United States. ULSD has a maximum sulfur content of 15 parts per million and is required under EPA regulations for all on-road and most off-road diesel applications. The use of ULSD facilitates compliance with EPA Tier 4 Final emission standards and is compatible with exhaust aftertreatment systems, including diesel particulate filters and selective catalytic reduction systems.
Engine Type. The generator engines will be either high-speed diesel engines (typically 1,800 RPM, common for generator sets in the 1–3 MW range) or medium-speed diesel engines (typically 900–1,200 RPM, common for larger generator sets in the 3–6+ MW range). The selection between high-speed and medium-speed engines will be made by TMCG during detailed design based on factors including unit capacity, fuel efficiency, maintenance requirements, noise characteristics, footprint, weight, and manufacturer availability. Medium-speed engines generally offer superior fuel efficiency, longer service life, and lower noise output per unit of power but are physically larger and heavier, which has implications for foundation design, building structural loading, and equipment access.
Emissions Standards. All diesel generators installed at the Campus must comply with EPA Tier 4 Final emission standards for compression-ignition internal combustion engines, as codified in 40 CFR Part 1039. Tier 4 Final represents the most stringent federal emission standard currently in effect and imposes significant reductions in allowable emissions of particulate matter ("PM"), nitrogen oxides ("NOx"), carbon monoxide ("CO"), and hydrocarbons ("HC") relative to prior emission tiers. In addition, all generators must comply with all applicable Virginia Department of Environmental Quality ("VDEQ") air quality requirements, including any state-level emission standards, permitting conditions, or operational limitations imposed through the air quality permit process. The implications of these emission standards for equipment cost, aftertreatment systems, and permitting strategy are discussed further in Section V of this memorandum.
Automatic Start Capability. All generators must be capable of achieving full rated load acceptance within ten (10) seconds of receiving a utility power failure signal from the automatic transfer switch system. This start-to-load time is a critical performance parameter that directly affects the duration for which the UPS battery systems must bridge the gap between utility power loss and generator power availability. A ten-second response time is consistent with Tier III+ and Tier IV data center design standards and is achievable with modern diesel generator sets equipped with battery-powered electric starting systems and pre-lubrication systems.
Noise Attenuation. All generators will be housed in weather-protective, sound-attenuated enclosures designed to reduce noise emissions to levels compliant with the Loudoun County noise ordinance at the property boundaries of the Stonebridge Parcel. The specific noise attenuation requirements will be confirmed during detailed design and proffer negotiations in connection with the ZMOD application (discussed in Sections V.C and IX.B below). Typical sound-attenuated enclosures for large diesel generators achieve noise reductions of 25–40 dBA relative to the unattenuated engine noise output, bringing the noise level at one meter from the enclosure to approximately 75–85 dBA (compared to 85–105 dBA for unattenuated engines of similar capacity). Additional noise mitigation measures, such as sound barrier walls, exhaust silencers, and setback distances, may be required depending on the results of the acoustic study recommended in Section X below.
Day Tanks and Fuel Transfer Systems. Each generator set will be equipped with an integral day tank (typically 500–1,000 gallons capacity) that provides an immediate fuel supply for engine operation. Day tanks are automatically refilled from the building's bulk fuel storage tanks via electrically powered fuel transfer pumps. The fuel transfer system design, including piping, pumps, controls, leak detection, and overfill prevention, will be specified by TMCG during detailed design and must comply with all applicable building code, fire code, and environmental regulatory requirements.
IV. Fuel Storage Requirements
A. On-Site Fuel Storage Capacity
Adequate on-site fuel storage is essential to the backup power program, as the generators' utility is limited by the quantity of fuel available on-site at the time of a utility outage. The design standard for the Stonebridge Campus is a minimum of 48 hours of continuous runtime at full load per building, consistent with industry best practice for mission-critical data center facilities and with the anticipated requirements of the construction and permanent lenders.
The 48-hour runtime target is based on the assumption that fuel resupply will be available within that period under most foreseeable outage scenarios. It provides a substantial buffer beyond the typical utility outage duration (which, in the Northern Virginia market, is generally measured in minutes to hours for planned maintenance and in hours to days for severe weather events or equipment failures) and allows sufficient time for IHDC to activate emergency fuel resupply agreements. The 48-hour standard is also consistent with the requirements of major hyperscale and enterprise data center tenants, who typically mandate minimum fuel storage durations of 24 to 72 hours as a condition of their lease agreements.
