The nation is full of data center hatred and California is no exception.
Temporary bans have sprung up across the region as residents from Imperial County to San José fight the proposals in their communities. Monterey Park became the first city in the country earlier this month to permanently ban data centers by popular vote. And a recent poll sponsored by environmental group Net-Zero California showed 70% of state residents don’t want data centers in their communities.
But unlike in Virginia, Texas, Ohio and other states where residents are fighting 400-plus megawatt hyperscaler sites in their backyards, California has some major barriers keeping data centers at bay.
High-rise industrial electricity prices are more than double the national average. Long wait times to connect to the grid have new data centers sitting empty in Silicon Valley. And the state controls the size of backup generators that keep facilities running when the grid goes down. That has limited many resources to a fraction of the size required by artificial intelligence.
That all means that California is seeing less development — fewer proposed data centers, and smaller in size — than in the country’s tropical regions.
“California is not even on the map today,” said Mehdi Paryavi, chairman of the International Data Center Authority. “Taxes are high, land is expensive, water is scarce, electricity is not easily available, communities are going backwards. There are all kinds of problems.”
Northern California and Southern California were the hubs of the previous generation of data centers. “But over time, as the sector has grown, the vast majority have been developed elsewhere,” said Andrew Batson, head of data center research at real estate brokerage JLL.
“Almost all of the data center needs generated in California are served by the surrounding states,” from places like Phoenix and Las Vegas, Batson said, “where energy is cheaper, land is more affordable, and regulations are less.”
Still, “California can’t outsource all of its data center potential,” and the state expects to see growth in the coming years.
Fifty-one centers are currently being planned in the state, according to the latest Pew Research Center survey, an 18% increase from the 277 operating today. According to research from UC Riverside, data center electricity consumption in the state is set to double between 2019 and 2023.
But some grid operators elsewhere are already seeing huge loads, such as the Pennsylvania-New Jersey-Maryland Interconnection which expects about 40% to be added to its demand, mainly from data centers, by 2035. Compare that with the California Energy Commission expecting data centers to drive an increase of about 2 gigawatts in 2040 by 2030 20400, and 20300. 9% of its 52 GW peak load respectively.
“It’s a significant amount of demand growth, but it doesn’t reach all the other factors,” said Mark Specht, senior energy manager at the Union of Concerned Scientists who released a report on California’s data center growth last month. “Some of the growth we see in electric vehicle demand in 2045 is actually higher than data center demand.”
California’s laws are part of what keeps data centers relatively small: State law requires any backup generator larger than 100 megawatts to be certified as a power center.
Specht’s report found none of the current data centers in California and almost none of the proposed ones need that certification because they fall under the 100 MW cap. (Exceptions include a planned 417 MW facility in Santa Clara and a 330 MW one in Imperial County that was blocked Tuesday by a stop vote.)
A hundred MW might be enough power for a small town to demand, but the average American data center is expected to demand more than 600 MW by 2030, according to energy intelligence firm Cleanview.
An analysis by the San Francisco Chronicle showed that California facilities currently make up about 5% of the national data center energy demand, but that share is expected to drop to 1% if construction continues as planned across the country.
Still, the growth is raising concerns among tax payers and environmentalists, not to mention the general public.
“There are real costs at stake,” said executive director Mark Toney at The Utility Reform Network, a ratepayer advocacy group.
He noted that Pacific Gas & Electric expects a large amount of new demand from data centers – about 10 GW – or enough to power 7.5 million homes. That would require grid upgrades he estimates at about $10 billion, part borne by taxpayers. Interest has been high in the PG&E area because it serves the San Francisco Bay area, where construction of a projected California data center is concentrated in San Jose, as Santa Clara has reached capacity.
Data center power estimates come with uncertainty, and PG&E says its largest confirmed load on the pipeline — mostly data centers — is closer to 5.3 GW.
Whatever the demand, TURN and others are fighting to protect ratepayers from PG&E’s construction costs, an ongoing battle with the Public Utilities Commission.
PG&E spokesman Rob Stillwell said the data centers help reduce costs by spreading the cost of grid maintenance across multiple customers. He noted that data centers already have to pay the upfront costs of connecting to the grid, under the interim law.
But TURN says that doesn’t include all the infrastructure and extensive grid upgrades PG&E will need to invest in to support the data centers.
And the law only applies to PG&E’s territory and doesn’t require data centers to deliver their own clean energy.
TURN now supports a bill from Sen. Steve Padilla (D-Chula Vista) would require all data centers to pay 100% of the cost of developing new transmissions and new clean energy to cover at least part of their electricity needs. The industry opposes this effort.
Another Padilla bill would authorize data centers immediately if they use clean energy. Another from Assemblymember Rebecca Bauer-Kahan (D-Orinda), would require data centers to disclose their energy use to the government. And bills by Assemblywoman Diane Papan (D-San Mateo) would require them to produce and report their water use as part of permitting and licensing.
However, politicians were reluctant to take control. Last year, similar bills were ignored, failed in the Legislature or opposed by Gov. Gavin Newsom.
At a panel in January, gubernatorial candidates were asked how they would balance environmental concerns about data centers with their ability to drive economic activity.
“We have to make sure that those data centers pay their fair share,” said Xavier Becerra, adding that businesses need to move away from diesel-powered generators.
Former candidate Tom Steyer of San Francisco responded with a dodge or a dose of facts, depending on your point of view.
“What data centers want is compute cost and compute speed, and the good news is that California’s power is so expensive in terms of cost, it’s not going to come here,” Steyer said. “We can talk all we want about data centers, but they’re not coming.”
