Downtown San Jose gets Google — and a power grid

Google is coming into San Jose and bringing its own electrical grid.

The tech behemoth is opening a massive complex in downtown San Jose and wants to construct its own electric distribution system, or microgrid, to power the 80-acre site. By the end of this year, San Jose will approve a business plan to make it happen.

The microgrid will power Google’s San Jose office, known as Downtown West, as well as nearby businesses and possibly homes.

This is how it will work: Google will construct the microgrid and cover all upfront capital costs. Once completed, it will turn the infrastructure over to a new utility the city will form and manage operations, maintenance and capital improvements. Google’s capital costs would be paid back over time by ratepayers like Google and a few other businesses nearby. The microgrid is projected to be ready for use in 2027 and at full capacity 7.8-10 megawatts by 2035.

Google would save on utility taxes and other costs if it produces its own power. San Jose, at the direction of Mayor Sam Liccardo, has been exploring the use of operating its own microgrids, in part, because PG&E’s aging infrastructure has left many residents in the dark — literally. This first microgrid could act like a pilot program for the rest of the city.

“Google provided a convenient platform for moving forward because Google was willing to fund the cost of development and take on that risk of paying for all those upfront capital costs,” Liccardo told San José Spotlight. “This would enable the city to have infrastructure up and running and potentially expanding it to residents (so they could) benefit from lower cost electricity and greater resilience.”

Kelly Snider, a professor of urban planning at San Jose State University, said the deal seems more like an 80-20 split, with Google reaping most of the benefits — but that doesn’t mean San Jose is losing.

“I think any experimentation or new technology adoption that can happen in partnership with the public sector is good,” Snider told San José Spotlight. “If we don’t jump on the coattails of very wealthy, very innovation-seeking companies like Google, then all of the cool new stuff for the next 100 years is going to be for private, for-profit businesses.”

She said moving to microgrids allows the city to be independent and better control its energy production — potentially even going 100% renewable.

“I suspect that’s why Google is so interested,” Liccardo said. “They have a commitment to making (its San Jose office) carbon neutral, so that’s one way to control that.”

Google declined to comment.

A city report detailing the benefits and risks of providing microgrid services found in addition to providing greener energy, city-owned utilities are much more cost effective for ratepayers. It’s cheaper to operate, and unlike investor-owned utility services like PG&E, city utilities don’t have to appease shareholders.

Ratepayers in cities like Santa Clara and Sacramento, who have their own public utility districts, pay 30-50% less than a private utility services, according the city study.

Liccardo said the biggest benefit is that the city wouldn’t have to rely on PG&E’s electrical grid or wait for infrastructure repairs from the company to provide more reliable power.

PG&E has a huge capital repair challenge and has made commitments to underground 10,000 miles of its distribution and transmission infrastructure that will cost close to $35-$40 billion and take years to complete.

“In the meantime, we’ve got to push ahead with alternatives,” Liccardo said.

This summer, hundreds of thousands of residents went without power because of blown transformers and other aging infrastructure failures — and the heatwave only exacerbated matters. Three hospitals in the city were also impacted by outages and had to operate their back-up diesel generators, Liccardo said.

Liccardo put pressure on PG&E to come up with a timeline for the preventative maintenance and capital replacement necessary to avoid what happened in August and September. A plan from PG&E is expected by the end of October.

Helen Chapman, former president of the Shasta Hanchett Neighborhood Association, said she’s bypassed power outages because her neighborhood is on the same grid as O’Connor Hospital — highlighting the benefits of having an alternative power source. Her neighborhood is near the Downtown West site and could potentially benefit from the microgrid if the city expands its reach.

“It’s an older neighborhood with old infrastructure. Things are being renovated now,” Chapman told San José Spotlight. “But it’s also an area with a lot of new development. So with all the new development coming along, the added capacity (from the microgrid) will be very beneficial.”

Contact Jana Kadah at [email protected] or @Jana_Kadah on Twitter.