The fuel consumption estimate for each building at full load (with one "N" side of generators operating and carrying the full approximately 30 MW building load) is approximately 5,500 to 6,500 gallons per hour. This estimate is based on typical fuel consumption rates for modern diesel generator sets of the anticipated capacity, which generally consume between 55 and 75 gallons per hour per megawatt of output, depending on engine type, load factor, and efficiency. The precise fuel consumption rate will be confirmed during detailed design based on the specific generator equipment selections made by TMCG.
Using a midpoint consumption estimate of approximately 6,000 gallons per hour, the required fuel storage per building is calculated as follows:
48 hours × 6,000 gallons/hour = 288,000 gallons per building
The total campus fuel storage capacity, across all four buildings, is therefore approximately:
288,000 gallons × 4 buildings = 1,152,000 gallons (approximately 27,429 barrels)
This represents a very substantial quantity of diesel fuel and triggers a number of federal, state, and local regulatory requirements, as discussed in Sections IV.B and V below.
The fuel storage infrastructure will consist of above-ground steel tanks with secondary containment, in accordance with VDEQ and federal EPA Spill Prevention, Control, and Countermeasure ("SPCC") requirements. The tanks will be either double-walled (with integral secondary containment) or single-walled within diked containment areas providing 110% of the tank's capacity. The specific tank configuration, sizing (number and capacity of individual tanks per building), and placement will be determined during detailed design by TMCG in coordination with Lumen Ridge Engineering, PLLC and will be subject to review and approval by the Loudoun County Fire marshal and VDEQ.
B. Fuel Storage Regulatory Compliance
The on-site storage of diesel fuel in the quantities contemplated for the Stonebridge Campus triggers several overlapping layers of federal, state, and local regulatory requirements.
Federal SPCC Requirements. An SPCC Plan is required under 40 CFR Part 112 for any facility that stores more than 1,320 gallons of oil (including diesel fuel) in above-ground containers or more than 42,000 gallons in underground storage, and that could reasonably be expected to discharge oil to navigable waters or adjoining shorelines. The Campus will far exceed the above-ground storage threshold — by a factor of approximately 870 — and an SPCC Plan must therefore be developed, certified by a licensed Professional Engineer, and fully implemented prior to the delivery of any diesel fuel to the Campus. The SPCC Plan must address, at a minimum: facility description and oil storage inventory; potential discharge locations and drainage pathways; containment and diversionary structures; inspections, testing, and recordkeeping; personnel training; security measures; and discharge prevention and response procedures. The SPCC Plan must be reviewed and updated at least every five years, or whenever a material change occurs in the facility's oil storage capacity or configuration.
Virginia Uniform Statewide Building Code and Virginia Fire Prevention Code. The storage and handling of diesel fuel on the Campus must comply with the Virginia Uniform Statewide Building Code (13 VAC 5-63) and the Virginia Fire Prevention Code (13 VAC 5-51, incorporating NFPA 1 and the International Fire Code by reference). These codes establish requirements for tank construction and labeling, tank spacing and setback distances from buildings and property lines, fire suppression and detection systems for fuel storage areas, emergency venting, spill containment, and electrical classification of areas adjacent to fuel storage. Compliance with these codes is enforced through the building permit process administered by Loudoun County, and the fuel storage installation must be inspected and approved prior to use.
Loudoun County Fire marshal. The Loudoun County Fire marshal's Office has jurisdiction over the permitting, inspection, and approval of fuel storage installations within unincorporated Loudoun County. The Fire marshal's review will encompass tank placement, fire protection systems, access for fire apparatus, emergency shutoff and containment, and compliance with the Virginia Fire Prevention Code. Early coordination with the Fire marshal is recommended to identify any site-specific requirements or concerns that could affect generator pad and fuel tank layout.
Coordination with Environmental Consultants. Pendleton Environmental Associates, Inc. (Dr. Renata Volkov, Principal) has been engaged to provide environmental consulting services for the Project, including Phase I and Phase II Environmental Site Assessments, environmental compliance review, and SPCC Plan preparation. The fuel storage regulatory compliance workstream should be closely coordinated with Dr. Volkov's team to ensure that all applicable requirements are identified and addressed in a timely manner.
C. Fuel Supply and Delivery Logistics
IHDC will need to arrange fuel supply contracts with one or more regional diesel distributors to provide initial fuel fill and ongoing replenishment for the Campus's fuel storage systems. Fuel supply procurement is outside the scope of the EPC Agreement with TMCG and will be managed directly by IHDC, with advisory support from Kestrel Infrastructure Advisors, LLC (Diane Prescott).
