Silicon Valley data centers sit empty, unpowered

They may stay that way for years because local utility not ready to supply electricity.

- BY JOHN GITTELSOHN AND MICHELLE MA

Two of the world's biggest data center developers have projects in Nvidia Corp.'s hometown that may sit empty for years because the local utility isn't ready to supply electricity.

In Santa Clara, where the world's biggest supplier of artificial-intelligence chips is based, Digital Realty Trust Inc. applied in 2019 to build a data center. Roughly six years later the development remains an empty shell awaiting full energization. Stack Infrastructure, which was acquired this year by Blue Owl Capital Inc., has a nearby 48-megawatt project that's also vacant, while the city-owned utility, Silicon Valley Power, struggles to upgrade its capacity.

The fate of the two facilities highlights a major challenge for the U.S. tech sector and indeed the wider economy. While demand for data centers never has been greater, driven by the boom in cloud computing and artificial intelligence, access to electricity is emerging as the biggest constraint. That's largely because of aging power infrastructure, a slow build-out of new transmission lines and a variety of regulatory and permitting hurdles.

And the pressure on power systems is only going to increase. Electricity requirements from AI computing likely will more than double in the U.S. alone by 2035, based on BloombergNEF projections. Nvidia's Jensen Huang and OpenAI's Sam Altman are among corporate leaders who have predicted trillions of dollars will pour into building AI infrastructure.

"The demand has never been higher, and it's really a power-supply problem that we have," Bill Dougherty, executive vice president for data center solutions at real estate brokerage CBRE Group Inc., said in an interview.