First-of-its-kind agreement between the utility and a city in its service area
The City of San Jose in California has signed an Implementation Agreement with utility Pacific Gas and Electric Company (PG&E) to streamline and guarantee power delivery for data centers and other large load customers.
The agreement is the first of its kind between PG&E and a city within its service area. According to the partners, the deal is in response to the skyrocketing demand from new data centers across the wider region. PG&E is currently processing requests for almost 2GW of new data center demand in San Jose alone.
Under the terms of the agreement, PG&E has committed to clear performance milestones and timelines to ensure timely power delivery and infrastructure upgrades.
“San Jose isn’t just the heart of Silicon Valley — we’re the launchpad for what’s next,” said Mayor of San Jose, Matt Mahan. “This landmark agreement will enable us to continue to lead the AI revolution by increasing grid capacity, reliability, and efficiency. 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 city is expected to benefit from two high-voltage transmission lines planned for completion by 2028. These lines are projected to add up to 2GW of power to the local grid, which would cover the expected growth in demand.
“San Jose represents the future of our hometowns in California — a model for how strong partnerships help us deliver on our triple bottom line, serving people, the planet, and the state’s prosperity. My coworkers at PG&E are proud to power San Jose’s growth with infrastructure built for purpose that delivers safe, reliable, clean, and affordable energy for all,” said PG&E CEO Patti Poppe.
PG&E, unlike some other utilities, has argued that new data center capacity is likely to act as a net positive for other ratepayers. In May, the utility estimated that for every 1GW of new demand from data centers, other customers across its footprint could see their monthly bill fall by between one and two percent.
The utility is currently advancing plans to develop three of its own data centers in San Jose. The projects, which were announced late last year, are expected to total 200MW in capacity and will be developed in partnership with real estate firm Westbank. They are expected to utilize excess heat generated by the data centers to heat and cool surrounding buildings.
The utility has also recently partnered with smart transmission firm Smart Wires on a new project aiming to enhance grid reliability and support the growth of data center energy consumption in San Jose.
The partnership will see the deployment of Smart Wires' Smart Valve system, an advanced power flow control (APFC) technology, to mitigate thermal overloads, redirect power flow, and increase available capacity at PG&E’s Los Esteros electric substation.
