East Bay city hits pause on data center development

Oakley, a city in Contra Costa County, has become the first municipality in the Bay Area city to impose a temporary ban on new data centers.

The Oakley City Council’s unanimous vote for a 45‑day moratorium halts all new land‑use applications for data centers, giving officials time to evaluate their long‑term impact, the San Francisco Chronicle reported. The ban can be extended in phases for up to two years, allowing the city to craft zoning and environmental rules before the next wave of proposals arrives.

City Attorney Derek Cole said the measure will allow Oakley to “study, deliberate and determine the acceptable scope” of future development. The move follows public opposition to the Bridgehead Industrial Project, where developer JB2 Partners withdrew plans for a data center near Highway 160 after residents raised concerns about power and water consumption.

Council Member Shannon Shaw emphasized the need for a deliberate approach, noting that the city wants to “do it right” before committing to large‑scale infrastructure.

The moratorium comes amid a regional reckoning over the location and massive energy needs of artificial intelligence‑driven data centers. A Lawrence Berkeley National Laboratory report found that data centers consumed 4.4 percent of U.S. electricity in 2023, up from 1.9 percent in 2018, and could reach 12 percent by 2028. Utilities are already bracing for the surge: PG&E has received applications totaling 7.2 gigawatts of new demand, mostly concentrated around San Jose, with many projects slated for completion by 2030.

Despite Silicon Valley’s momentum, California’s share of national data‑center capacity — currently about 5 percent — could fall to 1 percent as other states move faster to approve projects, according to the Chronicle. Brokerage CBRE’s Jerry Inguagiato, cite high electricity costs and long wait times for power hookups as major deterrents to development.

In Oakley, city leaders plan public workshops this summer and aim to finalize zoning regulations by year‑end, potentially setting a precedent for how smaller cities manage the next phase of AI‑related development.

– Joel Russell