(Bloomberg) -- California utility giant PG&E Corp. plans to partner with a developer to build a zero-carbon data center and residential project in downtown San Jose to meet Silicon Valley’s growing demands for housing and artificial-intelligence computing.
The project would include three new data centers and as many as 4,000 residential units within the city’s center, according to a statement from PG&E and real estate developer Westbank. The plan includes a system that would capture excess heat from the data centers and send it through pipes to nearby buildings for heating and hot water. The companies declined to disclose the project’s cost.
“This has enormous importance beyond building low-carbon housing in San Jose,” said Ian Gillespie, chief executive officer of Westbank, in an interview. “It has the potential to change the way people not only think about AI and data centers but think about their communities as they respond to climate change.”
Utilities across the country face a sudden increase in electricity demand after two decades of stagnant growth. Data centers, electric cars and new factories are projected to drive up electricity consumption, testing the limits of an aging grid. PG&E said earlier this year proposed data centers in Silicon Valley could add 3,500 megawatts of demand to the region, which boasts the headquarters of global technology giants.
For the San Jose project, PG&E will rebuild a downtown substation and upgrade power lines to allow for the delivery of 200 megawatts of clean electricity for the data centers. The grid improvements also will help the utility meet growing power demand from electric vehicles and other sources, said Mike Medeiros, a vice president for PG&E. One megawatt is roughly enough electricity for 750 homes.
San Jose Mayor Matt Mahan said he was supportive of the development, which is the first to be proposed under a new city program encouraging private companies to pitch creative, mixed-use projects. “It’s very innovative,” Mahan said in an interview. “It’s a scalable way to address our climate goals.”
The project requires approval by the San Jose City Council. The first residential units are expected to be finished in 2025, with the first data center following in 2027, according to Westbank, which has partnered with Peterson Group and OPTrust on the project.
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