(TNS) — Oakley has become the first Bay Area city to temporarily ban new data centers, signaling a more cautious approach as other parts of Silicon Valley continue to line up projects to meet rising demand for artificial intelligence.
The Oakley City Council voted unanimously Tuesday to impose a 45-day moratorium on data center projects, barring the city from accepting or processing related land-use applications. Under state law, the ban can be extended in phases to last up to two years.
City Attorney Derek Cole said the moratorium will give officials time to “study, deliberate, and determine the acceptable scope” of data center development.
“And then at the one-year mark, you can extend for one more year. But the idea is that in those two years, you will be developing and will have developed some resolution of how to deal with the issue,” Cole said.
The decision follows growing concern among residents in the eastern Contra Costa city about the impacts of large-scale data centers, particularly their heavy demand for electricity and water.
Those concerns first surfaced during a debate over the Bridgehead Industrial Project, where a developer withdrew plans to build a data center near Highway 160 and Bridgehead Road after public pushback.
Councilmember Shannon Shaw said the city should move deliberately.
“I really want to make sure that this is something that we do, and we do it right,” she said.
The debate in Oakley reflects a broader shift as demand for data centers accelerates alongside the rise of AI. A report from Lawrence Berkeley National Laboratory found data centers accounted for about 4.4% of U.S. electricity use in 2023, up from 1.9% in 2018, and could reach as much as 12% by 2028.
Utilities are already preparing for that growth. Pacific Gas and Electric Co. has received applications representing 7.2 gigawatts of new data center demand across its service area, with many projects expected to come online by 2030.
The majority of those are in the San Jose area, according to PG&E.
At the same time, California is losing ground in the race to build them. The state currently accounts for about 5% of the nation’s data center capacity, but that share could shrink to 1% if projects planned elsewhere move forward, according to a Chronicle analysis of data from Cleanview.
Industry experts point to high electricity costs and long wait times for power connections as major hurdles.
“We’ve fallen way behind because we don’t have energy utilities at scale,” Jerry Inguagiato, a Silicon Valley-based leader on commercial real estate firm CBRE’s data centers team, told the Chronicle.
Oakley officials plan to hold public workshops this summer and aim to introduce zoning rules later this year. Mayor Hugh Henderson has asked that regulations be completed before the end of the calendar year.
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Oakley Becomes First Bay Area City to Halt New Data Center Proposals
City leaders voted unanimously this week to stop accepting new applications while they study how large-scale facilities could affect local resources and development.
