High Demand and Capacity Challenges in Silicon Valley
Pacific Gas and Electric Company (PG&E) has announced plans to bring over 3.5GW of new data centre capacity online in California by 2029. This ambitious development aims to address the ongoing high demand in the Silicon Valley region, with a significant portion of this capacity requested by a single customer.
Substantial Data Centre Developments in Northern and Central California
PG&E’s recent investor update reveals extensive data centre developments across northern and central California. The San Francisco and Silicon Valley areas remain key locations for these facilities. In San Jose alone, over 1.6GW of capacity has been requested between 2025 and 2029 by 11 customers, with individual requests ranging from 10MW to 600MW. For 2025, 100MW has already been requested.
In Hayward, the total requests amount to 975MW from four customers, with one requesting 800MW by 2028. Other notable requests include:
Fremont: 230MW
Gilroy and Milpitas: 210MW
San Francisco: 70MW
Sunnyvale: 100MW
Santa Clara: 100MW
Richmond: 35MW
Anonymous Customers and Projected Growth
The companies behind these requests remain unnamed. However, one customer, referred to as Customer 1, stands out with over 1.3GW across five locations, expected to be operational by 2028. Another significant request comes from Customer 3, who has asked for 500MW, with a timeline extending from 2025 to 2029.
PG&E anticipates a load growth of 2-4% from 2023 to 2040, which translates to approximately 144TWh. Data centres are expected to contribute 0.5-1.5% of this growth, while electric vehicles are projected to account for 1.25-2%.
To meet the rising demand for data centres, PG&E estimates the need for capital investments between $500 million and $1.6 billion.
Grid Capacity and Power Supply Challenges
CBRE has previously noted that many substation sites in Silicon Valley may not be energized until 2028-2029, potentially causing delays due to grid capacity limitations in Santa Clara. Digital Core REIT, sponsored by Digital Realty, also highlighted power supply challenges in California. In a Q1 2023 update, the company mentioned that the local utility provider in Northern California has paused incremental power allocations for data centre development until 2028.
Silicon Valley Power, another regional utility provider, reports that many projects will receive a maximum of 2MW, restricting future expansion. PG&E has faced delays in delivering new power due to increased consumption and limited supply. According to their earnings report, new capacity is expected to be available by 2028.
Last year, Silicon Valley Power projected that the data centre load would nearly double by 2035. Data centres currently represent the largest single load for this utility, which plans to invest heavily in renewable energy sources, including geothermal and battery storage, to meet the growing demand.
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Charlie Sketchley
Senior Data Centre Consultant at Edison Smart
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Lewis Miller
Associate Data Centre Consultant at Edison Smart
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