Campus access for fuel delivery trucks — typically large tanker trucks with capacities of 7,500 to 9,000 gallons each — must be accommodated in the site civil design. This includes access road pavement design sufficient to support loaded truck weights (approximately 80,000 pounds gross vehicle weight for a fully loaded tanker truck), turning radii adequate for tractor-trailer combinations, and routing that avoids conflicts with other campus operations and minimizes disruption to occupied data center buildings. Coordination with Lumen Ridge Engineering, PLLC (Carlos Esteban, PE), the civil engineering firm for the Project, is required to ensure that the site civil design — including access roads, drive aisles, and fuel delivery staging areas — meets these requirements. Mr. Esteban's team should also confirm that the weight-bearing capacity and turning radius specifications for the access roads and internal campus circulation routes are consistent with the dimensions and weight of the fuel delivery vehicles to be used.
Additionally, IHDC should negotiate and execute emergency fuel resupply agreements with one or more diesel distributors to ensure priority fuel delivery in the event of an extended utility outage exceeding the 48-hour on-site fuel supply. Extended outage scenarios, while infrequent, can arise from severe weather events (hurricanes, ice storms, derechos), widespread grid failures, or prolonged equipment failures at the utility level. Emergency resupply agreements typically provide for guaranteed response times (e.g., delivery within 4–8 hours of request), pre-negotiated pricing, and priority allocation during periods of high demand (when multiple facilities in the region may be competing for limited fuel supply). The negotiation and execution of such agreements should be initiated well in advance of Campus energization and generator commissioning.
V. Environmental Permitting Considerations
A. Air Quality Permitting — Virginia Department of Environmental Quality (VDEQ)
The diesel generators to be installed at the Stonebridge Campus are classified as stationary internal combustion engines and are subject to air quality permitting under the Virginia Air Pollution Control Law (Virginia Code § 10.1-1300 et seq.) and the Virginia Air Pollution Control Board regulations (9 VAC 5). The applicable permitting requirements depend on the intended use of the generators and the aggregate emissions from the facility.
Generators that are used exclusively for emergency standby purposes — defined as operation during actual utility power outages and limited testing and maintenance — may qualify for exemption from minor New Source Review ("NSR") permitting, provided that the generators are operated less than 500 hours per year for non-emergency purposes (i.e., testing and maintenance). This exemption is critical to the Project's permitting strategy and cost structure, as the process for obtaining a minor NSR permit or a state operating permit is significantly more time-consuming, costly, and operationally burdensome than the alternative of qualifying for the emergency-standby exemption.
However, if the generators will be used for purposes beyond emergency standby — including, for example, demand response programs (in which generators are operated during periods of high grid demand to reduce the facility's utility consumption and earn demand-response payments), peak shaving (in which generators are operated during high-cost pricing periods to reduce utility energy charges), or islanding for testing purposes in excess of the 500-hour annual limitation — a more rigorous permit application may be required. Depending on the aggregate potential-to-emit from the generator fleet, this could involve a minor NSR permit, a state operating permit, or, in extreme cases, a major NSR permit under the federal Prevention of Significant Deterioration ("PSD") program. Given the total installed generator capacity of approximately 240 MW campus-wide, the aggregate potential-to-emit — if the generators were operated on an unrestricted basis — would likely exceed major source thresholds for one or more criteria pollutants, particularly NOx. Maintaining the emergency-standby classification is therefore essential to avoid triggering major source permitting requirements.
Recommendation: Generator use should be strictly restricted to emergency standby and limited maintenance and testing operations to maintain the favorable emergency-standby permitting classification. IHDC should not participate in demand response or peak-shaving programs using the diesel generators unless and until a thorough analysis of the permitting implications has been completed and any necessary permits have been obtained. This restriction should be reflected in the Campus's operational procedures and, if applicable, in the terms of any lease agreements with tenants that address backup power operations.
