California Cities Diverge on Data Center Growth

Santa Clara has expanded its server farm capacity while San Francisco implemented a new moratorium on facilities.

Updated on Sept. 18, 2026 in Data Centers

Bold flat-color editorial illustration showing a dense server building block and an empty land plot, representing divergent infrastructure policies. — Santa Clara and San Francisco have adopted conflicting regulatory approaches to data center growth, reflecting a regional debate over economic development and environmental priorities. AI Illustration. Upload story photo >

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Should local governments prioritize hosting data centers to lower utility costs for residents?

Santa Clara has continued to build out its data center infrastructure to capitalize on tax revenue, while San Francisco supervisors have moved to restrict new facilities. Officials in San Francisco cited environmental concerns in the Bayview neighborhood as the primary driver for their temporary halt on new development.

Why it matters

The divergent approaches highlight a growing regional conflict between the economic benefits of server farms and the environmental impact of energy-intensive infrastructure. While Santa Clara relies on data center revenue to fund public services, other areas are prioritizing local environmental preservation.

Santa Clara hosts 58 data centers and collects $29.5 million in annual revenue, supported by power costs of 18.2 cents per kilowatt-hour. In contrast, PG&E charges 42.2 cents per kilowatt-hour, and San Francisco is currently testing a 45-day moratorium on new sites.

The players

Shamann Walton

He is a San Francisco Supervisor who recently held a press conference to address the city's new moratorium on data center facilities.

Silicon Valley Power

This is the municipal utility provider for Santa Clara that offers electricity at 18.2 cents per kilowatt-hour to support the city's infrastructure.

Pacific Gas and Electric

It is the investor-owned utility providing power to San Francisco at a significantly higher rate of 42.2 cents per kilowatt-hour.

Intel

This major technology firm funded a local substation expansion and paid $10 million in fees to facilitate data center development in Santa Clara.

Valley Water

This regional agency manages water resources and held a briefing in May 2025 concerning the use of recycled water for cooling server farms.

The details

Santa Clara has invested $459 million into power grid upgrades to support its industrial belt, which utilizes recycled wastewater for cooling. Meanwhile, San Francisco supervisors, led by Supervisor Shamann Walton, have focused on limiting additional facilities due to concerns regarding their impact on residential areas.

September 14, 2026: Supervisor Shamann Walton held a press conference regarding the moratorium.
May 2025: Valley Water briefed officials on recycled water usage for cooling processes.
May 2026: A scheduled Gallup poll will assess public opposition to data centers.

The Tech Race

The implementation of the San Francisco 45-day moratorium on new data centers marks a significant departure from the rapid expansion seen in Silicon Valley. This shift reflects a wider struggle in the industry as municipalities weigh the financial benefits of hosting infrastructure against growing local environmental and energy consumption concerns.

Residents in Santa Clara may see continued funding for police, parks, and libraries derived from server farm tax revenue. Conversely, San Francisco businesses and residents may experience limited expansion of digital infrastructure and a potential cooling effect on local tech development during the moratorium.

The takeaway

The contrast between Santa Clara and San Francisco underscores how municipal utility rates and local ordinances dictate the feasibility of modern tech infrastructure. Communities seeking to balance growth with resident concerns must navigate these trade-offs through targeted land use and power management strategies.