Nvidia’s Hometown Data Centers Idle, Await Power Supply

Bassyonni

ago 2 hours

Nvidia Corp.’s hometown of Santa Clara, California, is currently facing significant delays in the development of data centers due to power supply challenges. Major developers, including Digital Realty Trust Inc. and Stack Infrastructure, have projects that remain inactive as local utility Silicon Valley Power (SVP) struggles to meet electricity demands.

Nvidia’s Hometown Data Centers Idle

Digital Realty applied for construction in 2019, but as of now, its site is an empty shell. Similarly, Stack Infrastructure has a 48-megawatt project that is also vacant. This situation points to a broader issue affecting the U.S. tech sector, where expanding data center demand collides with power supply constraints.

Power Supply Challenges in Santa Clara

Silicon Valley Power is undergoing significant system upgrades, including a $450 million investment set to complete by 2028. However, existing agreements with developers like Stack and Digital Realty are hindering immediate electricity access.

Digital Realty’s project is a 430,000-square-foot building.
Stack Infrastructure’s facility spans 551,000 square feet.
Electricity demand from AI is projected to double in the U.S. by 2035.

With aging infrastructure and slow upgrades, the operational capacity struggles to keep pace with the surge in demand driven by cloud computing and AI technologies. Bill Dougherty from CBRE Group emphasizes the urgency of addressing these power supply issues as they create roadblocks for local data center operations.

Comparative Infrastructure Development

In contrast to the stalled projects in Santa Clara, larger AI data centers are being developed in states like Texas and New Mexico, where electricity costs are lower. These locations face their own sets of challenges, yet they currently offer more favorable conditions for building. As noted, a significant portion of current U.S. construction is already committed to tenants, indicating high market demand.

74.3% of the U.S. construction pipeline is already leased.
Digital Realty has leased approximately 61% of its $9.7 billion project pipeline.

As the technology sector evolves, utilities across the U.S. face similar hurdles in upgrading capacity. The experience of firms like Digital Realty showcases the critical need to tackle regulatory and permitting challenges urgently.

Future Outlook

Despite challenges, investment in data centers continues aggressively. Blue Owl Capital recently announced over $50 billion in data center investments, signaling strong market confidence. The upcoming years will be crucial in addressing power supply issues to facilitate the growth and expansion of data centers, particularly in high-demand regions like Santa Clara.