In addition to state-level permitting requirements, the generators are subject to the National Emission Standards for Hazardous Air Pollutants ("NESHAP") for Reciprocating Internal Combustion Engines ("RICE"), codified at 40 CFR Part 63, Subpart ZZZZ. This regulation applies to stationary reciprocating internal combustion engines (including diesel generators) and imposes operational limitations, maintenance requirements, and recordkeeping obligations. For new emergency-standby diesel engines that meet EPA Tier 4 Final emission standards, the Subpart ZZZZ requirements are generally manageable and consist primarily of operational hour limitations (consistent with the emergency-standby use restriction discussed above), periodic maintenance in accordance with manufacturer recommendations, and maintenance of operating records. Compliance with Subpart ZZZZ should be incorporated into the Campus's environmental management system and operational procedures.
B. EPA Tier 4 Final Emissions Compliance
As noted in Section III.C above, all new diesel generators installed at the Campus must meet EPA Tier 4 Final emission standards for compression-ignition internal combustion engines, as codified in 40 CFR Part 1039. Tier 4 Final standards represent the most stringent federal emission limits currently applicable to diesel engines and impose the following approximate emission limits (values vary by engine power category):
•  Particulate Matter (PM): 0.02 g/kW-hr (approximately 90% reduction from Tier 1 standards)
•  Nitrogen Oxides (NOx): 0.40 g/kW-hr (approximately 90% reduction from Tier 1 standards)
•  Carbon Monoxide (CO): 3.5 g/kW-hr
•  Hydrocarbons (HC): 0.19 g/kW-hr
Achieving Tier 4 Final compliance typically requires exhaust aftertreatment systems, which may include diesel particulate filters ("DPF") to reduce PM emissions, selective catalytic reduction ("SCR") systems to reduce NOx emissions (using diesel exhaust fluid, also known as urea or "DEF"), and diesel oxidation catalysts ("DOC") to reduce CO and HC emissions. These aftertreatment systems add to the capital cost of the generator equipment (typically 10–20% above the cost of a comparable Tier 2 generator set), increase ongoing maintenance requirements (including DPF regeneration, SCR system fluid replenishment, and catalyst replacement), and increase the physical footprint and weight of each generator set (which has implications for foundation design and enclosure sizing).
TMCG is responsible for confirming engine manufacturer compliance with Tier 4 Final standards and specifying the aftertreatment systems and associated infrastructure (exhaust piping, DEF storage and delivery systems, control systems, etc.) in the detailed generator design. The EPC Agreement's Exhibit A should include specific language requiring Tier 4 Final compliance and should allocate responsibility for aftertreatment system procurement, installation, commissioning, and warranty to TMCG.
C. Noise Permitting and Mitigation
Diesel generators, particularly large generator sets operating at full load, produce significant noise. Typical noise output for a large diesel generator set is 85–105 dBA at one meter from the unattenuated engine, depending on engine size, speed, and configuration. This noise level substantially exceeds residential and commercial noise standards and, if unmitigated, could create significant nuisance and regulatory compliance issues for the Campus.
The Loudoun County Zoning Ordinance includes noise performance standards that establish maximum permissible noise levels at property boundaries, with different limits applicable to different zoning districts, times of day, and noise sources. The specific noise limits applicable to the Campus will depend on the zoning classification of the Stonebridge Parcel (currently agricultural, to be rezoned to a data center-appropriate zoning district through the ZMOD application) and the zoning classification of adjacent parcels. Given the Campus's location in an area that is transitioning from agricultural and rural uses to industrial and data center use, the noise standards at the property boundaries may be particularly sensitive, especially along boundaries adjacent to parcels that retain residential or agricultural zoning.
Generator noise must be mitigated through a combination of engineering controls, including sound-attenuated enclosures (as discussed in Section III.C), exhaust silencers, sound barrier walls, strategic generator placement (maximizing setback distances from property boundaries and noise-sensitive receptors), and, potentially, landscaping buffers or earthen berms. The specific mitigation measures required will depend on the results of an acoustic study that models generator noise propagation at the property boundaries and compares projected noise levels to applicable regulatory standards.
Proffer commitments submitted in connection with the ZMOD application (expected Docket No. ZMOD-2025-0038, with a filing target of May 30, 2025) may include specific noise-level caps or noise mitigation commitments related to generator operations. These proffer terms should be carefully negotiated to ensure that they are achievable with commercially available noise attenuation technology and do not impose unreasonable operational constraints on the Campus. Coordination with Thomas Ashcroft of Ashcroft & Wynn, P.C. ("A&W"), the land use counsel for the Project, and Alan Mercer of Cornerstone Land Use Consulting, LLC, the land use planning consultant, is essential to ensure that the noise-related proffer terms are appropriately drafted and that the generator locations and noise mitigation measures depicted on the site plan submitted with the ZMOD application are consistent with the detailed generator design.
