The other anti-data center movement: California’s sky-high electricity prices
California faces significant hurdles in data center development due to high electricity prices, grid connection delays, and strict regulations on backup generators, leading to fewer and smaller facilities compared to other states. Despite these challenges, new data centers are planned, prompting concerns among ratepayers about grid upgrade costs and driving legislative efforts to impose stricter energy and water requirements on the industry. Multiple localities have enacted bans or moratoriums on data centers.
California's notoriously high industrial electricity prices, prolonged grid connection wait times, and state regulations on backup generator sizes are naturally curbing the data center boom experienced in other states. This has resulted in fewer and smaller proposed facilities, with high costs for land and water scarcity also contributing to the state's diminished appeal for large-scale data center development.
Despite these barriers, 51 new data centers are projected for California, an 18% increase from the current 277, raising significant concerns among environmentalists and ratepayer advocates. The Utility Reform Network (TURN) executive director Mark Toney estimates that Pacific Gas & Electric (PG&E) could face 10 gigawatts of new data center demand, necessitating approximately $10 billion in grid upgrades, costs that may be passed on to ratepayers. TURN is actively lobbying the Public Utilities Commission to prevent this outcome.
Several legislative initiatives are underway to regulate the industry. State Senator Steve Padilla (D-Chula Vista) is backing a bill requiring data centers to fully fund new transmission upgrades and source at least 50% of their electricity from clean energy. Other proposals include Assemblymember Rebecca Bauer-Kahan's (D-Orinda) bill for energy use disclosure and Assemblymember Diane Papan's (D-San Mateo) bills for water use projection and reporting during permitting. However, past similar legislative efforts have been watered down or vetoed by Governor Gavin Newsom.
Simultaneously, a public "anti-data center movement" is active, leading to temporary bans across the state. Monterey Park recently became the first city in the U.S. to permanently ban data centers by popular vote, and a 330 MW facility in Imperial County was blocked by a moratorium vote.