San José’s Data Center Growth & What It Means for SJCE Customers

Powering the Future — Safely, Affordably, and Sustainably

San José is a major hub for next-generation data centers — the facilities that power cloud computing, artificial intelligence, and digital services used every day. This growth has created unprecedented energy demand in our community, with PG&E and the City of San José working together to bring nearly 2,000 megawatts (2 GW) of additional transmission capacity to the area to serve these new facilities.

This investment supports economic development and innovation, while SJCE remains committed to keeping energy generation costs affordable and ensuring a clean and resilient energy supply for all customers.

Visit Powering San Jose

The inside of a data center, with large computers in a room.

How You Benefit from Grid Infrastructure Upgrades

Stronger Local Grid Capacity: The new energy infrastructure — including two new high-voltage transmission lines — is designed to ensure reliable delivery of power for all SJCE customers, including data centers.

Economic Benefits: Increased electricity demand can help spread fixed utility infrastructure costs across more energy usage, which can lead to lower average electricity rates over time. For each data center, the City will earn approximately $3-7 million in general fund revenue. These funds can support infrastructure, parks and other essential services.

Choice & Clean Energy: SJCE customers continue to have access to cleaner, renewable energy options, even as the energy system expands to accommodate new demand. Data centers in San José also have the option to source electricity through SJCE’s clean energy options.

San José’s infrastructure upgrades and new energy capacity are intended to support economic growth while protecting the interests of SJCE customers through competitive clean energy options, cost-management policies, and strategic planning. We are focused on fair rates, reliability, and sustainable electricity — now and into the future.

FAQs

What exactly is driving the new power infrastructure in San José?

San José and PG&E have an agreement to increase grid capacity to support nearly 2 GW of new electricity demand from planned and proposed data center facilities by 2028. Two new high-voltage transmission lines and related grid upgrades are part of this effort. These new transmission projects were chosen by California’s electric grid operator to meet rapidly growing electric demand, especially from data centers, and to support renewable energy goals. For more information visit the City’s website on Powering SJ.

Will this new demand from data centers raise my electric bill?

Not necessarily. Because infrastructure and fixed costs are spread over a larger volume of electricity usage, the increased energy usage may not affect rates much. PG&E has established cost recovery rules for existing customers and San José Clean Energy sets rates based on what it costs to serve each customer class – including large customers like data centers – to make sure that other customers don’t experience rate increases as a result of new data centers.

What policies are in place to protect regular residential and small business customers?

San José and state regulators have several policy tools and protections:

Cost Responsibility Rules: This policy approach has been adopted at the state level to help protect ratepayers. Generally, the policy states that the entity causing the cost, pays the cost.

Local Agreements: The city’s agreement with PG&E includes performance milestones and timelines, creating accountability around delivering upgrades and managing costs.

Energy Options: SJCE sets rates based on what it costs to serve each customer class – including large customers like data centers. SJCE also continues offering renewable energy plans, so customers can choose cleaner power sources without losing cost visibility or predictability.

How will SJCE ensure clean energy remains affordable as demand increases?

Competitive Power Procurement: SJCE buys power through long-term agreements and diversified portfolios to help mitigate price volatility. We are working proactively with prospective new customers to understand their energy needs early so we can plan accordingly.

Local Clean Energy Programs: SJ Cares and Solar Access programs make clean energy accessible by providing bill assistance and community solar options for income-qualified households.

Demand Response Programs: SJCE offers a demand response program that works with all customers including data centers to reduce or shift electricity use during peak times, helping maintain grid reliability and control costs for all customers.

These strategies are key to keeping costs stable, even as the grid grows.

Will data center energy use affect reliability for residents?

No. Grid upgrades are being implemented by PG&E specifically to ensure that the increased demand is met without compromising reliability for residential and business customers. The design of the new transmission capacity serves broader community needs.

Are there environmental considerations with data center power demand?

Yes — data centers consume large amounts of electricity and water, which has prompted statewide discussion about energy use transparency and environmental impact. Some state policies now require data centers to disclose energy consumption and efficiency metrics, supporting better planning and policy oversight. SJCE also supports renewable energy sourcing, energy efficiency, and demand-response programs to balance environmental goals with reliability and cost.

How do data centers stay powered during power outages?

Data centers plan for outages in ways that do not affect residential customers because their power systems are engineered differently.

Most data centers have backup power systems including:

On-site battery storage
Backup generators
Redundant power systems

These systems allow data centers to continue operating without relying on the grid during a power outage.

They also have separate electrical infrastructure designed to isolate them from broader grid outages, sometimes with dedicated substations.

SJCE programs supports solutions that reduce the need for power outages, including:

Local renewable generation
Battery storage
Microgrids
Demand response programs

Will more data centers increase the risk of power outages?

Power outages are driven by weather conditions, wildfire risk, and vegetation and infrastructure safety. In fact, grid upgrades built to serve large customers can:

Improve overall system reliability
Support stronger, more resilient infrastructure
Reduce outage risk over time

How can I voice my support or concern?

We encourage community engagement, so decisions reflect local values and interests. Here are a few options where you can voice your support or concern: