At this month’s Southern California Development Forum, the panel of experts came together for a candid discussion on what it truly takes to make data centers feasible in California. Panelists explored how national design and technology trends—AI-driven automation, cloud growth, and advanced cooling systems— translate to the state’s local realities, and what development is happening in Southern California today. 

 

Moderated by Jeffrey H. Gyzen, Principal of Arcadis, the panel featured Ryan Helsdingen, PE, LEED AP, Associate at Syska Hennessy, Erick Dela Pena, Senior Director of CoreSite, and Ryan Oro, Data Center Developer at Trammell Crow. Whether you’re planning, building, or optimizing mission-critical facilities, this session offered a timely insight into the economic, sustainable, and practical pathways shaping the next generation of data centers across California. 

From Kilowatts to Megawatts: The New Power Paradigm 

One of the most striking takeaways from the panel was the rapid escalation in power density. A decade ago, the standard rack operated around 2.4 kilowatts. Today, racks routinely require 125 kilowatts, with projections reaching as high as 600 kilowatts per rack in the near future. This leap reflects the surge in AI workloads, cloud computing demands, and the ongoing race toward high-performance computing infrastructure. 

To meet these growing needs, data centers are rethinking everything from their electrical design to their cooling systems. The industry is shifting from traditional 208-volt distribution to 415-volt systems, enabling higher efficiency and more flexible cooling solutions. As Helsdingen noted, “We’re moving from managing megawatts to managing gigawatts.” 

However, this growth also poses a critical question: where will the power come from? 

The Power Puzzle: Challenges in Supply and Cost 

California’s power landscape is complex. While the state has aggressive renewable energy goals, data centers continue to rely heavily on natural gas and grid electricity to maintain consistent uptime. Power shortages and long interconnection timelines have slowed new development, especially in regions where utilities struggle to meet rising demand. 

Southern California has emerged as a bright spot, thanks to lower utility rates — around 14 cents per kilowatt-hour, compared to 22 cents per kilowatt-hour in the Bay Area. This cost difference makes cities like Vernon particularly attractive for developers seeking to establish new hubs. 

Yet, lower costs don’t necessarily translate into fewer hurdles. Developers must navigate intricate regulations, environmental review requirements, and local ordinances that can delay projects for years. Gyzen included that in California, data centers exceeding 99 megawatts must undergo rigorous environmental studies, which often add significant time and expense. 

Legislation and Location: The California Conundrum 

Panelists agreed that California lags behind other states in legislation supporting large-scale data center development. States like West Virginia and Nevada, for example, have enacted tax incentives and streamlined permitting processes to attract major players. 

By contrast, California’s strict environmental laws (like California SB 58 (2025-2026)), coupled with high land and construction costs, make the state a challenging environment for new facilities. Despite these barriers, the speakers were optimistic about the potential for policy innovation. They emphasized the need for legislation that supports on-site power generation and balances environmental protection with economic growth. 

Dela Pena noted, “California is still the epicenter of innovation. If we can solve these regulatory challenges here, we can create a model for sustainable data center development worldwide.” 

Vernon: A New Hub for Data Infrastructure 

Amid these challenges, the panel highlighted Vernon, a small industrial city in Southern California, as a rising star for data center investment. With access to subsea cables, competitive energy rates, and a municipality eager to diversify its economy, Vernon offers an appealing alternative to traditional tech hubs. 

The city is actively repositioning itself from a manufacturing-based economy to a digital infrastructure hub, working closely with developers to accommodate the unique needs of hyperscale and colocation operators. 

Still, developers face physical challenges when retrofitting existing offices or industrial spaces for data center use. Floor loading capacities, ceiling clearances, and electrical infrastructure must all be accounted for and often upgraded, adding to the final project costs. 

Looking Ahead: Powering Progress through Partnership 

As the discussion concluded, the panelists agreed that the future of California’s data center industry will hinge on collaboration between developers, legislators, utilities, and local communities. 

In the next one to three years, the industry is likely to see an expansion of on-site power generation, public-private partnerships, and sustainable design practices that make data centers more integrated with their surrounding environments. Panelists agreed that if future data centers are not connected at all, than there is no point in developing them at this scale. The challenges ahead are significant but by embracing creative solutions, developers can build smarter, cleaner, and more connected data centers.