PG&E Unveils Major Expansion Plans Amid Surge in San Jose Energy Demand

UPDATE: PG&E has announced ambitious expansion plans in San Jose as electricity demand is set to soar in the region. With the tech industry’s energy needs climbing rapidly, PG&E’s Chief Executive Officer Patricia Poppe confirmed during a recent event that the company is poised to upgrade key substations to meet this urgent demand.

The South Bay is projected to experience a staggering increase in electricity needs, with demand expected to nearly double by 2040. PG&E is targeting upgrades at two critical substations in downtown San Jose, specifically at Substation A on South Montgomery Street and Substation B on Coleman Avenue. Poppe emphasized, “San Jose is very important because it has room to grow,” highlighting the area’s capacity to support the booming tech sector.

In a significant development, PG&E has revealed that nearly 20% of its projected data center load growth—approximately 2 gigawatts—will be concentrated in San Jose. Currently, the city’s energy load sits at 1 gigawatt, but the anticipated demand could necessitate an additional 1.8 gigawatts of capacity, bringing the total up to around 2.8 gigawatts.

Poppe acknowledged a previous misconception among tech companies regarding PG&E’s capacity. “One of the big misunderstandings was that tech companies thought PG&E was out of power, but they were wrong about that,” she stated. Now, with fresh inquiries for increased power capacity coming from areas across the South Bay, San Francisco, and even the Central Valley, PG&E is responding to the surge in interest.

PG&E Vice President Jake Zigelman noted that the demand is largely driven by data centers, electric vehicles, and the electrification of buildings. This shift is crucial for the region’s economic growth. “We see increased demand for electricity and our services in San Jose over a long period,” Zigelman explained, indicating a sustained trend.

The utility’s expansion plans have been met with some skepticism from consumer advocates. Mark Toney, Executive Director of The Utility Reform Network (TURN), expressed concerns about potential rate increases for consumers amid the data center boom. “It’s essential that those costs are recovered fairly and don’t cause electric rates to increase for households who are already struggling,” Toney warned.

Despite these concerns, PG&E is optimistic about the economic benefits of its initiatives. The company estimates that every gigawatt of new demand from data centers could reduce PG&E bills by 1% to 2% under favorable conditions. Poppe stated, “When we share the grid with more customers, we can lower the cost for everyone,” outlining the potential advantages for residential customers.

Currently, PG&E is preparing to deliver electricity for a pipeline of projects requiring about 10 gigawatts of power. Among these projects are 17 data centers in the final engineering phase, expected to begin operations between 2026 and 2030. These developments are part of a larger vision to modernize San Jose’s power infrastructure.

Moreover, PG&E is collaborating with developers like Westbank to innovate energy usage by integrating data centers with housing projects. Poppe expressed excitement about initiatives that capture excess energy for residential use, stating, “That is a really wonderful use of new technologies.”

As PG&E gears up for these transformative changes, it is also ready to support major projects like Google’s Downtown West transit village. While Google has paused development, PG&E assures that the utility is prepared to power significant infrastructure, reaffirming its commitment to supporting the region’s growth.

Stay tuned for further updates as PG&E implements these crucial upgrades to keep pace with the rapidly evolving energy landscape in San Jose. As demand continues to surge, the implications for local residents and businesses are substantial, making this a critical development to watch in the coming years.