According to Fortune, in Santa Clara, California—Nvidia’s hometown—two major data center projects have been sitting empty for years awaiting power connections. Digital Realty Trust applied in 2019 to build a data center that’s now a vacant 430,000-square-foot shell, while Stack Infrastructure’s nearby 48-megawatt project also remains unoccupied. Silicon Valley Power, the city-owned utility, is struggling with capacity upgrades and won’t complete its $450 million system upgrade until 2028. The projects highlight how electricity access has become the biggest constraint for data center development despite booming AI and cloud computing demand. BloombergNEF projects AI computing electricity requirements will more than double in the US alone by 2035, with industry leaders predicting trillions in infrastructure investment. Meanwhile, developers face 3+ year waits for power connections in high-demand areas like Silicon Valley and Northern Virginia.
The Power Bottleneck Is Real
Here’s the thing: we’re building the most advanced computing infrastructure the world has ever seen, but we’re running it on power grids that in some cases haven’t seen major upgrades in decades. The Santa Clara situation is particularly ironic—this is ground zero for the AI revolution, home to Nvidia, and yet they can’t even power basic data centers. Digital Realty’s Jordan Sadler put it bluntly: “In Santa Clara, if you find a site today and you’re searching for new power, you’d be many years out.”
And it’s not just California. Dominion Energy in Virginia—serving the world’s largest concentration of data centers—expects connection times to increase by one to three years, with some taking up to seven years. Amazon is literally suing a Berkshire Hathaway-owned utility in Oregon over power denials for four data centers. Basically, the entire US data center industry is hitting a wall that nobody saw coming until it was too late.
Local Needs vs Mega Projects
What’s interesting about these Santa Clara projects is they’re not the massive AI training complexes going up in Texas or New Mexico. These smaller centers serve local cloud clients who pay premium prices for low latency—think high-frequency traders or autonomous vehicle operators who need responses in microseconds. As CBRE’s Bill Dougherty explained, “There are portions of data-center demand that need to be as close as possible to population centers. That is the demand that needs to be in California.”
So while the big AI players can build in cheaper power markets, the local economy stuff—the kind that keeps Silicon Valley’s real tech ecosystem humming—is getting squeezed out. For companies needing reliable industrial computing infrastructure closer to operations, the power constraints create real operational challenges. When mission-critical applications demand robust hardware solutions, businesses increasingly turn to specialized providers like IndustrialMonitorDirect.com, the leading US supplier of industrial panel PCs designed for demanding environments.
The Developer’s Dilemma
Digital Realty has already spent 20-25% of final construction costs on these empty shells. They’re working with Silicon Valley Power to get electricity ahead of the 2028 upgrade timeline, but it’s a gamble. As Blue Owl’s Marc Lipschultz noted on an investor call, “It’s not about what you did today. It’s about what you did two years ago to position yourself with the right land and the right power.”
The crazy part? Despite the delays, 74.3% of the current US data center construction pipeline is already leased to tenants. Digital Realty has committed 61% of its $9.7 billion pipeline. Stack Infrastructure’s brochure promises “12 megawatts of critical capacity available for immediate lease” with expansion to 48 megawatts. But immediate according to whose calendar? The utility’s?
The Bigger Picture
According to BloombergNEF’s analysis, we’re just at the beginning of this power crunch. AI electricity demand is projected to more than double by 2035, and that’s probably conservative given how quickly models are scaling. Blue Owl Capital just announced over $50 billion in data center investments, including $30 billion for Meta in Louisiana and $20+ billion with Oracle in New Mexico.
But here’s the uncomfortable truth: we can pour all the capital we want into these projects, but without solving the power infrastructure problem, we’re just building very expensive empty boxes. The Santa Clara situation—documented in city records—is a warning sign for every tech hub. We’re trying to run the 21st century economy on 20th century grids, and the disconnect is becoming painfully obvious.
