Santa Clara Data Centers Await Power Supply

Two major data center developers hit a wall in the heart of Silicon Valley due to a lack of power.

Digital Realty Trust and Stack Infrastructure, two global heavyweights in the sector, have multimillion-square-foot projects in Santa Clara that are idle because city-owned utility Silicon Valley Power can’t yet deliver enough electricity to flip the switch, Bloomberg reported.

Digital Realty applied to build its 430,000-square-foot facility back in 2019; Stack, acquired earlier this year by Blue Owl Capital, completed its 551,000-square-foot building two years later.

Silicon Valley Power is working to expand its grid capacity, part of a $450 million system-wide upgrade; the grid capacity expansion process won’t be done until 2028. Blue Owl Capital has a 48-megawatt facility nearby that’s also vacant.

The holdup underscores a mounting crisis for the data center industry, where demand is exploding due to artificial intelligence and cloud computing but aging transmission infrastructure and permitting delays are choking supply.

Electricity needs tied to AI alone are expected to more than double in the U.S. by 2035, according to BloombergNEF.

Santa Clara is the home of Nvidia, the world’s most valuable company, whose processing chips have become crucial pieces of the growing AI puzzle.

Santa Clara has 57 active or planned data centers. Power costs in the Silicon Valley city are high, but proximity to tech firms and users that can’t run on long-distance latency in power transmission, such as autonomous vehicle companies, keeps developers interested in building in the area.

“The demand has never been higher, and it’s really a power-supply problem that we have,” Bill Dougherty, executive vice president for data center solutions at CBRE, told Bloomberg.

Digital Realty typically spends about 20 to 25 percent of the final construction cost for a shell before a building is readied for occupancy.

Stack Infrastructure’s plant has four floors of empty data halls. A dedicated on-site substation with 12 megawatts of critical capacity is planned to provide power to the building.

— Chris Malone Méndez