Santa Clara leaders are raising concerns about how the city’s dozens of data centers affect residents and the environment.
Santa Clara has more standalone data centers than any other California city — 55 in operation and three in the pipeline, according to the city. Demand is growing as more people use the internet and digitally demanding technology advances, such as artificial intelligence. With data centers providing the city with millions in revenue, officials are questioning impacts to water and the electrical grid.
Officials said city-owned power utility Silicon Valley Power has lower electricity rates compared to PG&E, a plus for data centers that need reliable energy, and the reason so many companies have planted their data centers in the city. Santa Clara also has a strong fiber optic network near Central Expressway, where most of the data centers are located, making it easier for more data to travel faster.
“Santa Clara is home to an extraordinary array of high tech companies and we have a competitive advantage,” City Manager Jovan Grogan said at a May 20 joint meeting of the City Council and Planning Commission.
Reena Brilliot, Santa Clara’s director of economic development and sustainability, said the city receives $40.9 million annually from its data centers through property and sales tax, as well as Silicon Valley Power payments.
“We as a city need to strategically go after developments that are supporting our city’s fiscal sustainability … and data centers are a very tangible source of economic support,” Brilliot said.
Elected officials raised concerns with the amount of land, electricity and water used by data centers, as well as the diesel generators they rely on for backup power. Planning Commissioner Priya Cherukuru said the city is committing too much land to industrial uses such as data centers and not enough for other uses that would benefit residents, such as housing or parks.
“The controversy surrounding data centers stems from the complex interplay between economic development, environmental sustainability and the needs of local communities,” Cherukuru told San José Spotlight. “The growing reliance on data centers for modern digital infrastructure necessitates finding a balance between these competing interests.”
Cherukuru, who is the executive director of space planning for Stanford Health Care, said Santa Clara needs to conduct a deeper study on the strain data centers put on city resources, such as electricity and water.
Data centers use water to cool their densely packed servers. Ahmed Aly, the city’s principal engineer for water and sewer utilities, said more data centers are starting to use water efficient cooling systems, and 31 data centers in the city use recycled water.
As for electricity, Silicon Valley Power has been working to increase its transmission capacity to meet increasing demands, namely from its data centers. Chief Operating Officer Nico Procos said the utility’s sales have grown 25% from 2019 to 2023.
“(On) growth and expansion, it is driven by data centers,” Procos said. “We’ve had requests to add 500 megawatts of load, so that’s growing from our current peak of about 720.”
City spokesperson Janine De la Vega confirmed the city’s electrical grid caps new data centers. She said Silicon Valley Power has multiple expansion projects to meet the current demand, which are estimated to finish by 2029.
Commissioner Eric Crutchlow questioned the environmental impacts of the diesel backup generators, and staff told him the generators are the industry standard for reliable, resilient emergency energy. Grogan said most of the city’s critical infrastructure has diesel backup generators.
“One of the reasons frankly as an industry that we have chosen it, and I know cities do, is in a major catastrophe, you can find a diesel mechanic,” Grogan said. “(With) a lot of the current emerging tech, there are significant continuation of business concerns.”
Councilmember Karen Hardy said improvements to the city’s electrical grid have been made possible because of the city’s data centers and technology industry, and that data centers are becoming more efficient with their energy, water and space.
Hardy said the city has turned away proposed data centers because of electrical grid limitations, and there won’t be any new data centers beyond those that’ve already been approved by Silicon Valley Power.
“When people rely on the internet, they don’t see all the underlying ones and zeroes, literally … the electricity that has to occur to make that happen,” Hardy told San José Spotlight. “There’s so many positives to the residents that they don’t realize because of that redundancy built into the system that data centers need.”
Contact B. Sakura Cannestra at [email protected] or @SakuCannestra on X.
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