How AI Data Centers Could Save California High-Speed Rail

Forbes

3 days ago

W ith the clawing back of $4 billion in federal grants to support it, the Trump Administration seems hell bent on ensuring that California's high-speed rail project ends up as precisely the 'train to nowhere' the President lambastes it as. Gov. Gavin Newsom is suing to keep the money, but the train's new CEO has big ideas for saving the priciest U.S. infrastructure project. They include new long-term funding, private partnerships and even turning to one of California's newest 'natural' resources: The AI data center.
Ian Choudri, who spent decades working on global mega-infrastructure projects for major engineering firms Bechtel, Alstom and Parsons before taking the high-speed rail job last September, is on a mission to convince skeptics that after years of slow progress, the Golden State's bullet train from San Francisco to Los Angeles can be built– perhaps for less than its $128 billion price tag and even without federal support.
'We're getting contacted by Silicon Valley investors now asking, 'Hey, can we move data centers into Fresno and plug into your power grid that's renewable?'' Ian Choudri
'We'll show that it becomes less cumbersome on taxpayers because it's generating revenue,' he told Forbes , without providing financial details. In addition to future ride revenue, he thinks the system can make money by letting tech firms build data centers on its land, powering them with solar farms that will also propel its trains. Other ideas include selling the rights to telecom companies to lay fiber optic cable along the train's path, and promoting real-estate development projects on its route, particularly in the lower-priced Central Valley region.
'We're getting contacted by Silicon Valley investors now asking, 'Hey, can we move data centers into Fresno and plug into your power grid that's renewable?'' Choudri said. 'If I combine all those ancillary revenue sources, roughly it's going to be 30% to 40% of the farebox revenue.'
He's submitting a revised plan next week that maps out steps to complete an initial 119-mile segment through California's Central Valley by 2033, and then expand service north to San Francisco and San Jose and south to Palmdale in Southern California as soon as 2039, with Los Angeles to follow later. His focus is on sequencing construction phases to maximize revenue as quickly as possible, making the project less dependent on government money.
Gov. Gavin Newsom speaks at the opening of a railhead facility in January, joined by CEO Ian Choudri, right. California High-Speed Rail Authority
'Build the initial sections where you can. Start using the service. Have the highest impact on the economic transformation of the towns and cities that are getting connected, and then add more value by monetizing all the assets you have along the corridor,' said Choudri, sitting in a conference room overlooking the copper-topped California Capitol building in Sacramento. 'That's so critical in our new approach because it offsets a lot of this demand for continuous funding–whether federal, state or a combination of both–because your system goes live and becomes a corridor of opportunities for everybody.'
'People are looking for new approaches, creative approaches, to deliver the project more efficiently and more quickly.' State Senator Scott Wiener
The plan is a massive change from the project's past. But it hinges on critical legislation: a long-term funding plan proposed in May by Newsom would provide an additional $20 billion, or $1 billion a year through 2045, along with a bill to speed up permitting for High-Speed Rail Authority construction work and relocate portions of roads and utilities that are in the way.
State Senator Scott Wiener of San Francisco, who authored the permitting bill, isn't certain the funding plan will be authorized in the current session that ends on Sept. 12. But he thinks support for the project is improving.
'People want to see a solid plan to deliver the project in a timely manner,' he said. 'And people are looking for new approaches, creative approaches, to deliver the project more efficiently and more quickly.' No Land, Fuzzy Plan
Trump in May accused the long-maligned train of being '30,40 times' over budget, calling it 'the worst cost overrun I've ever seen. It's totally out of control.'
The price tag for a bullet train operating at speeds over 200 miles per hour between San Francisco and Los Angeles has ballooned, though not nearly by the amount Trump falsely claims. It's tripled from an estimated $45 billion in 2008, when state voters approved a $10 billion bond measure for it (up from an initial $33 billion estimate), to as much as $128 billion as of the 2024 business plan.
Approval of the train by voters 17 years ago was a leap of faith, because none of its backers, including then-Gov. Arnold Schwarzenegger, knew exactly how big a challenge it would be. In 2008, there was no fixed route, land or right of way and plans had to go through California's grueling environmental impact review process. The project has also had limited eminent domain authority when it came to things like getting utilities to move power lines and pipes. Negotiating terms to acquire thousands of parcels of land was an expensive, excruciating slog with repeated court challenges.
In its early years, the project also relied heavily on outside consultants, instead of staffing up with megaproject experts–like Choudri. He's also built up his team with rail and infrastructure veterans, including Construction Chief Edward Fenn, who helped build Brightline's Florida system, and Soon-Sik Lee, chief of planning and engineering, who previously worked on the UAE's Etihad high-speed rail line and Caltrain.
A high-speed rail bridge under construction in California's Central Valley. California High-Speed Rail Authority
Despite its messy start, the project has made far more progress than Trump and Transportation Secretary Sean Duffy acknowledge. Some 2,300 parcels of land have been secured, environmental approvals are largely complete and active construction is underway, employing more than 15,000 people, on the 119-mile section between Fresno and Bakersfield, with preparations extended to Merced, Gilroy and Palmdale to tie into existing rail systems.
'High-speed rail will be a game-changer for Fresno and the Central Valley' Fresno Mayor Jerry Dyer
After rocky years, 'we're now on the other side and we want to get this done,' Newsom said after his budget, including about $800 million this year for high-speed rail, was signed into law in May. 'Game-Changer'
