PG&E’s Data Center Pipeline Surges in Second Quarter

PG&E Corp. reported a 7.6-gigawatt increase in its data center pipeline during the second quarter as the artificial intelligence build-out gains momentum.

The California utility’s pipeline of proposed data center projects totaled 12.7 gigawatts at the end of June, up from 5.1 gigawatts in March, the company said Thursday in its latest earnings presentation. The surge underscores that the data-center boom won’t be limited to the states that have dominated AI infrastructure thus far, including Virginia and Texas.

PG&E separates projects in the pipeline into different categories depending on how far along the interconnection application is. The current makeup of the pipeline shows that while dozens of projects have advanced enough to sign an application and pay a study fee, far fewer are close to getting connected.

The largest gain in the second quarter came from projects that have applied and paid that initial fee. The company now has 26 projects totaling 8.2 gigawatts in that category, up from 1.7 gigawatts in March. But there are only four projects making up 490 megawatts of the pipeline that have actual interconnection construction agreements, up from 140 megawatts.

The bulk of the projects entering the pipeline are in what CEO Patti Poppe calls the “Goldilocks” size of 1.5 gigawatts or smaller and concentrated in the Bay Area.

But larger projects are coming in. “As people realized that we have more capacity in California than they thought, and that we’ve been adding capacity and we have transmission capacity, we’ve had more applications for these larger projects in the mix,” she said on a call with investors Thursday.

Like many U.S. utilities, PG&E has said it’s working to lower customers’ bills while contending with how to get ever-bigger data centers connected to power. According to the company, each additional gigawatt in its data center pipeline reduces customers’ electricity bills by 1% or more. But those results can “differ materially” depending on the pricing and rate design for large electricity users, the company said, an issue utilities and regulators are still working to determine.

“We remain very focused on pricing this load correctly, attractive to data center customers, but still rate reducing for our other customers,” Poppe said.

PG&E shares fell as much as 3%, the biggest intraday drop in over a month, after the company reported second-quarter operating revenue that was below analysts’ estimates.

Top photo: Pacific Gas & Electric Co. (PG&E) trucks sit on a roadside in Paradise, California, on Tuesday, Jan. 22, 2019. Bloomberg.