California could power its data centers with hydrogen

Clean energy company Vema Hydrogen just signed a 10-year deal to supply clean hydrogen to power data centers across California starting in 2028.

The buyer is Verne, which plans to use that hydrogen for on-site power and cooling.

This is a long-duration supply contract designed to replace grid dependence for some of the most power-hungry buildings in the economy. Out of all disruptive technologies, AI is the most power-hungry.

Under the agreement, Vema Hydrogen will scale production above 36,000 metric tons of hydrogen per year. Verne will turn that fuel into always-on electricity at customer sites. No offsets. No subsidies. No waiting for transmission upgrades. Just baseload power where the servers sit.

This matters because data centers are running out of grid.

By 2030, data centers are expected to burn roughly 945 terawatt-hours of electricity globally, about double today’s usage. AI workloads are the accelerant. AI’s bottleneck isn’t chips — it’s electricity. Utilities can’t build generation and transmission fast enough, especially in California where permitting and local opposition slow everything. That gap is now big enough for entirely new power models to step in.

The disruption behind the news: Hydrogen breaks the power bottleneck.

Hydrogen here isn’t being trucked in as a novelty fuel or propped up by tax credits.

Vema’s Engineered Mineral Hydrogen process pulls hydrogen from underground chemical reactions.

That cuts out electrolyzers, massive renewable overbuilds, and most of the cost volatility that kills green hydrogen economics.

Data centers don’t care about peak pricing or carbon accounting.

They care about 99.999 percent availability. Hydrogen baseload gives them that without begging utilities for new interconnects that take five to seven years. If Vema can reliably deliver 36,000 metric tons a year, that’s enough energy to support hundreds of megawatts of continuous load.

This also cuts through political gridlock. Because the supply doesn’t depend on state or federal incentives, it can move forward even if climate policy stalls or reverses. That makes projects easier to finance, and once the first systems prove they work at scale, private capital is likely to move in quickly.

There’s a second-order disruption too. On-site power collapses the traditional data center location playbook. Cheap land near substations stops being a constraint. Latency-sensitive workloads can move closer to users. Smaller operators gain access to power models that used to be reserved for hyperscalers.

Vema’s recent approval as a qualified supplier by First Public Hydrogen Authority signals this isn’t a one-off. California is becoming a proving ground for hydrogen as infrastructure, not experiment.

What to watch next

Watch construction timelines.

If Verne brings systems online before 2028, competitors will scramble.

Watch cost per delivered megawatt-hour compared to grid prices plus backup generation.

If hydrogen lands within 10 to 20 percent, the market flips. And watch how quickly utilities push back when load growth stops flowing through their meters.

If this works, the grid stops being the default for data centers.