Data Centers

As data center development grows across California and the nation, the California Energy Commission is playing an important but limited role. While the CEC does not permit data centers, it does assess their impact on future electricity demand and, in some cases, permits or exempts on-site power generation associated with these projects.

As California sets records for bringing on new clean energy resources, data centers are emerging as a driver of electricity demand growth in the State. California has more than 200 active data centers, making it one of the nation's leading states in data center development, second to Texas and Virginia. In early 2026, data centers accounted for about 1,000 megawatts (MW), or 2 percent of the California Independent System Operator (California ISO)’s peak electricity demand, according to the CEC's Planning Forecast. That is projected to increase to 4,500 MW, or 9 percent of peak demand by 2040.

From the early days of computing to today’s digital age, California has remained a driving force in global technology and innovation. That legacy continues as more data centers are developed, which have become integral in modern digital infrastructure. Across the Golden State, ongoing technological activity, ranging from software development to large-scale data processing, contributes to the next generation of innovation.

California Energy Demand Forecasting

Every year, the CEC develops the Energy Demand Forecast, which compiles energy demand projections that serve as a key planning tool for California energy agencies, including the California Public Utilities Commission (CPUC), California ISO, and investor-owned utilities. The forecast helps guide decisions about energy procurement, transmission, and distribution planning, and other actions needed to maintain reliability, conserve resources, protect the environment, and ensure affordable electricity rates for Californians.

In 2024, the CEC began incorporating projected data center growth into its demand forecast, using data obtained from applications submitted to utility companies. The CEC works closely with the utilities to understand the likelihood of completion for these projects, based on the application stage. Utilities in the Bay Area with decades of experience planning for data centers have shared best practices with CEC for forecasting demand growth. CEC staff used that information to develop its forecast methodology and will continue to refine its approaches.

The demand forecast is part of the Integrated Energy Policy Report (IEPR), which serves as the CEC's big-picture guide to understand where the state’s energy system is headed. The IEPR is published every two years, with an update produced in between years, so the state always has a current view of what's happening and what's coming next.

Permitting

The CEC does not permit data centers but does have jurisdiction over certain energy infrastructure associated with them under its exclusive permitting authority to certify all thermal generating facilities 50 megawatts (MW) and larger in California. While most data centers rely on the electric grid as their primary source of power, they typically require on-site electricity generation for backup power, most commonly diesel-powered generators. These backup generators only run during emergencies, testing, and maintenance, but still require permits to build and operate.

Data centers may also propose to construct their own primary electricity on-site instead of drawing from the grid.

Depending on the size and technology type of the on-site generation facility proposed, data centers may seek permitting through one of the following programs: Small Power Plant Exemptions, Application for Certification Process, the Opt-In Certification Program.

  • Small Power Plant Exemptions (SPPE): Proposed thermal power generation projects between 50 and 100 MW are eligible for an exemption from CEC’s permitting authority. If the application is granted, the facility can proceed with local permitting, such as through a land use authority and/or air quality district. The CEC staff conducts a California Environmental Quality Act (CEQA) review of the project; to be exempt, the CEC must find that the proposed facility would not have substantial adverse impacts on the environment or energy resources.
  • Application for Certification (AFC) Process: A proposed thermal generation facility greater than 100 MW must obtain approval through the CEC’s certified regulatory licensing process under CEQA to operate. This process includes a CEQA analysis where CEC conducts ongoing monitoring of certified facilities for compliance with all applicable federal, state, and local laws, and any conditions of certification imposed by the CEC.
  • Opt-In Certification Program: The CEC has an optional permitting program, in lieu of local permitting, for eligible clean energy generation facilities.

Frequently Asked Questions

Data centers are buildings designed and equipped to meet the needs of high-density computing equipment, such as server racks, used for data storage and processing. Typically, these facilities require dedicated uninterruptible power supplies and cooling systems. Functions may include traditional enterprise services, on-demand enterprise services, high-performance computing, internet facilities, and/or hosting facilities. These are often free-standing, mission-critical computing centers. When a data center is located within a larger building, it will usually have its own power and cooling systems and require a constant power load of 75 kilowatts or more.

Data centers do not require CEC approval. The CEC does have authority related to thermal power plant licensing, small power plant exemptions, and an optional certification program for clean energy projects. The CEC also oversees Building Energy Efficiency Standards that impact data centers and develops statewide energy forecasts that include estimated data center electricity usage.

Standalone data centers over 50,000 sq ft and data centers located within buildings larger than 50,000 sq ft are required to report and disclose energy usage to the CEC every year as part of the Building Energy Benchmarking Program. Benchmarking benefits building owners by providing insights into their building’s energy usage and identifying opportunities for efficiency upgrades. The data collected is public and helps the CEC plan for future building energy policies.

The CEC does not currently manage a tally but works closely with the utilities to track requests for electricity service for proposed data centers.

Load is the amount of electric power supplied to meet one or more end users' needs.

Data centers do not change California’s goal of 100 percent clean energy by 2045. In the last six years, California has added more than 30,000 megawatts of new clean energy and storage capacity. Clean energy is cheaper, faster to build, and better for public health. The Golden State will continue adding more clean energy resources to meet both rising demand and its goals.

The rapid growth of data centers presents new challenges for demand forecasting and grid planning. By continually refining methods and incorporating new data, the CEC aims to provide transparency and support proactive, reliable grid planning. Staff will continue to monitor data center applications to utilities for energization as well as the impacts of recent federal policy changes, like the Accelerating Federal Permitting of Data Center Infrastructure Policy.

Contact

For more information and questions, contact mediaoffice@energy@energy.ca.gov.