D. Stormwater and Containment
The fuel storage areas associated with the backup generator systems require careful stormwater management design to prevent diesel fuel from entering the stormwater management system and, ultimately, receiving waters. Diesel fuel is a regulated pollutant under the Clean Water Act and Virginia's water quality regulations, and even small quantities of diesel in stormwater runoff can create significant environmental liability and regulatory enforcement exposure.
Stormwater management for fuel storage areas must be coordinated with Lumen Ridge Engineering, PLLC (Carlos Esteban, PE), which is responsible for the overall site civil engineering design, including the stormwater management facility design and the Stormwater Management Facility Easement and Maintenance Agreement. The fuel storage areas should be designed to segregate stormwater runoff from areas that may come into contact with diesel fuel (e.g., tank containment areas, fuel transfer piping corridors, and truck unloading areas) from the general site stormwater system. This is typically accomplished through the use of diked containment areas, covered fuel storage enclosures, oil-water separators, and dedicated stormwater treatment systems for fuel storage areas.
All fuel tanks must be equipped with secondary containment capable of holding at least 110% of the capacity of the largest tank within the containment area, consistent with SPCC requirements and Virginia Fire Prevention Code requirements. Secondary containment may be provided through double-walled tank construction (providing integral containment within the tank structure), concrete dike walls surrounding single-walled tanks, or a combination of these approaches. The secondary containment system must be designed to be impermeable and must be equipped with drainage controls that allow accumulated rainwater to be tested and released only after confirmation that it is free of petroleum contamination.
VDEQ requires the preparation and implementation of a Stormwater Pollution Prevention Plan ("SWPPP") for the Campus during both the construction phase (as a condition of the Construction General Permit for land-disturbing activities) and the operational phase (if the facility is subject to the Industrial Stormwater General Permit). The SWPPP must specifically address fuel storage and handling areas and must include best management practices ("BMPs") for spill prevention, containment, and cleanup, as well as inspection and monitoring procedures for fuel storage areas.
E. Phase I/Phase II ESA Considerations
The environmental due diligence program for the Project is being conducted by Pendleton Environmental Associates, Inc. (Dr. Renata Volkov, Principal), and includes Phase I and Phase II Environmental Site Assessments ("ESAs") for both the Stonebridge Parcel and the Meridian Parcel. The Phase I ESA completion target is June 1, 2025; the Phase II ESA completion target for the Stonebridge Parcel is July 1, 2025.
The Phase I ESA addresses existing environmental conditions on the site, including historical land uses, potential sources of contamination, and recognized environmental conditions ("RECs"). A known issue identified during preliminary environmental investigation is the potential for residual pesticide contamination in the northwest quadrant of the Stonebridge Parcel — an area of approximately 4.2 acres — attributable to former agricultural use of the property. This potential contamination area requires further investigation through the Phase II ESA, which will include soil and groundwater sampling to delineate the nature and extent of any contamination and to assess the potential need for remediation or engineering controls.
The potential presence of residual pesticides in the northwest quadrant of the Stonebridge Parcel is directly relevant to the backup power system design, as the placement of generator pads, fuel storage tanks, and associated infrastructure in an area with known or suspected soil or groundwater contamination could complicate construction (due to the need for special handling and disposal of contaminated soils excavated during foundation construction), create additional environmental liability (due to the commingling of diesel fuel storage operations with pre-existing soil contamination), and trigger additional regulatory requirements (such as site remediation or the implementation of engineering controls as conditions of building permits or environmental permits).
Recommendation: Generator pads and fuel storage tank locations should be sited away from the northwest quadrant of the Stonebridge Parcel — the approximately 4.2-acre area identified as having potential residual pesticide contamination — pending the completion and review of the Phase II ESA results. The final locations of generator pads and fuel tanks should be determined only after the Phase II ESA results are available and any necessary remediation measures or engineering controls have been identified and incorporated into the site design. This recommendation should be communicated to TMCG and Lumen Ridge Engineering to ensure that it is reflected in the detailed site plan and generator layout drawings.
