San Jose, PG&E Ink Data Center Power Infrastructure Deal

The city of San Jose has entered into a new agreement with Oakland-based Pacific Gas and Electric (PG&E) to ensure the type of power required to support large data center operations in the area. The deal, announced July 25, is being heralded as a first for the utility.

Data centers are necessary for common and emerging technologies such as generative AI to operate, yet they are incredibly power-hungry.

PG&E, for its part, has open requests for 2,000 megawatts of capacity for data centers in the San Jose area and this agreement formalizes the company’s commitment to meet that demand with new infrastructure.

“This landmark agreement will enable us to continue to lead the AI revolution by increasing grid capacity, reliability and efficiency,” Mayor Matt Mahan said in a statement. “And with clear performance measures built into the agreement, we’re holding ourselves and PG&E accountable — making sure businesses get the power they need, when they need it. The message is clear: San Jose is ready to deliver.”

The announcement comes as PG&E filed a proposal with regulators to upgrade its infrastructure to provide “transmission-level service” to a proposed Microsoft data center in the southern part of the city. That 90-megawatt data center will be constructed on 65 acres that Microsoft purchased for $73.2 million, according to The Mercury News.

That project is expected to be operational by January 2027.