Key Points
- San Jose remains at the center of Silicon Valley’s data-center and AI infrastructure growth.
- Large proposed facilities can require electricity loads approaching 100 MW, making them major pieces of energy infrastructure.
- San Jose’s data-center pipeline demonstrates why electricity availability is becoming increasingly important to future development.
- Large new electricity loads raise important questions about grid investment, reliability, infrastructure costs, and customer rates.
- Communities and regulators should carefully evaluate how infrastructure costs associated with large new loads are allocated.
- San Jose and Silicon Valley also contain extensive commercial, industrial, municipal, and parking properties that could potentially support distributed-energy resources.
- Distributed solar and storage cannot replace the grid infrastructure required by large AI data centers, but they could complement broader energy investments.
- The Solar Harmonic Framework™ explores how data-center development could help catalyze energy investment beyond the data-center campus.
San Jose has spent decades at the center of the digital economy.
Now the capital of Silicon Valley is confronting the physical infrastructure required to support its next phase.
Artificial intelligence requires enormous computing capacity.
That computing capacity lives inside data centers.
And those data centers require electricity—often at a scale far beyond that of traditional commercial buildings.
For San Jose, the AI revolution is therefore becoming a question not simply about technology, but about energy infrastructure.
As new data centers are proposed and existing digital infrastructure expands, the city will need to consider how these large electricity loads fit into the regional grid, how infrastructure investments are paid for, and how the surrounding community can participate in the economic opportunities created by the energy transition.
Data Centers Are Already Part of San Jose
San Jose isn’t waiting for the data-center boom.
The city already has significant digital infrastructure, with additional projects proposed or under review.
One prominent example is Microsoft’s San Jose Data Center at 1657 Alviso-Milpitas Road.
According to the California Energy Commission, the project includes approximately 396,914 square feet of data-center and administrative space.
Its maximum electrical load is up to 99 MW, with an estimated operating load of approximately 77 MW.
The project is designed to receive utility electricity from PG&E.
And that is only one example.
Another Microsoft project under California Energy Commission review, known as San José Data Center 04, includes two four-story data-center buildings, onsite electrical infrastructure, and up to 97.8 MW of backup generation.
Meanwhile, the City of San Jose continues to review additional large energy-use projects.
The takeaway is straightforward:
Data centers are already an important part of San Jose’s physical infrastructure landscape.
The San Jose Data-Center Pipeline Continues
As of 2026, the city’s project listings include additional data-center proposals.
One project at 5977 Silver Creek Valley Road proposes an approximately 516,000-square-foot, three-story data center with a maximum electrical load of 99 MW.
Another proposed project at 865 Embedded Way identifies approximately 18 MW of electrical equipment capacity.
A proposal at 180 Park Avenue includes an option involving an 11-story data center as part of a larger mixed-use development.
These projects will not necessarily all move forward exactly as proposed.
Project sizes, timelines, configurations, and electricity requirements can change during planning and review.
But taken together, they demonstrate why electricity is becoming increasingly important to San Jose’s development strategy.
The city’s future technology infrastructure depends not only on available land and connectivity, but also on access to reliable power.
AI Changes the Electricity Conversation
Traditional commercial buildings consume electricity.
Large AI data centers can consume electricity at an entirely different scale.
A facility with a maximum load approaching 100 MW is not simply another commercial building connecting to the grid.
It is major energy infrastructure.
That requires utilities and cities to consider:
- Substations
- Transmission
- Distribution
- Generation
- Backup systems
- Reliability
- Long-term load growth
- Infrastructure costs
The broader scale of the trend is reflected in PG&E’s data-center pipeline.
The utility reported in 2026 that it was working with more than 12 GW of potential data-center demand across its service territory.
Not every project in that pipeline will ultimately become an operating facility.
Nevertheless, the direction is clear.
Electricity availability is becoming a strategic asset in the AI economy.
Will Data Centers Increase Electricity Rates?
This is one of the most important questions communities and policymakers are beginning to ask.
The answer is more complicated than a simple yes or no.
Large new electricity loads can require significant investments in generation, transmission, substations, and other grid infrastructure.
At the same time, large customers also purchase substantial quantities of electricity.
PG&E has argued that, with appropriate rate structures, additional data-center demand can spread fixed system costs over a larger volume of electricity sales and potentially reduce costs for other customers.
Those claims deserve careful regulatory scrutiny.
