PG&E Data Center Pipeline Surges to 12.7GW, More Than Double Q1 Capacity

California’s primary electric utility, PG&E, reported that its pipeline of proposed data center projects has more than doubled to 12.7 gigawatts (GW) at the end of the second quarter, up from 5.1GW in the first quarter. The sharp increase reflects accelerating demand from hyperscalers and AI-driven workloads seeking grid connections in the state, where power availability has become a critical constraint for new developments.

According to PG&E’s Q2 results, the utility expects that 1.8GW of this load will reach operational status by 2030. The biggest growth came from projects that have applied to be studied and paid the initial interconnection fee. The company now lists 26 projects in that bracket, with a combined capacity of 8.2GW, compared to just 1.7GW in Q1. In contrast, only four projects totaling 490MW have secured interconnection construction agreements, up from 140MW in the prior quarter, indicating that most proposed capacity remains at an early stage.

PG&E CEO Patricia Poppe acknowledged that not all projects in the pipeline will be built. “We learn more every day about which of these projects are the highest quality. I think there are a couple of factors that will drive the quality. I do not think we can predict today which of them will flow all the way through. We know they will not all, but the number one criterion is that they must be rate-reducing,” she said during the earnings call.

The utility claimed that each additional gigawatt in its pipeline could reduce electricity bills for its other customers by one percent or more, though it cautioned that results could “differ materially” depending on the pricing and rate design for large electricity users. To manage the influx of applications, PG&E has tightened criteria for projects entering preliminary and final engineering phases. Final-stage projects now require a signed work performance agreement and a financial commitment typically equivalent to around 10 percent of total project cost.

The company has also taken steps to streamline the interconnection process. In early 2025, PG&E signed a first-of-its-kind Implementation Agreement with the City of San Jose to guarantee power delivery for data centers and other large-load customers. More recently, it partnered with smart transmission firm Smart Wires on a project aimed at enhancing grid reliability and supporting the growth of data center energy consumption in San Jose. These efforts underscore PG&E’s strategy to balance the rapid expansion of data center loads with the need to keep rates affordable for residential and small-business customers.

The surge in pipeline capacity highlights the broader challenge facing utilities in regions with high data center concentration: how to accommodate surging power demand while maintaining grid stability and avoiding cost shifts to other ratepayers. With California’s ambitious clean energy goals, PG&E’s approach to prioritising rate-reducing projects will be closely watched by industry stakeholders and regulators alike.