New San Jose power hub could help fuel city's AI, data center ambitions

SAN JOSE - A major new power hub rising downtown could help San Jose meet surging electricity demand from artificial intelligence, data centers, and other energy-hungry industries, as part of a broader push to strengthen the grid in the Bay Area’s largest city.

LS Power broke ground Wednesday on what the company calls its Skyline terminal at 200 Ryland St., an electricity complex that will connect to PG&E’s adjacent Station B at 260 Coleman Ave. In 2023, an affiliate of LS Power paid $56.5 million for the 9.8-acre site.

Once complete and connected to the PG&E grid, the LS Power hub, coupled with other efforts, will help deliver an additional 1,000 megawatts of transmission capacity to San Jose and the surrounding area as part of a $2 billion South Bay project, according to LS Power CEO Paul Segal.

LS Power’s projects in the South Bay will create enough transmission capacity for 1 million homes, Segal told this news organization.

“San Jose needs to be the capital of power as much as it is the capital of Silicon Valley,” Leah Toeniskoetter, CEO of the San Jose Chamber of Commerce, said in an interview with this news organization.

LS Power said it has pursued multiple projects in San Jose because of positive economic prospects largely propelled by the region’s tech industry.

“The Bay Area is one of the most economically dynamic regions in the world, home to more than 7 million people,” Segal said. “It’s a hub for technology, advanced manufacturing and biomedical research. It’s a region where demand for reliable and affordable electricity is accelerating."

The new terminal is slated to be energized in 2028 once the project is completed, according to officials with LS Power, an electricity and infrastructure company that has launched multiple projects to bolster power capacity in the South Bay.

“The project represents a transformative investment in San Jose’s future,” said San Jose City Councilmember Michael Mulcahy, whose district includes the site on Ryland Street. “As our city continues to grow, so does the demand on our electric grid.”

LS Power is undertaking two major projects to bring new power connections into San Jose totaling a combined 1,000 megawatts.

One involves a 500-megawatt transmission line and related facilities between the Metcalf substation in South San Jose and PG&E’s San Jose Station B.

The other involves the development of a 500-megawatt electricity transmission link and other facilities between PG&E’s existing Newark Substation in Fremont and the Northern Receiving Station in Santa Clara.

Executives with LS Power said upgrades won't just be for the tech industry.

“Every electricity customer in the region will benefit from these upgrades, whether that is is a family in a new home, a small business, electric vehicle charging networks, buildings that are undergoing electrification, or just a major-load customer like a manufacturing facility or a research facility,” Segal said.

It’s uncertain how many homes, businesses, research labs, office buildings, data centers, shopping malls, schools, government buildings, hotels, or apartment buildings would be served by the transmission upgrades.

The LS Power efforts in San Jose and nearby suggest the region remains in an advantageous position moving forward, according to Bob Staedler, principal executive with Silicon Valley Synergy, a land-use consultancy.

“This is another sign that San Jose and Silicon Valley are in growth and expansion mode, not in contraction,” Staedler said.

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This story was originally published May 20, 2026 at 3:15 PM.