The nation is awash in data center hate and California is no exception.
Temporary bans have cropped up across the state as residents from Imperial County to San José fight proposals in their communities. Monterey Park became the first city in the country earlier this month to permanently ban data centers by a popular vote. And a recent poll sponsored by the 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 facilities in their backyards, California has some major barriers keeping data centers at bay.
Sky high industrial electricity prices are more than double the national average. Long wait times to connect to the grid have some new data centers sitting empty in Silicon Valley. And the state regulates the size of the backup generators that keep the centers running when the grid goes down. That has limited most facilities to a fraction of the size that artificial intelligence increasingly demands.
That all means that California is seeing less of a boom — fewer proposed data centers, and smaller in size — than in the country’s hot spots.
“California isn’t even on the map today,” said Mehdi Paryavi, chairman of the International Data Center Authority. “Taxes are high, land is expensive, water is scarce, energy is difficult to find, communities are pushing back. There are all kinds of problems.”
Northern California and Southern California were hubs for an earlier generation of data centers. “But over time, as the sector has grown, the overwhelming majority has been developed elsewhere,” said Andrew Batson, head of data center research at real estate intelligence firm JLL.
“Almost all the data center demand being generated from California is being serviced by adjacent states,” from places such as Phoenix and Las Vegas, Batson said, “where power is much cheaper, land is more affordable, and regulations are quite less.”
Still, “California can’t outsource all it’s data center capacity,” and the state expects to see growth over the coming years.
Fifty-one facilities are currently planned in the state, according to a recent study from the Pew Research Center, an 18% increase over the 277 operating today. According to a study from UC Riverside, data center electricity use in the state doubled between 2019 and 2023.
But some grid operators elsewhere are already seeing overwhelming loads, such as the Pennsylvania-New Jersey-Maryland Interconnection that expects about 40% to be added to its total demand, largely from data centers, by 2035. Compare that to the California Energy Commission which expects data centers to drive an increase of about 2 gigawatts by 2030, and 5 GW by 2040. That’s about 4 and 9% of its 52 GW peak load respectively.
“It’s a significant amount of demand growth, but it’s not dwarfing all the other factors,” said Mark Specht, a senior energy manager at the Union of Concerned Scientists who put out a report on California data center growth last month. “Some of the projections we’re seeing for increased electricity demand from electric vehicles in 2045 is actually higher than the demand from data centers.”
California regulations are part of what’s keeping data centers relatively small: A state rule requires any backup generator bigger than 100 megawatts to be certified as a power plant.
Specht’s report found none of the current data centers in California and almost none of the proposed ones require that certification because they fall under the 100 MW cap. (Exceptions include a 417 MW planned facility in Santa Clara and a 330 MW one in Imperial County blocked Tuesday by a moratorium vote.)
One hundred MW could power a small city’s peak demand, yet the average U.S. data center is expected to demand over 600 MW by 2030, according to the energy intelligence company Cleanview.
A San Francisco Chronicle analysis showed that California facilities currently make up about 5% of national data center power demand, but that share is expected to fall to 1% if building proceeds as planned across the country.
Still, the growth that does exist is raising concerns among utility ratepayer advocates and environmentalists, not to mention the general public.
“There are real costs at stake,” said Mark Toney executive director at The Utility Reform Network, a ratepayer advocacy group.
He noted Pacific Gas & Electric anticipates a massive amount of new demand from data centers — about 10 GW worth — or enough to power 7.5 million homes. That would require grid upgrades he estimates at about $10 billion, partly borne by ratepayers. Interest has been high in PG&E territory because it serves the San Francisco Bay area, where California’s projected data center buildout is concentrated around San Jose, now that Santa Clara has reached capacity.
Data center electricity projections come with uncertainty, and PG&E says its confirmed large load in the pipeline — mostly data centers — is closer to 5.3 GW.
Whatever demand materializes, TURN and others are fighting to shield ratepayers from the costs of PG&E’s buildout, a battle playing out at the Public Utilities Commission.
PG&E spokesperson Rob Stillwell said data centers help reduce rates by spreading the costs of grid maintenance over more customers. He noted data centers already have to pay the up front costs of connecting to the grid, under a temporary rule.
But TURN says those don’t include all of the infrastructure and broader grid updates that PG&E will have to invest in to support data centers.
And the rule only applies for PG&E territory and doesn’t require data centers to bring their own clean power.
TURN is now backing a bill from State Sen. Steve Padilla (D-Chula Vista) that would require all data centers to pay for 100% of the costs of new transmission upgrades as well as new clean energy to cover at least half their required electricity. The industry is opposing the effort.
Another Padilla bill would approve data centers faster if they use more clean energy. One from Assemblymember Rebecca Bauer-Kahan (D-Orinda), would require data centers to disclose their energy use to the state. And bills by Assemblymember Diane Papan (D-San Mateo) would require them to project and report their water use as part of permitting and licensing.
Yet politicians have been hesitant to regulate. Last year, similar bills were either watered down, didn’t make it through the legislature or were vetoed by Gov. Gavin Newsom.
At a panel in January, gubernatorial candidates were asked how they would balance environmental concerns about data centers with their potential to drive economic activity.
“We have to make sure that those data centers are paying their fair share,” said Xavier Becerra, adding that businesses need to move away from diesel backup generators.
Former candidate Tom Steyer of San Francisco answered with a dodge or a dose of realism, depending on your view.
“What data centers are looking for is cost to compute and speed to compute, and the good news is that California’s energy is so expensive on a cost basis, they’ll never come here,” Steyer said. “We may talk all we want about data centers, but they’re not coming.”