The central principle for policymakers should be straightforward:
Existing customers should not unfairly subsidize infrastructure costs created specifically to serve extremely large new loads.
Determining how those costs are allocated will become increasingly important as California considers how to accommodate the growing electricity requirements of AI infrastructure.
Utilities, regulators, developers, and communities will all have a role in that conversation.
What About Local Energy?
There is another side to the equation.
San Jose and the broader Silicon Valley region contain enormous amounts of commercial and industrial property.
Consider:
- Warehouses
- Office campuses
- Manufacturing facilities
- Parking structures
- Municipal properties
- Schools
- Retail centers
- Industrial buildings
Some of these properties could potentially support distributed solar, battery storage, microgrids, demand flexibility, or other energy technologies.
No realistic amount of rooftop solar should be presented as a substitute for the utility-scale electricity infrastructure required to support Silicon Valley’s large data centers.
It cannot replace the generation, transmission, substations, and other systems necessary to serve major AI loads.
But distributed energy can still play a meaningful role.
From Data-Center Growth to Energy Investment
What if every major new data-center development triggered a parallel evaluation of distributed-energy opportunities in the surrounding community?
Local commercial properties could be evaluated.
Battery-storage opportunities could be identified.
Municipal facilities could participate.
Grid constraints could help determine where distributed resources might provide the greatest value.
Data-center developers could explore opportunities to support community energy investments.
This would change the conversation from:
“How much electricity will AI consume?”
to:
“How much new energy investment could AI help catalyze?”
That is a fundamentally different approach to economic development.
Instead of viewing a data center solely as a large new electricity customer, communities could explore whether its arrival can help accelerate investment in energy infrastructure beyond the facility itself.
The Solar Harmonic Framework™
This is the central idea behind the Solar Harmonic Framework™.
Rather than treating the data center, utility, and community as separate entities, the framework explores a collaborative model:
Utility + Data Center + City + Businesses + Property Owners + Distributed Energy
The goal is not to replace the grid.
Large AI data centers will continue to require substantial utility-scale infrastructure.
The goal is to explore whether the economic activity surrounding major new electricity demand can also support appropriate distributed-energy investment throughout the surrounding community.
Potential opportunities could include:
- Commercial rooftop solar
- Industrial solar
- Battery energy storage
- Solar parking structures
- Municipal energy projects
- Microgrids
- Demand flexibility
- Community resilience projects
The feasibility of each opportunity will depend on site conditions, economics, utility requirements, regulations, and actual grid needs.
The framework is about identifying where those opportunities may make sense and bringing the appropriate stakeholders together.
San Jose’s Opportunity to Lead Again
San Jose helped create many of the technologies driving today’s AI revolution.
Now it has an opportunity to help shape the energy model supporting that revolution.
The challenge is substantial.
Large data centers require enormous amounts of reliable electricity.
Utilities must plan for new loads.
Communities must understand infrastructure impacts.
Regulators must consider cost allocation and reliability.
Developers must secure viable energy supplies.
But there is also an opportunity.
If Silicon Valley can connect AI infrastructure growth with investment in electricity infrastructure, distributed energy, and community benefits, it could create a model that other technology regions eventually follow.
The Next Chapter of Silicon Valley May Be About Energy
The growth of AI data centers is changing how San Jose should think about development.
The key question is no longer simply where technology companies want to build.
It is also where reliable electricity can be delivered—and how the infrastructure required to deliver that electricity will affect the surrounding community.
San Jose has the opportunity to approach that challenge strategically.
The city can evaluate individual data centers while also considering the larger energy system being created around them.
That means thinking about generation, transmission, substations, storage, distributed energy, infrastructure costs, reliability, and community participation as connected pieces of the same conversation.
Silicon Valley built much of the digital economy.
Now it has an opportunity to help shape the energy infrastructure that will power its next chapter.
Powering AI. Empowering Communities.
San Jose’s growing data-center market represents a major infrastructure challenge, but it also creates an opportunity to rethink how AI investment connects with the communities and energy systems supporting it.
The Solar Harmonic Framework™ explores how data-center developers, utilities, cities, businesses, property owners, and distributed-energy developers can work together to identify energy opportunities beyond the data-center campus.
Is your San Jose organization, business, or community preparing for major AI infrastructure growth?
Solar Harmonics can help you explore opportunities for distributed solar, battery storage, municipal energy projects, and broader community energy investment. Contact Solar Harmonics to discuss how a coordinated energy strategy can help support AI growth while creating meaningful value throughout the community.
