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Executive says that the largest California utility has seen a 40% increase in interest in data centers.

PG&E's, California's biggest electric utility, saw a 40% increase in the number of requests from developers of data centers across the northern part the state for power supplies this year, a company executive said on Tuesday.

California's Silicon Valley has one of the oldest and largest data center markets in the world. However, analysts say that the high cost of electricity and the price of land will prevent the state from capitalizing on the surge of artificial intelligence data centers currently being built across the nation.

PG&E said, however, that it sees signs that the state has still room to grow.

PG&E launched a new process last month for data center developers who are interested in connecting with the utility's network. PG&E supplies power and natural gases to 16 million people across northern and central California including Silicon Valley.

Mike Medeiros is PG&E’s vice president for South Bay Delivery. He said that the so-called "cluster study" yielded 4.1 Gigawatts in interest on top of 8.7 Gigawatts previously announced by the company during its most recent earnings call, held late April.

Medeiros stated that not only has the pipeline of data centers within PG&E grown, but also the size of these projects have increased since last year's study on clusters.

The typical data center that PG&E wanted to power last year had a capacity of 50 to 100 Megawatts. Currently, proposals range from 500 megawatts up to 1,000 megawatts.

Medeiros explained that "we're seeing a big change in the type of homes customers want. Some of this might be due to land availability, or simply scale and efficiency of building larger."

Data centers for AI, unlike earlier ones, are used to train large language models like ChatGPT and can be located further from the city center.

California's oldest data centers are located in Silicon Valley, in the western part, but many of the proposed new developments are in the inland areas, such as Contra Costa County and Fresno.

PG&E is not expected to connect all data centers that make inquiries. This is due to the short timelines set by operators and developers, as well as the backlog of equipment required to build the grid.

(source: Reuters)