When fully built out, perhaps sometime in the 2040s, the railway is to be a 494-mile system, running from San Francisco in the north to Los Angeles and Anaheim in Southern California. The first step is completing the initial 119-mile section connecting the Central Valley cities of Fresno to Bakersfield. From there, the plan is to extend north from Fresno to Merced, connecting to Amtrak's service to Sacramento, and northwest to Gilroy and the Caltrain commuter system that feeds into San Jose and San Francisco.
From Bakersfield, Choudri wants to build south to Palmdale, a high desert city served by the Metrolink commuter rail line that runs to Los Angeles and Orange County. Billionaire Wes Edens' Brightline West bullet train from Las Vegas to suburban Los Angeles may also link to Palmdale via a proposed segment funded mainly by Los Angeles County's Metro transit agency. Those extensions could be in place by 2039, Choudri estimates, giving the system significant utility as construction of high-speed tracks progresses further south.
'High-speed rail will be a game-changer for Fresno and the Central Valley' Fresno Mayor Jerry Dyer
Critics have said it would have been cheaper and faster to build the system along Interstate 5, the main freeway linking San Francisco to L.A. (Brightline West is doing that with its 218-mile line from Las Vegas to suburban Los Angeles along Interstate 15, which could be running by 2028.) But the idea was scrapped long ago for a simple reason: It would exclude the state's interior cities.
A newly completed grade separation for California's high-speed rail project in Fresno, California. California High-Speed Rail Authority
'High-speed rail will be a game-changer for Fresno and the Central Valley,' Fresno Mayor Jerry Dyer told Forbes . 'We're an ag-centric region, heavily reliant upon agriculture and commercial jobs that are associated with it. When Interstate 5 was built many, many years ago, it was built intentionally from Northern California to Southern California, and left the Central Valley out of the broader California economy.'
He's convinced that links from his city, where median home prices are a third or less than in San Francisco or Los Angeles, to the state's main economic centers will bring profound changes. 'It will allow people who work in Silicon Valley to be able to commute and live in Fresno. That's exciting for us in Fresno because it would change our local economy,' Dyer said.
Commute times between San Jose and Fresno could be as little as 45 minutes one day, according to Choudri.
'A colossal boondoggle' Transportation Secretary Sean Duffy
In an op-ed last month, as the administration works to claw back funds, Duffy slammed the project as a 'colossal boondoggle.' But Newsom's office pushed back, arguing for the value the project will bring to heavily red districts in the middle of the state. 'Secretary Duffy continues to call this a 'train to nowhere.' It's another slap in the face for the Central Valley,' said Daniel Villaseñor, a spokesman for the governor. 'Unlike the Trump Administration, we're not going to abandon the Central Valley.' Private Partnerships
Losing $4 billion of federal funds would be a major setback, representing 14% of the $28 billion the project has raised, with the rest coming through state funding and a previous $3 billion federal grant. That's why Newsom hopes to finally stabilize the project with his $20 billion plan funded by California's Cap-and-Trade program, in which polluters pay for their carbon emissions. If approved, that would allow Choudri to make good on his vision and also create opportunities to bring in private infrastructure partners to assist with financing and construction, including companies like Bechtel, Meridiam and Plenary.
'Up to now, private investors, private equity, private operators really weren't interested in taking a look at or investing equity or participating in any kind of a risk transfer in the California project because they weren't sure of the commitment–the financial commitment to long-term funding on behalf of the state,' said Sia Kusha, head of business development for Plenary, which is working on transit and bridge projects across the U.S. and Canada.
The likelihood that the state will approve a 20-year financing plan is 'probably the biggest impetus behind why there's new excitement in the private development community' about the rail project, he said.
A guaranteed funding stream would allow Choudri to borrow against future revenue to accelerate the pace of construction. Already, the High-Speed Rail Authority, which has been building the embankments, bridges, tunnels and grade separations needed for the train over the last decade, like an overpass just completed in Fresno, has begun ordering steel and other materials needed to finally begin laying tracks.
Choudri acknowledges past problems, which frustrated him as an outsider. 'It was micromanaged in the law – which said, 'it should be this many minutes from here to this station' – back in 2008, when we didn't even know where the alignment was going to go,' he said. The initial cost and service estimates weren't useful because there was no detailed plan.
'You can't put 10 carts in front of the horse, and then say, 'Why isn't it moving?' It wasn't moving because it wasn't set up the way other countries do this.'
Rendering of a high-speed rail train entering Fresno's station. Craig Kohlruss/The Fresno Bee/Tribune News Service via Getty Images
The approach seen in projects including Japan's shinkansen bullet train, to high-speed rail networks in China, Europe and dozens of other countries, focused on segment-by-segment plans to connect cities–and with full national government support. He thinks it was a mistake to estimate the cost of California's entire system long before thorough planning was done and routing was determined.
'That's why I left the private sector,' Choudri said. 'I'd been watching this program since 2012, and my mind was just going crazy.' That motivated him to take the job last year, thinking, 'I need to go in and just say, 'Alright, let's go fix this thing because we cannot fail.'' More from Forbes Forbes California Sues Trump To Hang Onto $4 Billion Of Bullet Train Funds By Alan Ohnsman Forbes Trump Could Derail California High-Speed Rail Project, Despite Billions Spent By Alan Ohnsman Forbes California's $100 Billion Electric Bullet Train Will Be Fully Solar Powered By Alan Ohnsman Forbes In Las Vegas, A Billionaire's Blueprint For Building Bullet Trains By Alan Ohnsman