San Jose is hustling to keep the AI-era data center boom inside city limits, even as developers warn that California is starting to lose its grip on the industry. At a recent West Coast panel, builders described long waits for power, steep electricity prices, and a maze of permits that are pushing the biggest projects to states that can move faster and cheaper. City and utility leaders are betting that a new implementation pact will flip that script, but it still has to survive real-world timelines and environmental reviews.
Panelists did not sugarcoat the stakes. They said delays and costs are cutting into California's share of a national buildout that could reach hundreds of gigawatts. As reported by Bisnow, PG&E CEO Patti Poppe told the crowd at Bisnow's DICE: West event, “If we're not careful, we lose the chance,” capturing a growing industry belief that speed to power now outweighs almost every other site factor.
San Jose's power pact lands a quick win
The city already has one early win to point to. PG&E and San Jose say they have energized Equinix's new SV12 facility in south San Jose, delivering 40 megawatts of capacity and marking the first project completed under the city's implementation agreement with the utility. PG&E is pitching the activation as proof that the partnership can cut connection timelines for large customers and scale upgrades when needed. In a press release, PG&E also highlighted that the project will generate new net revenue for the city while the utility expands a nearby substation to be fully scalable.
Rankings and the national shift
That local momentum matters because the broader rankings are not kind to California. JLL's latest global data center outlook shows how speed to power, land availability, and overall cost are rearranging where capacity gets built. JLL projects huge investment in new capacity through 2030 and warns that markets able to move quickly on power interconnections are pulling ahead of slower, higher-cost regions.
A massive site and a long approval path
San Jose is also trying to line up one of the last big local land plays. The city has tapped Prologis as its preferred developer for a 159-acre site near the regional wastewater facility, a property that could support data centers and advanced manufacturing. Local reporting says the proposal could generate tens of millions of dollars in annual revenue for the city, but still has to pass CEQA review and other approvals before any construction starts. San Jose Inside covered the council action, and AI data center jackpot coverage has tracked the city's broader push to secure AI jobs and supporting infrastructure.
Developers' calculus: speed and dollars
Developers at the panel were clear about why some projects never make it to groundbreaking. Mark Calvano said he “spent $10M and 10 years” trying to get a data center permitted in California, only to move the deal to Texas. Primary Digital Infrastructure's John Sheputis reminded attendees that “a hundred megawatts, that's a billion and a half dollars” in capital, which investors are not eager to leave in limbo. Global Compute Infrastructure's Scott Peterson told the room to expect a near-term California market made up of “boutique, niche, infill” projects rather than the multigigawatt campuses rising in other states, as documented by Bisnow.
Why smaller projects make sense
Even so, smaller high-priced facilities can still make financial sense in places like the Bay Area. Tenants are willing to pay for proximity to engineering talent and low latency, even when land and power are expensive. JLL notes that energy availability and interconnection speed now matter more than land price for many site decisions, a trend that favors infill and niche developments under 100 megawatts.
Tradeoffs for residents and regulators
City leaders argue the upside is hard to ignore. Large, steady power loads can broaden the customer base that helps pay for grid maintenance and bring in fresh revenue for city budgets. At the same time, local advocates and regulators are watching closely for impacts on habitat, recycled-water use and community benefits tied to major sites. Those conditions will help decide whether projects move quickly or bog down. The local debates and environmental issues around the wastewater facility have been detailed by San Jose Inside.
What to watch next
Key markers to watch include the outcome of Prologis' exclusive-negotiation agreement, the CEQA documentation and PG&E's load and interconnection studies. Any of those could speed up or slow down the path to a potential 2028 to 2030 construction window. PG&E's public updates will be the clearest test of whether the implementation pact is actually shortening wait times for big customers. For immediate details on the Equinix activation and PG&E's account of the work completed so far, see the utility's news release.
For now, San Jose can point to a visible win with the Equinix energization and a major development site in negotiations. Market players, though, say California's long-term role as a data center hub will come down to whether cities and utilities can consistently turn planning promises into on-time power deliveries and permit approvals.
