Two large data center projects in Santa Clara remain unused because of insufficient power supply from the city’s utility, Silicon Valley Power. Digital Realty Trust and Stack Infrastructure have built facilities with millions of square feet, but both are unable to operate as planned due to ongoing electricity shortages, according to Bloomberg.
Digital Realty began its 430,000-square-foot project in 2019. Stack Infrastructure, which Blue Owl Capital acquired earlier this year, finished a 551,000-square-foot facility two years after that. In addition, Blue Owl Capital has a separate nearby 48-megawatt facility that is also sitting vacant.
Silicon Valley Power is expanding its grid through a $450 million upgrade. The process is not expected to finish until 2028. This delay highlights an increasing problem for the data center industry: surging demand driven by artificial intelligence and cloud computing while older transmission systems and slow permitting hold back new supply.
BloombergNEF projects that electricity demand related to AI will more than double across the U.S. by 2035.
Santa Clara hosts Nvidia, now the world’s most valuable company; its chips are key for AI technology development. There are currently 57 active or planned data centers in Santa Clara. Despite high local power costs, developers continue investing because being close to tech companies—and users like autonomous vehicle firms who need low-latency connections—remains important.
Bill Dougherty, executive vice president for data center solutions at CBRE, told Bloomberg: “The demand has never been higher, and it’s really a power-supply problem that we have.”
Typically, Digital Realty invests about one-fifth to one-quarter of total construction costs before completing a building ready for tenants.
Stack Infrastructure’s site features four floors of empty data halls and plans include an on-site substation providing up to 12 megawatts of critical capacity once operational.
— Chris Malone Méndez
