A California-based company and a Petersburg-raised developer are teaming up to possibly bring a small, artificial intelligence data center to the former Ocean Beauty pier and cannery in Petersburg, a proposal that drew some support and some skepticism from the public at the April 20 borough assembly meeting.

Sam Enoka, founder and CEO of Greensparc, addressed the assembly via Zoom, outlining plans to deploy what he described as a micro-scale data center at the property owned by Andrew Mazzella, CEO of Mazzella Alaska, who also addressed the assembly remotely.

Greensparc also has been talking with officials in Wrangell about building a similar small data center at the borough-owned 6-Mile Mill property. Public opposition, however, has been strong in Wrangell, with critics citing their perceptions of power use, noise and other factors.

“This town is not super-stoked on the data center,” and the assembly is likely to say no, Borough Manager Mason Villarma said at a meeting last month to consider another tenant for the former mill property.

Enoka said he continues to look at Wrangell, along with Petersburg. “They are not exclusive,” he said in a phone interview on May 1.

The company’s head of infrastructure was just in Ketchikan, looking at that city as a possible site too, he said.

Greensparc’s business plan is to put in small data centers in communities with available renewable energy — Wrangell, Petersburg and Ketchikan all run on hydroelectric power. The company installed an even smaller pilot-project data center last year in Cordova, which also runs on hydropower.

Petersburg Municipal Power and Light Director Karl Hagerman told the assembly that the utility supports the project, saying it could generate up to $2.1 million in gross annual revenue for the utility and help reduce electric rates for customers.

“It is very rare that any utility that I’ve been involved with in Petersburg sees an opportunity to have downward pressure on rates,” Hagerman said.

The project would use a two-megawatt transformer at the former cannery; Mazzella said the transformer came with the property when he purchased it. Greensparc plans to start the operation at one megawatt and scale up to the transformer’s full capacity over time.

Mazzella said the data center would occupy roughly 1,500 square feet — about 2% to 3% of the 65,000-square-foot facility. The remaining space, he said, is intended for marine uses.

There is no deal finalized between Mazzella and Greensparc.

Hagerman walked the assembly through the project’s potential benefits. He said the key driver is the data center’s constant, around-the-clock power consumption, which he contrasted with the variable demand of typical residential and commercial customers.

“What we see in small communities’ utility rates is that we have a very small customer base, and when costs increase ... that same small customer base has to shoulder those increases,” Hagerman said. “A customer like this, that is using a tremendous amount of power comparatively to other customers in Petersburg, helps dramatically the rate picture.”

Using rate study projections, Hagerman said a customer with a $300 monthly electric bill today would likely see that bill rise to $427 in 10 years without any new large customers on the system. However, with a two-megawatt data center in place, that same bill would be $362, a savings of roughly $65 per month.

Hagerman also pointed to stranded energy at Tyee Lake as a factor. He said the Southeast Alaska Power Agency spilled 48,000 megawatt-hours of water past the Tyee Lake turbines last year — power that went unused because there were not enough customers to consume it. He noted that 25,000 to 30,000 megawatt-hours are spilled in an average year.

He described the facility as quiet — with air-cooled servers housed inside a building — with no harmful emissions or radiation. Any water cooling, if used, he said, would be a closed-loop system with no ongoing draw on the municipal water supply.

Enoka, who was born in North Pole, attended Eielson High School and earned a business degree from the University of Alaska Fairbanks in 1995. He said he has spent 30 years building a career in Silicon Valley and now lives in San Francisco but remains active in Alaska.

He noted that the Wrangell and Petersburg projects are different: A data center in Wrangell would be built on borough land, while the Petersburg project is a private arrangement between Mazzella and Greensparc.

Several community members used the public comment period at the Petersburg assembly meeting to raise concerns or questions about the project.

Tom Kowalske questioned whether the spilled Tyee Lake water should be characterized as unused surplus. He noted that last year was exceptionally wet, and said forecasters are now predicting a strong El Niño cycle ahead, which historically brings drought conditions to Southeast Alaska.

A former Petersburg planning and zoning commissioner and Kupreanof mayor, David Beebe, raised broader concerns about AI infrastructure, data privacy and federal preemption of local land-use authority, referencing pending federal legislation he said could limit local review of wireless facility expansions.

Greg Browning expressed skepticism and stressed the importance of upfront due diligence.

Aaron Hankins, of the Petersburg Volunteer Fire Department, noted that some modern data center battery backup systems use lithium-ion technology, which presents a fire risk that Petersburg firefighters could not fully suppress.

Mazzella responded that when the project applies for a building permit, it will include whatever fire suppression system is required.