Cisco Blocks New Silicon Valley Power Plant

In what is a harbinger for other electricity-intensive high-tech corridors that have sprung up in various regions of the U. S., a local zoning decision in the midst of California's Silicon Valley could decide the fate of a new generating plant that everyone agrees is badly needed to serve the rapidly growing power requirements of the Internet-connected, new economy businesses.

A couple of unlikely opponents in the ongoing power plant siting struggle are both pillars of San Jose, CA's bright new economic future --- Calpine Corp., the merchant power plant developer, and Cisco Systems, Inc, the world's leading provider of the servers and related equipment that enable e-commerce to grow.

The state's newly-enacted accelerated power plant siting process does not apply since the project is in what its backers say are the final stages prior to getting state approval, probably early next year. Ultimately, the decision may require the always-difficult choice between regional energy needs and local land-use control, unless the backers can reach an agreement with Cisco, which broke off talks early in the summer, according to a Calpine spokesperson.

"We recently sent a letter asking for a meeting and we hope they will take us up on it," said Lisa Poelle, a San Jose-based spokesperson for the project that was formed to develop four new power plants in the greater San Francisco Bay Area. (One is under construction in the East Bay and two other sites are yet to be identified.)

Most state officials and energy industry stakeholders support the plans by Calpine and a joint venture partner, San Francisco-based Bechtel, to develop a $400 Million, 600 MW, natural gas-fired power plant at the southern-most end of San Jose, less than a mile from critical gas supply pipelines and a major tie-in to the grid through a 50-year-old Pacific Gas & Electric substation. This would be the first major electric generating plant in Silicon Valley, which sits in a somewhat precarious position at the bottom of a "funnel" of gas and electric transmission lines serving the power-hungry section of the San Francisco Bay Area.

The major question looming is whether the electricity project can get the zoning change it needs in the face of the current strong opposition from Cisco. San Jose's mayor and three council members support Cisco. Eight of the 11 San Jose City Council members have remained neutral pending the completion of the environmental and other fact-gathering and analysis being conducted by the California Energy Commission, the state siting authority for new power plants. The energy commission work is expected to be completed Oct. 1, after which the city council is expected to hold hearings and make a decision by Thanksgiving.

If the city council refuses to make the zoning change needed for the power plant, the Calpine-Bechtel alliance won't say if it would abandon the proposed project, the spokesperson, Poelle, said.

While the environmental and technical requirements of the state energy commission are apparently all being satisfied, the proposed Metcalf Energy Center, as Calpine has dubbed the power plant, hit a huge potential stumbling block in Cisco, which has plans to develop 688 acres a half-mile from the proposed Metcalf site to build a $1.2 billion office park complex for 20,000 additional employees. It does not want to have the power plant as a visible neighbor, even though the Calpine-Bechtel plans call for giving the electric generating site the appearance of an office building and the larger, 40-acre PG&E substation is already in the area as a critical transmission juncture.

Opponents of the Metcalf plant, which include some local groups, contend there are other suitable sites for a new power plant. Calpine strongly disagrees, saying this is the only site that can provide a new source of electricity to Silicon Valley within the critical timeframe of the next two years. (If everything went right for the backers, the earliest Metcalf could be online would be late summer, 2002, according to Poelle.)

Major electric transmission constraints make Metcalf the only viable site, according to the backers. The nearby 250 KV transmission line coming through the PG&E substation is a major attraction.

"If you put a plant in some outlying area and try to bring the power in, you have to build a whole new transmission corridor," Poelle said. "You can't just hook up to the existing transmission lines (in outlying areas). Building a whole new transmission corridor is tougher than building a new power plant. Nowadays it would be a private venture; need property rights of ways for miles, and it would take years. Maybe six or seven years, and we don't have that kind of time. We are in dire need now. People can barely wait until 2002; they are worried about next summer."

To support her point, Poelle said at a Silicon Valley energy forum early in the summer, Oracle Corp.'s energy director made the point that his company's current servers require about 50 to 60 watts of electricity for every square foot of a data center in which they operate, but the next generation of server will more than double that power requirement to 150-200 watts/square foot.

Given the obvious need to keep up with the surge in electricity demand, Calpine-Bechtel are promoting Metcalf as a model site, applying $10 million just to improve the power plant's aesthetics, including using a hillside to help "hide" the plant and planting 800 trees to rim the site. As it stands, the developers have had to purchase 136 acres, although only eight acres will be used for the power plant. The rest of the land is un-developable because of various environmental and topographical restrictions.

In addition, the plant will be far below the required air emission limits and will be free of the usual "steam plume" associated with power plants, Poelle said.

"Our contention is that Metcalf is fully compatible with its surroundings (which include a butterfly habitat and a major riparian area along a creek traversing the site)," she said. "Right across the street is a 40-acre PG&E substation that has been the hub for electricity in the Silicon Valley. Cisco chose to locate its campus within a mile of a huge substation, which many people think is quite an eyesore. On the other hand, our project will beautify the area."

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