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A new study suggests that the Central Valley and areas around Fresno County could be a desirable location for data centers by using solar energy that is unused on California’s power grid.
The study, “Curtail to Compute: Siting Datacenters to Leverage California’s Stranded Renewable Energy,” was released on March 10 and conducted by the Next 10 thinktank and researchers at the University of Pennsylvania. The study looks at how placing data centers around solar generation locations could help reduce energy waste and avoid transmission upgrades.
California produces more solar power than the grid can carry during some hours, which is called curtailment.
When transmission lines are congested, renewable energy is shut off, even though it could help power homes and businesses. According to the report, curtailed energy in the state increased by 23% between 2023 and 2024, which is enough electricity to power around 500,000 homes a year.
The study showed that this issue is prevalent in PG&E’s “Fresno Zone,” where congestion has led to the highest levels of curtailed energy in California. Most of the congestion comes from Path 15, a transmission line that runs through the Central Valley and connects Northern and Southern California’s power grid.
The corridor could see congestion for over 7,300 hours a year by 2039, which is about 84% of the hours in a year.
Due to this, large amounts of solar energy produced in Fresno County are stranded locally, which can create an opportunity for energy related industry.
The study found that putting data centers around solar sites in Fresno County would potentially allow facilities to run on electricity that would be curtailed. In simulations, a 20-megawatt data center that would hypothetically be located in Fresno County could use solar energy for around 54% of the year.
The report shows benefits and a short-term dilemma for a rural, curtailed energy data center.
A 20-megawatt rural Fresno County data center would cost about $94 million less to build than a comparable Silicon Valley facility, driven by land that costs roughly $150,000 per acre versus $2.5 million in Santa Clara. Tenants would also pay about 10% less for electricity. The report models a 28% investor return versus 15% for urban facilities.
The report flags that the main obstacle isn’t long-term profitability — it’s the early lease-up period. A Fresno data center would need to charge tenants roughly 23% more than Silicon Valley rates to satisfy lenders in year one, because Fresno lacks the internet exchange infrastructure that attract tenants quickly. Getting an anchor tenant committed before construction would change that math considerably, according to the report.
Whether Fresno can capitalize on the opportunity may depend on factors outside the report’s scope — broadband infrastructure, local permitting and whether a major tech tenant decides the Central Valley’s cheap, clean power is worth the distance from Silicon Valley.