As California’s data centers, especially those powering artificial intelligence (AI), grow in size and number, so does the environmental toll associated with their energy consumption. A growing reliance on diesel generators for backup power has raised alarms, as these generators contribute to air pollution, climate change, and public health risks.
Rising Energy Demand
In recent years, the energy demands of data centers have skyrocketed, driven largely by the rapid growth of AI technologies. Servers used for AI require far more powerful chips than those used in traditional computing, necessitating an increase in both capacity and energy use. According to McKinsey, global demand for data center capacity could increase from 60 gigawatts to 219 gigawatts by 2030, enough to power over 35 million homes.
California now hosts some of the largest data centers in the country, consuming more electricity than any state except Texas and Virginia. As the demand for server space grows, so does the push to expand infrastructure, often bypassing or minimizing environmental regulations.
The Small Power Plant Exemption
A loophole in California’s power plant regulations is allowing data center builders to avoid extensive public review processes. The Small Power Plant Exemption (SPPE), which was originally intended to expedite the approval of emergency power plants for residents, is being used to greenlight diesel-powered backup generators for large data centers. Since 2017, over 1 gigawatt of diesel-based energy—enough to power more than 160,000 homes for a year—has been approved for data centers in California.
While the exemptions were initially intended for emergency backup power in areas with pressing energy needs, they are increasingly being applied to large-scale facilities in tech hubs like Silicon Valley. Eleven of the 13 data centers approved for the exemption are located in the cities of Santa Clara and San Jose, many near residential neighborhoods and schools.
Environmental and Public Health Risks
Diesel generators, while serving as an emergency backup, emit harmful pollutants including carcinogens that pose significant health risks, particularly for nearby communities. In addition to these health concerns, the use of diesel contributes to California’s growing greenhouse gas emissions, directly conflicting with the state’s ambitious renewable energy goals. The state aims to reduce emissions by 40% below 1990 levels by 2030 and phase out fossil fuels entirely by 2045.
Despite these concerns, the California Energy Commission has so far resisted calls to consider cleaner alternatives, such as natural gas or battery storage, for backup power. Environmental groups have also criticized the current review process for failing to engage the public adequately. The Center for Biological Diversity, for instance, filed a lawsuit last December against a developer and the city of Pittsburg over inadequate environmental review for a large data center.
Local Communities Left in the Dark
One of the main issues with the SPPE process is the lack of transparency. Cities and counties, rather than the state, are responsible for notifying local residents about planned data centers. In some cases, communities are left unaware until construction is underway. In San Jose’s Santa Teresa neighborhood, for example, residents were shocked to learn about the construction of a new data center complex by digital infrastructure firm Equinix. The facility will consume 99 megawatts of power and includes 39 diesel backup generators.
Local residents, like Mimi Patterson, were not notified until after the construction had already begun. “They found a piece of land, they figured these people won’t complain, and they took advantage of this neighborhood,” Patterson said. The nearby communities now face industrial noise from generator testing, which can reach the decibel level of 45 locomotive engines during emergency power tests.
Regulation and Oversight
The debate over the energy demands of data centers is also a question of regulation. Under current regulations, any power plant using 50 megawatts or more of energy must go through a lengthy application process with the California Energy Commission, including public outreach and hearings. However, facilities using less than this threshold are able to bypass this review through the SPPE.
Advocates for stronger regulations argue that this exemption allows data centers to bypass environmental safeguards. Alan Abbs, a legislative officer with the Bay Area Air Quality Management District, has pushed for cleaner alternatives and more rigorous oversight but says the commission has largely ignored these calls.
Pushback from Tech Industry
Despite growing concerns about diesel use, the tech industry is pushing forward with expanding data center capacity. In 2023, the Silicon Valley Leadership Group lobbied the state legislature to increase the SPPE from 100 to 150 megawatts, though the bill ultimately failed. The group, which represents major tech companies, argues that diesel generators are rarely used and that data centers are crucial for California’s economy.
“They have to rely on backup sources less than 0.07% of the time,” said Tim McCrae of the Silicon Valley Leadership Group during a legislative hearing. However, critics argue that even this small percentage could contribute significantly to environmental degradation and public health issues.
A Growing Crisis
The rapid expansion of data centers, coupled with the reliance on fossil fuels for backup power, is a growing environmental crisis. As the global demand for AI-powered computing continues to rise, California’s data centers are expected to continue to expand, placing additional strain on the state’s energy resources and contributing to pollution.
Researchers have warned that this trend could lead to significant public health costs. A December study by UC Riverside and Caltech found that an increase in diesel generator permits for data centers in Virginia could result in 14,000 asthma symptom cases and as much as $300 million in healthcare costs. By 2030, the health burden from data centers could amount to $20 billion.
Looking Ahead
As the demand for data centers grows, state and local officials face a difficult challenge: balancing the needs of the tech industry with the environmental and public health concerns raised by local communities. While the push for increased transparency and accountability continues, the need for more sustainable, cleaner energy solutions is becoming ever more urgent.
For now, California’s race to accommodate the tech industry’s growth comes at the expense of its long-term environmental goals, leaving communities to grapple with the unforeseen consequences of an industry that has long operated under the radar.
