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City of San José Announces Historic Agreement with PG&E, Positioning San José as West Coast's Premier Data Center Hub
A first-of-its-kind agreement and 2,000 megawatts of new transmission capacity ensure speed and certainty of power delivery for large energy customers, including data centers
SAN JOSE, Calif. (July 25, 2025) – The City of San José announces the execution of a groundbreaking Implementation Agreement with Pacific Gas and Electric Company (PG&E), establishing San José as the most power-ready city in California and the West Coast's premier destination for data center development. This historic partnership is the first agreement of its kind between PG&E and any municipality in its service area, guaranteeing speed and certainty of power delivery for large energy customers.
San José and PG&E are seeing an unprecedented amount of energy demand from new data centers. Currently, PG&E has requests for nearly 2,000 megawatts of new demand from data centers in the San José area. This agreement ensures PG&E is ready to deliver local infrastructure upgrades to meet that demand – with clear performance milestones and timelines for PG&E to deliver power to large-energy customers.
In addition to the local data center demand, San José is preparing to benefit from 2,000 megawatts from two new high-voltage transmission lines by 2028, which could provide enough power for nearly 1.5 million homes.
“San José isn’t just the heart of Silicon Valley — we’re the launchpad for what’s next,” said Mayor Matt Mahan. “This landmark agreement will enable us to continue to lead the AI revolution by increasing grid capacity, reliability, and efficiency. And with clear performance measures built into the agreement, we’re holding ourselves and PG&E accountable — making sure businesses get the power they need, when they need it. The message is clear: San José is ready to deliver.”
“San José represents the future of our hometowns in California — a model for how strong partnerships help us deliver on our triple bottom line serving people, the planet and the state’s prosperity. My coworkers at PG&E are proud to power San Jose’s growth with infrastructure built for purpose that delivers safe, reliable, clean and affordable energy for all,” said PG&E Corporation CEO Patti Poppe.
PG&E estimates that every 1,000 megawatts of new demand from data centers can help lower all PG&E customer bills by 1-2%. When new data center load comes onto the system, those large customers assume a larger share of the fixed costs of operating and maintaining the grid, which lowers rates for all customers.
"This agreement with PG&E represents a transformative moment for San José," said City Manager Jennifer Maguire. "By securing binding commitments for power delivery and leveraging the incoming 2,000 megawatts of new transmission capacity, we're not just attracting data centers – we're building the digital backbone that will sustain Silicon Valley's leadership in innovation for decades to come. This agreement ensures our residents benefit through job creation, workforce development, and significant revenue that will support essential city services."
San José as a Prime Location for Innovation and Technology
San José's comprehensive advantages for data center development position the City as the nation's most attractive location for digital infrastructure investment. Environmental and economic benefits further enhance San José's appeal: San Jose Clean Energy provides 62% renewable energy and 100% renewable options; the South Bay Water Recycling program offers recycled water below potable rates; and land costs are lower than comparable Bay Area markets.
Additionally, the City's location creates unparalleled connectivity to the tech ecosystem. San José sits within 25 miles of more than 40 Fortune 500 tech headquarters, ensuring low latency critical for artificial intelligence (AI) and machine learning applications. San José is home to eight of the world's top 10 cloud providers' regional presence and provides ready access to tech R&D spending. San José offers access to the world's largest talent pool of data center engineers and Information Technology professionals, with 27% of Bay Area workers holding graduate or professional degrees compared to 11% nationally.
Data centers serve as the essential infrastructure backbone supporting Silicon Valley's innovation economy. With AI, machine learning, and edge computing driving unprecedented demand for data processing capabilities, San José's strategic positioning ensures the region remains at the forefront of technological advancement.
When fully operational, these data centers will generate significant annual revenue for the City's General Fund, with individual projects contributing between $3.4 million and $6.8 million annually in utility taxes and property taxes. These funds can be used to support a range of City services such as public safety, libraries, parks, and infrastructure.
The Implementation Agreement builds on San José's existing strengths as the heart of Silicon Valley, where innovation meets infrastructure. The city's commitment to sustainable development, combined with guaranteed power delivery and strategic location advantages, creates an unmatched value proposition.
About the City of San José
With almost 1 million residents, San José is one of the most diverse large cities in the United States and is Northern California’s largest city and the 12th largest city in the nation. San José’s transformation into a global innovation center has resulted in one of the largest concentrations of technology companies and expertise in the world.
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