Why Data Centers in San Jose?

San Jose is positioned to be the fastest-growing data center cluster on the West Coast. These facilities support everything from cloud services, online retail, AI, banking, and global communications. Their presence has helped shape the region’s innovative economy and reinforces San Jose’s role as the Capital of Silicon Valley.

Data centers choose San Jose for several reasons:

Powered by clean energy and recycled water – Access to 93% carbon free power through San José Clean Energy, and more than 100 miles of recycled water pipes.
Unique partnership with PG&E to support speed and certainty for power – Our historic Implementation Agreement with PG&E supports large energy users.
Access to generational investment in transmission power – Over 2000MW of transmission capacity on track to be in service by mid-2028.
Strong infrastructure and favorable land use – Over 9000 acres of data center-allowed land on commercial and industrial zoned parcels, plus an extensive fiber network.
Proximity to tech companies - Being close to customers and businesses reduces latency and supports fast service delivery.
Business-friendly environment - The City works closely with data center developers on planning, permitting, and infrastructure needs.
A thriving ecosystem of talent – One in three workers has a bachelor’s degree or higher, over 6000 high tech companies, and one out of every five jobs is in tech or manufacturing.

Data Centers contribute to local revenue, job creation, and the City’s economic stability.

Data Centers Play a Critical Role in Our Economy and Lives

Data centers play a major role in everyday life, even if you never see them.

They:

Support critical services, from hospitals to banking to public safety
Protect and manage business and data
Support cloud storage, streaming, and e-commerce
Generate revenue that helps fund City services
Power AI and machine learning technologies
Enable secure financial transactions

San Jose - Data Center Infographic

What is a data center?

A facility that contains a large number of networked computer servers is typically used by businesses and organizations for the remote storage, remote computing, and distribution of large amounts of data. Data centers host cloud services, store customer data, provide internet services, or operate as enterprise computing infrastructure. For Data Centers, computing is the primary product they sell as a service to external clients.

How can I find out more information about the proposed data centers?

San Jose publishes a list of projects seeking approval and those that were recently approved. This page also includes links to each project’s permit documents and their environmental documents. You can find the list of these projects here: https://www.sanjoseca.gov/your-government/departments-offices/planning-building-code-enforcement/planning-division/data-center-and-other-large-energy-use-projects

How can data centers improve their energy sourcing?

How much energy do data centers use?

Do data centers increase energy use?

Are data centers noisy or disruptive?

Do data centers affect residents’ electric rates?

It depends on how the costs of serving large customers are allocated. Data centers can, in principle, help hold rates down: many use energy steadily and predictably, which lets utilities plan infrastructure efficiently, and their bills contribute to the cost of the existing poles, wires, and substations we all share, spreading those costs across more customers. But if serving a data center means building new infrastructure or buying more power, and the data center's bills don't cover that, the difference can land on everyone else's bill.

The City of San José is collaborating with the State on legislation and regulations to ensure costs are allocated fairly and, ideally, existing customers receive benefits from large load development.

Why can’t data centers pay more to lower residents’ electric rates?

Utilities in California must follow “cost-of-service” rules, which require each customer group (residential, commercial, and industrial) to pay rates based on the actual cost to serve them. Data centers currently fall under commercial and industrial rates; regulators are now looking at whether data centers should have their own rates.

The goal of the customer class system is to keep one group of customers from paying the costs of another. It protects residents from subsidizing data centers, and for the same reason it prevents charging data centers above what it costs to serve them.

That said, data centers can still benefit other customers without paying above cost. Because they use energy steadily and in large volumes, their bills contribute to the cost of the poles, wires, and substations we all share, spreading those costs across more customers. The City supports large load development that delivers this kind of benefit and is working to make sure new data centers cover the costs of serving them.

What is the City doing to ensure data centers are sustainable?

The City works with data centers on:

Increasing renewable energy consumption and flexible power use
Reducing greenhouse gas emissions
Ensuring adequate availability of water supply
Encouraging the use of recycled water where feasible
Meeting building and environmental standards
Managing long-term infrastructure responsibly

San Jose is currently developing uniform standards for data centers and other large energy users, such as research and development facilities, that will focus on energy consumption and sourcing, water use, air quality, and other environmental factors.

Do data centers use water?

Some cooling systems require water, while others use air or hybrid solutions.
Large data center projects must complete a water supply assessment that is approved by City Council to show that enough water is available during normal and dry years. It supports the environmental review process by ensuring adequate water supplies are available before large projects are approved.

Recycled water is the preferred water supply for data center projects due to its cost-effectiveness and availability. South Bay Water Recycling has significant additional capacity to serve data centers. Using Recycled water helps conserve drinking water supplies while providing a reliable sustainable water source for non-potable uses. Through the City’s General Plan and the San José Municipal Code, San José requires the use of recycled water where feasible and contribute to recycled water infrastructure.

The use of potable water by data center projects can also help keep rates down for residents. Water usage is dropping, so the smart, efficient usage of water can provide needed revenue, and spread the costs needed to maintain the system across more customers.

Do data centers benefit the community?

For any additional questions, please reach out to Erica Garaffo, Strategic Energy Customer Development Lead, at erica.garaffo@sanjoseca.gov