VI. EPC Contract Integration — Generator Procurement Within GMP
A. Confirmation of Scope Inclusion
The EPC Agreement with Titan-McAllister Construction Group, LLC (GMP: $412,000,000) expressly includes within the GMP scope the procurement, delivery, installation, testing, and commissioning of all backup diesel generators and all associated equipment, including but not limited to: generator sets and engines; enclosures and sound attenuation systems; exhaust systems and aftertreatment equipment (DPF, SCR, DOC); fuel day tanks and bulk fuel storage tanks; fuel transfer piping, pumps, and controls; automatic transfer switches and paralleling switchgear; generator control systems and monitoring equipment; and all structural foundations, electrical connections, and site improvements necessary for the installation and operation of the backup power systems.
The scope inclusion is documented in the following EPC Agreement exhibits:
•  Exhibit A (Scope of Work and Technical Specifications): The generator systems are included under the "Electrical Infrastructure and Backup Power" division of the scope of work. Exhibit A establishes the baseline technical specifications for the generator systems, including minimum capacity, redundancy configuration (2N), fuel type, emissions compliance standards, start-to-load time requirements, and noise attenuation requirements.
•  Exhibit B (GMP Schedule and Budget): Generator procurement is a specifically identified line item within the per-building cost allocation of $103,000,000 per building ($412,000,000 ÷ 4 buildings). The GMP budget allocates costs across major work categories, and the backup power systems (generators, fuel storage, switchgear, and ATS) are separately identified to facilitate cost tracking, draw request documentation, and budget variance analysis.
Because the generator systems are fully within the GMP scope, IHDC is not required to procure generators through a separate contract or procurement process. TMCG bears full responsibility for generator procurement, including manufacturer selection, specification development, purchase order issuance, quality assurance and quality control, factory acceptance testing, delivery coordination, installation, and commissioning. Any cost overruns on generators are absorbed within the GMP unless the scope is modified through an approved change order process in accordance with the change order provisions of the EPC Agreement.
B. Procurement and Lead Time Considerations
Large diesel generator sets in the 2+ MW capacity range currently have manufacturer lead times of approximately 40 to 52 weeks from order placement to delivery. These lead times reflect ongoing supply chain constraints in the generator manufacturing industry, driven by high demand from the data center sector (particularly in Northern Virginia, which is the largest data center market in the world), semiconductor supply limitations affecting engine control systems, and limited manufacturing capacity for Tier 4 Final compliant engines and aftertreatment systems. Lead times for certain manufacturers and product lines may be even longer, depending on current order backlogs and manufacturing schedules.
Given the target date for issuance of the Notice to Proceed ("NTP") under the EPC Agreement of November 1, 2025, and the Substantial Completion target for Building A of August 1, 2027 — representing a 21-month construction window for the first building — generator procurement orders must be placed promptly after NTP and potentially even earlier to ensure that generator equipment is delivered and available for installation within the construction schedule.
Specifically, if NTP is issued on November 1, 2025, and generator lead times are 40–52 weeks, generator equipment would not be delivered until August 2026 through October 2026 at the earliest. This delivery timeline is consistent with a 21-month construction schedule for Building A (Substantial Completion August 1, 2027), but it leaves very little margin for procurement delays, manufacturing defects, shipping damage, or other supply chain disruptions. If generator delivery is delayed beyond October 2026, it could jeopardize the Building A Substantial Completion milestone and trigger liquidated damages exposure under the EPC Agreement.
To mitigate this supply chain risk, we recommend that the EPC Agreement include a specific provision allowing early-release procurement of generators and other long-lead electrical equipment. An early-release procurement authorization would permit TMCG to issue purchase orders for generators and selected long-lead equipment promptly after NTP (or, potentially, even prior to NTP subject to appropriate contractual protections), without waiting for the completion of all detailed design and engineering work. Early-release procurement is a common practice in data center EPC contracting and is specifically contemplated by the construction schedule in Exhibit C to the EPC Agreement.
TMCG's designee for generator procurement coordination is Michelle Tran, SVP of Data Center Programs. Ms. Tran's team should be requested to provide a detailed generator procurement schedule — including manufacturer selection milestones, purchase order dates, factory acceptance testing dates, delivery dates, installation milestones, and commissioning milestones — within the overall construction schedule documented in Exhibit C to the EPC Agreement.
C. Cost and GMP Allocation
The generator and backup power systems represent a significant component of the per-building GMP. Based on industry benchmarks and preliminary cost estimates provided by TMCG during the GMP negotiation process, the generator and backup power systems (including generators, enclosures, switchgear, ATS, fuel storage, and emissions control equipment) are estimated to constitute approximately 8% to 12% of the per-building hard costs. Applied to the per-building GMP allocation of $103,000,000, this yields an estimated per-building generator and backup power cost range of approximately $8,200,000 to $12,400,000.
