An agreement securing additional energy for an Amazon data center could chart a path for other energy customers to do the same.
At Tuesday night’s city council meeting, Manuel Pineda, chief electric utility officer, detailed a power purchase agreement with Bloom Energy. That agreement — essentially two agreements: one with Bloom and another with Amazon — would secure 20 megawatts for a data center located at 2315 Mission College Blvd.
Demand for energy beyond what Silicon Valley Power (SVP) can provide is increasing with some of the utility’s marquee customers, Pineda said. Consequently, SVP asked the council to authorize securing an additional 80 megawatts as part of the agreement to service these customers.
“We have been working very hard to try to get additional transmission capacity and grow the system,” Pineda said Tuesday night at the council meeting. “We have been taking a proactive approach to look at additional opportunities for in-city generation that is not affected by transmission … we have been working nonstop to look for additional options for two-plus years.”
In just the last year, the council has approved $136.7 million in purchases for SVP to increase its load. Despite those efforts, Pineda said some customers, namely data centers, simply need greater transmission than SVP is providing.
SVP will enter into a 15-year agreement with Amazon Web Services (AWS) and another, contingent agreement, with San Jose-based energy company Bloom Energy for the energy transmission.
A neighboring substation, with four transformers, set to be located at 2305 Mission College Blvd., is under construction to accommodate the data center.
“What AWS would like to do is have this extra 20 megawatts so they can both accelerate their load ramp but also have the option to have power for their second building,” Pineda said.
Energy secured for Amazon is expected to cost roughly 50% more than is typical, Pineda said. Because of this, the Bloom agreement to secure the energy depends on Amazon agreeing to pay for all costs associated with the transmission, including SVP employee costs.
The agreement will funnel approximately $1.7 million a year into the city’s general fund. The energy, generated through natural gas, counts toward the utility’s renewable portfolio by leveraging renewable energy credits.
Pineda said at least four other customers are interested in similar deals. However, should any of those agreements exceed 20 megawatts, SVP would return to the council for approval.
The council approved the contracts in a 6-0 vote. Council Member Suds Jain recused himself because he owns Amazon stock.
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