San Jose Races to Power AI Data Center Boom Amid Grid Crunch

San Jose, the heart of Silicon Valley, is aggressively vying to become the Bay Area's epicenter for colossal AI data centers amid a boom driven by tech giants' computing needs. Mayor Matt Mahan has championed plans for 400 megawatts of data centers just miles from Silicon Valley's tech campuses and million-dollar homes, dominating PG&E's pipeline of proposed projects. Yet, power constraints have halted progress, with facilities in nearby Santa Clara standing vacant for years.

In Santa Clara, home to Nvidia, the world's top AI chip supplier, Digital Realty Trust applied in 2019 to build a data center that remains an empty shell six years later, awaiting full energization from Silicon Valley Power. Nearby, Stack Infrastructure's 48-megawatt project, now under Blue Owl Capital, sits idle as the city-owned utility scrambles to upgrade capacity. These delays highlight Silicon Valley's lag behind faster-growing markets like Atlanta and Northern Virginia, where power is more available.

The AI surge is testing California's electricity grid and rates, particularly in San Jose, where data center demands could strain PG&E and local utilities. While promising economic boosts through construction and operations jobs, the boom raises concerns over higher power costs for residents and businesses. City officials continue racing to secure energy solutions to turn proposals into reality.