Data Centers Invade – Texas Edition

Data centers are “massive warehouses filled with computers to power artificial intelligence for companies such as Amazon, Meta, and Google.” Smaller data centers were built to run the Internet, but cloud computing and AI require much more room and significantly more electricity.

Texas Data Centers

The Electric Reliability Council of Texas (ERCOT) reports receiving dozens of new requests each quarter from companies that want to pull more electricity than traditional data centers of the past.

Speculators and developers have been purchasing land across Texas and cash in on the opportunity to construct these massive warehouses.

Pablo Vegas is the CEO and President of ERCOT. He calls the astonishing rush of requests an “unprecedented change in the pace of growth.”

Over the last two years, ERCOT has received 519 requests to connect large users of electricity compared to the 24 requests in the year prior, according to May 2026 records.

These large projects require an estimated 438,595 megawatts, which equals a third of all the power generation in America. Ninety percent of that is for data centers that hope to begin operations by 2030.

ERCOT asserts that not all of these projects will come to fruition, but it is unclear how many will ultimately be granted permission to connect to the grid or how much power will be necessary. Last week, the ERCOT board voted to change its policies for reviewing data center requests.

Dominic Boyer is a cultural anthropologist at Rice University who studies energy politics. He says, “The projections are insane. Not all of that will be built, but just even the fact that that much is being proposed sort of suggests that there is this absolute sea change happening in terms of electricity demand.”

Vice president of state policy for the industry association, the Data Center Coalition, Dan Diorio, says the explosion of data center projects in Texas is due to it becoming “one of the national leaders in digital infrastructure.” The business-friendly regulatory environment has attracted projects, as well as the strong workforce, available land, water, and fiber infrastructure, according to Diorio.

By 2030, Texas could surpass Virginia for the title of the world’s largest data center market, according to a report from real estate and investment management firm JLL. Gov. Greg Abbott says Texas is “the epicenter of AI development.”

“Our competitive advantage as a state is also the source of our biggest planning challenge. So there’s a bit of a paradox there. But it’s a good problem to have. I think a lot of other states would kill to have that kind of problem,” says Matt Boms, executive director for Texas Advanced Energy Business Alliance.

Community advocates are fighting to stop data centers, concerned the projects will spike electric bills in Texas and make the grid less reliable. These concerns include the possibility that the warehouses will emit constant noise, drain water supplies, and spew pollution into the air from gas-fueled power plants and backup generators.

Industry leaders assert the projects will create jobs, especially during the construction of these massive sites. The facilities will receive billions of dollars in tax breaks, but pay billions more in local and state taxes.

According to a review of facilities compiled by two companies tracking the industry, 248 planned data centers are coming to Texas. ERCOT does not publicly share detailed site information, and company findings only showed power use estimates for half the projects.

Eighty-six of these projects are planned for North Texas, 56 in Central Texas, and 45 in West Texas. The majority of these facilities are planned for urban and suburban areas with more than 50,000 people. Half the projects are aimed at unincorporated areas with limited regulatory capacity.

Some of these projects are already underway in Abilene that will use grid power and batteries to pull up to 1,200 megawatts of electricity that will power a third of the homes in Houston, according to census data.

Another site is planned by Gov. Rick Perry’s company, Fermi America, outside Amarillo. It will need 11,000 megawatts to power 2.75 million homes. There is a third project underway in Pecos County that will use more than 5,000 megawatts.

All three of these sites will require on-site, gas-fueled power plants. According to two of the project websites, water will be cycled through their systems. The Abilene data center will require eight million gallons of city water, the same amount large offices use in a year.

“Texas has been one of the best and easiest places to move those projects forward. It’s never easy, but it is relatively smoother here than in many other states,” according to the co-founder of data center developer Crusoe, Cully Cavness, who is working on the Abilene project.

Texan Concerns

Texans are concerned about the reliability of the grid. In 2001, the grid failed during a winter storm when ERCOT cut power to millions in freezing temperatures. Texans want to protect their quality of life from construction traffic, industrial blight, and noise pollution. These are in addition to the constant concern of a stable water supply.

“A lot of the sentiment that I’m hearing from those that don’t want data centers… is like, ‘You’re telling me, you know, you want to build this big thing in my community that’s going to take all energy and take the water to build the technology that’s going to take the jobs away from my kids?’ That’s what I’m hearing a lot of people are feeling, and some of that’s just because this technology is so new. We just don’t know what it’s going to do,” says Joshua Rhodes, a research scientist at the University of Texas at Austin.

Residents and experts are concerned the data centers will push the Texas water supply to the brink. There has already been an increase in demand due to population and economic growth.

In 2025, Texas made its largest financial commitment to expanding the water supply. The state dedicated $20 billion for water projects over the next 20 years; however, $174 billion is required over the next 50 years, according to a draft projection of the 2027 state water plan.

Water experts assert that data centers will put significant pressure on the Texas water supply. According to one estimate, data centers could account for between three and nine percent of the total water use in Texas by 2040. This is an increase from the current use of less than one percent.

Data centers require significant amounts of water to keep the systems cool. Some centers are proposing a closed-loop system that will pull a large amount of water at startup but reuse it over a period of years. Texas does not require projects to use this technology. Other projects use less expensive evaporative cooling systems that replenish their water supply more consistently.

Various entities, including special districts, utilities, and river authorities, determine the amount of water usage allowed by each project.

“Data centers are among the most efficient water users. [They] will continue to deploy advanced cooling technologies that are water efficient and continue to invest in water sustainability practices,” says Diorio, citing research that discovered they use less water than semiconductor manufacturing, annual municipal water leaks, and food and beverage production.

In addition to the water usage, these projects will require considerably more power than other such projects. According to an analysis conducted by the Tribune, “of the planned and existing data centers that provided information about their power draw, the average facility will require five times more capacity than the average existing data center in Texas.”

The upper limit for power capacity is 1,200 megawatts across existing projects, but the max for planned centers is nine times that. At full capacity, however, a 390 MW data center can power:

• 488 grocery stores the size of the largest H-E-B
• 244 Houston Rockets arenas
• 178 Houston Galleria-sized malls
• 80 Baylor University Medical Center-sized hospitals
• 18 University of Texas at Austin campuses
• 8 Dallas Fort Worth International airports

Sources:

The Texas Tribune: An unprecedented data center boom means new challenges for Texas
Click2Houston: A data center boom is coming to Texas
Reuters: Texas grid flags risks as data centers, crypto sites frail voltage test

Featured Image Courtesy of Chad Davis’ Flickr Page – Creative Commons License