A brand new settlement between San Jose and PG&E is the most recent in a string of strikes by the California utility, aimed toward supporting knowledge facilities’ energy wants
In sum — what to know:
Energy companions – The settlement between town of San Jose and PG&E is the primary of its sort, and introduces 2,000 megawatts of recent transmission capability.
Velocity and certainty – The companions need to appeal to knowledge heart growth and make San Jose a significant knowledge heart hub by eradicating uncertainty round grid connection and capability.
Golden Mind-set – Utility PG&E is engaged on 18 new knowledge heart initiatives throughout the state which are within the ultimate section of engineering and anticipated to return on-line between 2026-2030.
Within the coronary heart of Silicon Valley, San Jose, California needs extra than simply tech HQs. It needs the information facilities, too. So town is working with utility PG&E to supercharge its grid, including about 2,000 megawatts (MW) of transmission capability through two new high-power traces by 2028, to help new knowledge facilities beneath growth. It’s a part of San Jose’s bid to turn out to be Silicon Valley’s — and the West Coast’s — server heart.
Amid knowledge heart energy utilization that’s exploding, significantly with power-intensive synthetic intelligence workloads, connecting to the native grid is one of many greatest bottlenecks for knowledge heart growth.
San Jose indicated that the brand new settlement with Pacific Gasoline and Electrical (PG&E) is the primary of its sort between the utility and a municipality in its service space, and positions San Jose as “essentially the most power-ready metropolis in California and the West Coast’s premier vacation spot for knowledge heart growth” by guaranteeing velocity and certainty of energy supply for knowledge heart clients.
PG&E presently already has requests for practically 2,000 megawatts of vitality demand from new knowledge facilities within the San Jose space. “This settlement ensures PG&E is able to ship native infrastructure upgrades to fulfill that demand – with clear efficiency milestones and timelines for PG&E to ship energy to large-energy clients,” town stated in a launch.
“This settlement with PG&E represents a transformative second for San José,” stated San Jose Metropolis Supervisor Jennifer Maguire. “By securing binding commitments for energy supply and leveraging the incoming 2,000 megawatts of recent transmission capability, we’re not simply attracting knowledge facilities — we’re constructing the digital spine that may maintain Silicon Valley’s management in innovation for many years to return. This settlement ensures our residents profit by job creation, workforce growth, and important income that may help important metropolis companies.”
In its bid to be a significant knowledge heart hub, San Jose can also be emphasizing its proximity to a excessive focus of tech firms. It says it’s inside 25 miles of greater than 40 Fortune 500 tech headquarters, has regional presence from eight of the highest 10 international cloud suppliers, a excessive focus of information heart and IT professionals and “prepared entry to tech R&D spending” — and probably, a number of concentrated curiosity within the low latency and excessive efficiency that might come from having regionally accessible, high-speed computing capability.
PG&E and San Jose are additionally desperate to serve up clear vitality to these knowledge facilities and assist firms meet their environmental targets. PG&E boasts of with the ability to provide “a few of the cleanest electrical energy in the USA.” Whereas some geographies are saying no to knowledge facilities, San Jose is touting “complete benefits for knowledge heart growth”: Choices for as much as 100% renewable vitality, a program gives recycled water cheaper than consuming water, and land prices which are “decrease than comparable Bay Space markets”.
“San José isn’t simply the guts of Silicon Valley — we’re the launchpad for what’s subsequent,” stated Mayor Matt Mahan. “This landmark settlement will allow us to proceed to steer the AI revolution by rising grid capability, reliability, and effectivity. And with clear efficiency measures constructed into the settlement, we’re holding ourselves and PG&E accountable — ensuring companies get the ability they want, once they want it. The message is obvious: San José is able to ship.”
After all, town additionally has monetary incentives: When the deliberate knowledge facilities in San Jose are totally operational, they’ll add “important annual income” to town’s coffers. Particular person initiatives will contribute between $3.4-$6.8 million in utility and property taxes annually, in keeping with town.
PG&E engaged on knowledge heart energy initiatives past San Jose
The settlement with San Jose is simply a part of PG&E’s give attention to assembly knowledge heart wants throughout the state of California. The utility is engaged on 18 new knowledge heart initiatives which are within the ultimate section of engineering, which signify energy demand of about 1.4 GW and can come on-line between 2026 and 2030. Most of them are in Silicon Valley and the San Fransisco Bay Space, in keeping with PG&E, however there are additionally some areas scattered throughout the Sacramento space and California’s Central Valley.
In the meantime, PG&E stated lately that it’s already seeing a “enormous soar within the quantity of electrical energy wanted for brand spanking new knowledge facilities.” Information facilities are anticipated to want about 8.7 GW of electrical energy over the approaching decade, up from about 5.5 GW on the finish of final yr, the utility firm stated. PG&E has been learning the information heart energy wants, beginning with San Jose final yr and increasing a follow-up research to the remainder of its service space in northern and central California. Since April, the corporate stated, it additionally obtained 21 further knowledge heart functions totaling 4.1 GW of energy demand by a follow-up cluster research.
Whereas some components of the nation are anticipating to see utility costs enhance, together with for residential clients, due to power-hungry knowledge facilities, PG&E is framing the information heart demand as “excellent news for all PG&E clients.”
It estimates that for each 1 GW of recent demand from knowledge facilities, its electrical clients might save 1-2% on their month payments “in the long run.”
“When new knowledge heart load comes onto the system, these giant clients assume a bigger share of the fastened prices of working and sustaining the grid, which lowers charges for all clients,” the corporate stated.
“What differentiates the chance for knowledge facilities in California is a diversified set of consumers and initiatives, extra clear energy provide, and a regulatory method which ensures that our present residential clients will lower your expenses,” stated Mike Medeiros, VP of South Bay Supply at PG&E.
PG&E can also be placing in smarter utility infrastructure upgrades to assist meet quick energy wants, whereas these new transmission traces are nonetheless a few years away. In Might, the corporate stated that it’s within the course of of putting in superior energy movement controls from an organization referred to as Sensible Wires, at a substation on the fringe of the South Bay which is close to knowledge facilities beneath growth. That venture is predicted to be accomplished late this yr and increase the substation’s capability by greater than 100 MW.
Sensible Wires’ tech “dynamically redirect[s] energy from overloaded to underutilized traces. This method addresses present capability constraints and optimizes present infrastructure for the huge vitality wants of information facilities,” in keeping with Joanna Lohkamp, CEO of Sensible Wires. That energetic line administration is ready to scale back warmth overloads with the intention to enhance present traces’ energy supply capabilities.
PG&E can also be trying to discover extra new concepts at an “innovation pitch fest” in September, with as much as $25 million in funding accessible this yr. It’s searching for improvements in areas together with assembly the rising vitality wants of AI knowledge facilities, and utilizing AI internally to enhance components like security, affordability, reliability and customer support.