On a campus-wide basis, the total estimated cost of the generator and backup power systems across all four buildings is approximately $33,000,000 to $50,000,000. This cost is fully included within the overall $412,000,000 GMP and does not represent an additional capital budget requirement. The precise cost breakdown will be detailed in the Exhibit B line items once TMCG completes its detailed cost estimate during the early design phase.
On a per-MW basis, the estimated cost of backup power capacity (including both generator equipment and associated infrastructure but excluding fuel costs) ranges from approximately $137,500/MW to $208,333/MW of installed generator capacity (based on the 240 MW total campus-wide generator capacity and the $33M–$50M estimated total cost). This is generally consistent with current market pricing for Tier 4 Final compliant diesel generator installations in Northern Virginia, though actual costs may vary based on manufacturer selection, aftertreatment system requirements, site-specific installation conditions, and prevailing market conditions at the time of procurement.
As noted above, any cost overruns on generators or other backup power system components are absorbed within the GMP. TMCG bears the cost risk on generator procurement and installation, and IHDC's exposure is limited to the GMP (subject to approved change orders). Conversely, if generator costs come in below the estimated allocation, the savings remain within the GMP and may contribute to reducing the overall project cost to within the GMP ceiling, or may offset cost overruns in other budget categories.
D. Liquidated Damages and Generator Commissioning
The EPC Agreement provides for liquidated damages in the event that TMCG fails to achieve Substantial Completion by the specified milestone dates. The liquidated damages rate is $125,000 per calendar day per building, capped at 10% of the per-building GMP allocation — i.e., a maximum of $10,300,000 per building ($103,000,000 × 10%). These liquidated damages reflect IHDC's estimated actual damages from delay, including lost rental income, increased financing carrying costs, and reputational harm, and have been negotiated as a reasonable pre-estimate of such damages.
Critically, the definition of "Substantial Completion" under the EPC Agreement requires the commissioning and testing of all backup power systems, including the diesel generators, ATS equipment, paralleling switchgear, fuel storage and transfer systems, and the integrated operation of these systems with the UPS systems and the overall electrical distribution infrastructure. A building cannot achieve Substantial Completion — and the liquidated damages clock does not stop running — until the backup power systems have been fully tested and are demonstrated to be operational and capable of performing their intended function.
The required commissioning and testing program for the backup power systems includes, at a minimum:
•  Individual generator set testing: Each generator set must be started, run, and verified to achieve rated output and to meet Tier 4 Final emission standards.
•  Load-bank testing: Each generator side (A-side and B-side) must be tested under full rated load using resistive load banks to verify capacity, voltage regulation, frequency stability, and fuel consumption rates.
•  Integrated systems testing: The complete backup power system (generators, ATS, switchgear, UPS, and electrical distribution) must be tested in an integrated fashion to verify that the automatic transfer sequence operates correctly — i.e., that a simulated utility power failure triggers generator start, ATS transfer, and seamless load transfer from utility to generator power, and that the reverse transfer (from generator back to utility power upon utility restoration) also operates correctly.
•  2N redundancy verification: Testing must verify that each generator side can independently carry the full building load and that the failure of one complete side does not affect power availability to the IT load through the other side.
The Substantial Completion milestone dates under the EPC Agreement are as follows:
Any delay in generator procurement, delivery, installation, or commissioning that causes TMCG to miss these Substantial Completion dates will expose TMCG to liquidated damages. This creates a strong contractual incentive for TMCG to manage the generator procurement timeline aggressively and to prioritize generator commissioning within the overall construction schedule.
E. Performance and Payment Bonds
Generator procurement and installation are covered under the performance bond and payment bond issued by Great Basin Surety & Insurance Corp. in connection with the EPC Agreement. Both bonds are in the penal amount of $412,000,000 — equal to the full GMP.
The performance bond guarantees TMCG's faithful performance of the EPC Agreement, including the procurement, installation, and commissioning of all backup power systems. In the event that TMCG fails to perform its obligations with respect to the generator systems (e.g., fails to procure generators, fails to install them in accordance with the contract specifications, or fails to commission them by the Substantial Completion date), Great Basin Surety & Insurance Corp. is obligated under the performance bond to step in and either complete the work or compensate IHDC for the cost of completing the work using an alternative contractor.
