By 2030, the centers could consume the equivalent of adding another city the size of L.A. to the state’s power grid.
Surging electricity demand from data centers across the U.S. is outpacing the supply of new clean energy sources, helping to sustain the fossil fuel industry. It’s a dynamic at play in California, where renewable energy is limited and expensive while power from existing natural gas plants is available and cheap.
Home to Silicon Valley, California now has nearly 300 data centers, many of which require around the clock power to run pre-trained artificial intelligence inference models. More are planned, and their combined power needs could be substantial. So could their pollution output, which comes from high electricity use and on-site diesel generators.
By 2030, California’s data centers could consume the equivalent of adding another city the size of Los Angeles to the grid. In the last two years, investor-owned utility Pacific Gas & Electric has had twice as many applications for large customers than during the previous eight years, mostly from new Bay Area data centers.
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In filings to the California Public Utilities Commission, which is considering updates to its clean energy incentives, PG&E cited data centers and headwinds against renewable energy as reasons that regulators should allow millions more tons of climate-heating emissions by 2030.
“The volume of data center load was previously not considered” when the commission set a target of capping grid emissions at 30 million metric tons, PG&E wrote. The utility suggested it should instead be 38 million, a difference equal to 21 additional fossil gas plants operating for a full year. It would put the state at the upper limit of its goal to slash grid emissions by decade’s end.
The AI load comes at a challenging time for California, whose data center power consumption is among the highest in the nation. The state also wants 5 million electric vehicles on the road by 2030 compared to 1.9 million today. In 20 years, state law requires California to have a fully clean energy grid, even as it pushes for millions of additional electric cars and anticipates far more complex data center power demands.
But for large buyers of power, clean energy currently comes at a premium, limiting its use. A years-long delay for grid interconnection at the California Independent System Operator, as well as high demand and financing costs, are contributing factors, as is the abrupt end of federal clean energy tax credits and other anti-renewables assaults under President Donald Trump. That offers an advantage to operators of existing gas plants, which now power more than a third of California’s grid even as renewables have surged.
Prices for renewable energy in long-term purchasing contracts are “some of the highest that I’ve seen in the last 20 years,” said Monica Padilla, CEO of Silicon Valley Clean Energy. Her organization, a community choice aggregator that buys renewable electricity for customers, serves three data centers.
Over the last year, “We started seeing these huge load growth” forecasts from the state, Padilla said. Meanwhile, prices per megawatt for solar, wind, geothermal and battery storage have doubled or tripled since 2018. “We can’t do it just with renewables right now. They’re too expensive.”
While many data centers are in Silicon Valley, more than half of the state’s most polluting gas plants are in communities with high levels of poverty, disease and pollution, a report by California Environmental Justice Alliance and the Sierra Club found. At least nine of the gas plants are releasing levels of nitrogen oxides, a smog-forming group of pollutants, that are above federal limits. But the AI boom has undercut the efforts of advocates to phase out natural gas.
After releasing the report, environmentalists intended to “start working long term to phase down natural gas plants,” said Sam Brown, who lives four miles from the Walnut Creek Energy Center, a top polluter, in Los Angeles County, and knocked on doors to warn of the danger. “With the amount of consumption of energy with AI, I think it’s going to look a lot less likely now,” Brown said.
Yet some gas plant operators say they have a solution: capturing the carbon. More specifically, using chemical amines such as monoethanolamine, which binds to carbon dioxide molecules in gas to prevent them from being emitted and warming the atmosphere.
The technology has, however, failed to meet capture targets worldwide and requires large sums of capital to retrofit onto power plants. It’s also energy intensive. Research from MIT found that reheating amines to remove the carbon and then compressing it eats 15% more of the plant’s energy.
Additional investment and energy are needed to pipe the compressed carbon for permanent sequestration, such as burying it.
Despite those issues, the idea of retrofits has been embraced in California’s blueprint for cutting emissions, after years of advocacy by influential oil and gas lobbyists.
Some companies are lobbying the Public Utilities Commission to allow power from gas plants retrofitted with new pipelines and amine absorbers and regenerators to receive clean energy credits.
