SAN JOSE — A big energy company from the Midwest has bought a prime plot of empty downtown San Jose land that once was slated to be the site of a mixed-use village of homes and offices.
LS Power, operating through an affiliate, bought a 9.8-acre site near the corner of Coleman Avenue and Santa Teresa Street in downtown San Jose, Santa Clara County real estate records show.
The affiliate, LS Power Grid California, paid $56.5 million for the land, which is adjacent to a PG&E power station that is located at 260 Coleman Avenue, according to public documents that were filed on May 22.
The property purchase occurred in the wake of a March decision by the California Independent System Operator (CAISO) to select LS Power as the developer, owner and operator of two massive new Bay Area projects to bolster electricity reliability in California.
“We’re excited to be taking this major step forward on our recently awarded project,” said Casey Carroll, a vice president with LS Power Grid California.
Both projects would create substantial new electricity transmission systems involving four facilities in and next to the South Bay.
One project would build a 500-megawatt electricity transmission connection between PG&E’s existing Newark Substation in Fremont and the Northern Receiving Station in Santa Clara.
“The Independent System Operator estimates that the proposed (Newark-Santa Clara) project will approximately cost $325 million to $510 million,” CAISO stated in an April 2022 report. “The project must be in-service no later than June 1, 2028.”
The other project involves the creation of a 500-megawatt transmission connection between the Metcalf substation in south San Jose and PG&E San Jose Station B, which is the substation that’s next to the just-bought property.
“The ISO estimates that the proposed (Metcalf San Jose) project will approximately cost $525 million to $615 million,” the Independent System Operator stated in the 2022 report. CAISO also set a June 2028 date for this project to be up and running.
Electricity demand has grown rapidly in the South Bay and is expected to surge further, energy experts believe. CAISO also believes the projects will improve electricity reliability.
The just-bought property in downtown San Jose would be used as the site of a new electricity substation.
“Silicon Valley cannot achieve its Climate Smart policy goals of electrifying all buildings and electrifying all vehicles without this major upgrade to the electrical transmission system,” said Erik Schoennauer, a land-use consultant who is advising LS Power in its efforts to build facilities in the San Jose area.
Missouri-based LS Power obtained the downtown San Jose property in an all-cash deal, the county documents show.
Acquity Realty, acting through an affiliate, sold the property, according to the property documents.
In 2015, an Acquity Realty predecessor paid Union Pacific Railroad $7.8 million for the 9.8-acre site, county records show. Real estate veterans John Pringle and Dennis Randall are the principal executives of Acquity Realty.
The Acquity Realty predecessor proposed a few years ago the development of a mixed-use village called Rail Yard Place. The original plans called for the construction of offices, a hotel and hundreds of homes. Those plans failed to reach fruition.
Plus, the coronavirus outbreak spawned economic uncertainties that clouded the prospects for an array of proposed office buildings and hotel projects.
LS Power describes itself as a development, investment and operating company that focuses on power and energy infrastructure facilities and projects in North America.
The company has been an active player in recent years in the energy industry, completing numerous acquisitions of energy facilities. The company has launched multiple financing rounds to bolster its wide-ranging investment, development and operating efforts.
The two Bay Area projects that LS Power has spearheaded are in the earliest stages of planning, development and obtaining permits, according to Schoennauer. Construction could begin sometime in 2026 with an eye to completion in 2028.
The transmission line connecting the Metcalt station and the San Jose substation near Coleman Avenue would be installed underground. The underground electricity transmission line would be about 14 miles long, Schoenauuer estimated.
“Using some of the most advanced smart grid technologies available, the project will create a robust new electrical connection in the South Bay to improve grid reliability and support the state’s climate goals,” said Carroll, the LS Power executive.
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