The payment bond guarantees payment to all subcontractors, suppliers, and laborers providing work, materials, or equipment in connection with the EPC Agreement. This includes generator equipment manufacturers, generator installation subcontractors, and all other parties in the generator procurement supply chain. The payment bond protects IHDC against the risk that TMCG fails to pay its generator suppliers or subcontractors, which could result in mechanics' lien claims against the Project property and disruptions to the construction schedule.
VII. Insurance Considerations for Backup Power Systems
A. Builder's Risk Coverage
During the construction phase, the diesel generators and all associated backup power equipment are covered under the builder's risk insurance policy for the Project. The builder's risk policy has been procured through Northgate Insurance Brokerage, LLC (William Keane, Account Executive) and is underwritten by Great Basin Surety & Insurance Corp. with a policy limit of $412,000,000 and a per-occurrence deductible of $250,000. The builder's risk policy provides all-risk coverage for property damage to the work in progress, including materials, equipment, and supplies delivered to the Project site or in transit to the site.
Given the extended lead times for generator equipment and the possibility that generators may be stored at the manufacturer's facility, a staging location, or a warehouse prior to delivery and installation at the Campus, it is important to confirm that the builder's risk policy includes coverage for equipment in transit and in storage prior to installation. This is typically provided through an inland marine extension or endorsement to the builder's risk policy. We recommend that IHDC instruct Northgate Insurance Brokerage (William Keane) to confirm that the builder's risk policy includes adequate inland marine coverage for the generator equipment — which may represent $33,000,000 to $50,000,000 or more in aggregate value — during the period from manufacturer shipment through installation at the Campus.
Additionally, the builder's risk policy should be reviewed to confirm that it includes coverage for testing and commissioning activities, including load-bank testing, integrated systems testing, and the initial operation of the generators under load. Generator commissioning involves the first operation of newly installed equipment under real-world conditions and carries inherent risks of mechanical failure, fire, or property damage. The builder's risk policy should explicitly cover these risks without any exclusion or limitation for testing and commissioning operations.
B. Operational Property Insurance
Following the issuance of the certificate of occupancy for each building and the transition from construction to operational status, the diesel generators and fuel storage systems must be included in the Campus's operational property insurance program. The target replacement cost value for the Campus-wide operational property insurance program is $600,000,000, which reflects the full replacement cost of all buildings, improvements, equipment, and infrastructure on the Campus.
The operational property insurance program should include, at a minimum, the following coverages applicable to the backup power systems:
•  All-risk property coverage for the generators, enclosures, switchgear, ATS equipment, fuel storage tanks, and all associated infrastructure against risks of physical loss or damage, including fire, explosion, windstorm, flood (if available), vandalism, and accidental damage.
•  Equipment breakdown / boiler and machinery coverage specifically including the diesel generators, engine control systems, exhaust aftertreatment systems, and associated electrical switchgear. Equipment breakdown coverage provides protection against mechanical and electrical breakdown of equipment, including failures caused by electrical arcing, mechanical failure, operator error, and other causes that may not be covered under standard property insurance forms. Given that the Campus will have approximately 240 MW of diesel generator capacity, with individual generator sets in the multi-megawatt range, equipment breakdown coverage is a critical component of the insurance program.
•  Business interruption / loss of income coverage to protect against revenue loss in the event that a generator failure or damage to the backup power system renders a building or portion of a building unable to operate or unable to meet the redundancy requirements of tenant leases.
C. Environmental Liability
The storage of over one million gallons of diesel fuel on the Campus creates meaningful environmental liability exposure. A fuel spill, tank failure, or containment breach could result in soil and groundwater contamination, regulatory enforcement action, third-party claims, and significant remediation costs. This environmental liability must be addressed through a combination of contractual indemnification and insurance.
From a contractual perspective, the Environmental Indemnity Agreement that will be delivered to the construction lenders (Summit National Bank, N.A. as Administrative Agent, Cascade Commercial Lending Corp., and Harborview Trust Company) as a condition of loan closing should be reviewed to confirm that it expressly contemplates fuel storage operations on the Campus. The Environmental Indemnity Agreement typically requires the borrower (Stonebridge Campus Holdings LLC) and the guarantor (IHDC) to indemnify the lenders against any environmental liabilities arising from the Project, including liabilities related to the release of hazardous substances or petroleum products. Given the scale of the fuel storage program, the lenders may require specific representations, warranties, and covenants related to fuel storage compliance, including compliance with SPCC requirements, maintenance of seco

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