California Resources Corporation, which operates thousands of oil wells in addition to the 550 megawatt Elk Hills gas plant in Kern County, described gas plants such as those affixed with amine tanks as an “ideal” renewable energy resource, even better than wind or solar. The company said it could also reduce pollutants like nitrogen oxides; the plant released 88.5 tons of them in 2023 as well as volatile organic compounds, atmosphere-heating methane and other pollutants.
In a call with investors in May, CEO Francisco Leon said his company was “pursuing multiple new opportunities with AI data center companies.” Its subsidiary Carbon TerraVault received federal permits in 2024 to construct four carbon injection wells in which it plans to bury 1.5 million metric tons of carbon annually through 2050.
Even if this project succeeds, it wouldn’t address methane leaks that comprise 25% to 48% of emissions from gas-fired power, a paper published by Stanford researchers found. And the amines eventually degrade into cancer-causing nitrosamines and ammonia that pollute the air, the paper concluded.
The company didn’t respond when asked how soon its power plant might begin capturing carbon.
Another company, Calpine Energy, wrote to the commission that gas-fired power plants retrofitted with carbon capture technology are “essential to achieving” California’s emissions goals.
Even as renewables have grown as a share of grid power since 2009, Calpine’s 22 gas plants saw some of their largest peak loads and emissions in the last five years, especially during heat waves as people cranked up air conditioners.
That includes the Los Medanos Energy Center, a 500 megawatt gas plant in the Bay Area that emitted record carbon levels in 2022. Calpine is seeking permits to capture small amounts of carbon there, and was overseeing a federally funded pilot project at another plant before funding was cut.
Calpine didn’t respond to questions about its carbon capture projects.
In July, the Federal Energy Regulatory Commission approved plans for Calpine to merge with Constellation Energy, a major power company in the Northeast and Midwest, to become the biggest generator of gas and nuclear power in the U.S. with 50 GW of capacity — equal to about 10% of U.S. electricity consumption.
Constellation cited data centers as a growing sector needing “around-the-clock energy.” Last year, it struck a deal with Microsoft to restart the Three Mile Island nuclear plant in Pennsylvania to power data centers. Three Mile Island was the site of the county’s worst nuclear disaster in 1979, when one of its reactors suffered a partial meltdown.
Calpine and California Resources Corporation have for years been driving forces behind carbon capture regulations in the California Legislature, including this year’s AB 881 and SB 614, both of which task the Office of the State Fire Marshal with regulating carbon pipelines and are awaiting Gov. Gavin Newsom’s signature. The companies spent a combined $2.56 million on lobbying since 2023, not including trade groups.
Some gas power plant owners, including Calpine, are installing battery storage systems on their properties that already have interconnections to the grid.
For Silicon Valley Clean Energy’s Padilla, that’s a good step. Her group recently bought power from a Central Valley natural gas plant owned by Middle River Power with a battery installed on site. The battery delivers electricity in the evening before the gas turbine kicks on.
“It makes sense to utilize that interconnection capacity for clean resources as well,” Padilla said.
But even as it operates the battery, Middle River Power, which is owned by data-center investor Partners Group, told the Public Utilities Commission in July that renewable energy sources were unpredictable and variable. Gas-fired power plants that capture carbon, by contrast, hold “great promise” and deserve clean energy credits.
Among Middle River Power’s gas fleet is the 330 megawatt Tracy Combined-Cycle gas plant in San Joaquin County, which consistently violated federal limits on nitrogen oxides, the Sierra Club report found.
Kathy Hurst, Middle River Power’s director of environmental health and safety, said the company has “very restrictive” nitrogen oxide limits. It is installing a battery storage system at the Tracy plant, which will “reduce the plant’s generation by 40 megawatts,” she added.
With operational carbon capture for the state’s gas plants potentially years away, regulators run the risk of creating an impression that the technology allows companies to “guiltlessly combust fossil fuels,” said Sascha von Meier, a senior advisor at the California Institute for Energy and Environment.
Natural gas should be treated as a “transitional aid” to renewable energy, von Meier said, not a permanent solution. But the unpredictable growth of computational power for AI creates uncertainty. “There’s a potential for it to just be totally out of control.”
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