Data Center Expansion Expected to Reduce Energy Costs for PG&E Clients

Introduction

In a groundbreaking announcement, Pacific Gas and Electric Company (PG&E) revealed that the demand for electricity stemming from new data centers is set to significantly increase. This surge is primarily associated with cutting-edge technologies such as artificial intelligence and cloud storage. Over the next decade, PG&E projects these data centers will require approximately 8.7 gigawatts (GW) of power, reflecting a marked rise from the previous 5.5 GW reported in late 2024. This growth not only promises to modernize the energy infrastructure but also suggests potential savings for PG&E customers.

Unprecedented Demand

The increasing need for data centers, particularly in areas like Silicon Valley, is substantial. PG&E is actively collaborating with real estate developer Westbank to establish three data centers that will also incorporate up to 4,000 residential units—aiming to create a model of sustainable urban development in downtown San Jose. As a host utility, PG&E is participating in the DTECH Data Centers AI Conference held in San Jose from May 27 to May 29, 2025. This event gathers industry leaders to discuss strategies for addressing the escalating power requirements associated with data-heavy technologies.

Economic Implications

To contextualize the staggering energy demands, 1 GW is reportedly sufficient to power about 750,000 homes simultaneously. PG&E conveys that for every 1,000 MW (or 1 GW) of electric demand from these data centers, customers could expect a reduction of 1-2% in their monthly electric bills over time. This is a crucial message, particularly when considering the broader impact on customer savings while ensuring some of the cleanest electricity supply in the nation.

Partnerships and Innovations

Among the notable discussions at the DTECH conference are topics such as the transformational role of AI in energy consumption, accelerated power delivery mechanisms to data centers, and enhanced collaboration with developers and local communities. Mike Medeiros, Vice President of South Bay Delivery for PG&E, underscores the unique opportunities California offers for data center development due to its diverse customer base, ample clean energy supply, and regulatory frameworks that promote cost-effective expansion without burdening residential customers.

PG&E is already progressing on several projects, with 18 data center initiatives collectively representing about 1.4 GW currently in the final engineering phase. These facilities, set to initiate operations between 2026 and 2030, are primarily located in Silicon Valley and the San Francisco Bay Area, while also extending into the Central Valley and Sacramento regions.

Broader Impact and Next Steps

The rise in energy demand necessitated by data centers bodes well for PG&E customers by enabling the utility to maximize its existing power infrastructure. By effectively distributing costs over a broader energy base, customer expenditures can become increasingly efficient. The future appears promising as PG&E embarks on an expansive study analyzing the energy needs across its vast service area of 70,000 square miles in Northern and Central California.

In addition to the 8.7 GW outlined in their first quarter 2025 report, PG&E has received 21 new project applications through an expanded cluster study launched in April 2025, adding an additional 4.1 GW to its power demand projections. By consolidating project applications, PG&E is optimizing planning and expediting customer connections.

Furthermore, collaboration with Westbank on developing a new net-zero community in downtown San Jose is set to commence, with infrastructure upgrades already underway. Westbank is actively seeking partners to establish data centers within this innovative space.

Conclusion

To stay abreast of PG&E's sustainable initiatives and understand how data centers can shape energy consumption practices, you can visit their innovation page at www.pge.com/innovation. PG&E, a subsidiary of PGE Corporation, continues to champion energy efficiency while serving over sixteen million residents across its extensive service regions.

This transformation in the energy landscape, driven by increased data center demand, signifies a pivotal moment for PG&E customers—a movement that not only curtails energy costs but also cultivates a greener, more sustainable future in California.