Everything is bigger in Texas. That’s also true for data center demand in the Lone Star State, where project developers are rushing to cash in on the artificial intelligence boom.
Cheap land and cheap energy are combining to attract a flood of data center developers to the state. The potential demand is so vast that it will be impossible to meet by the end of the decade, energy experts say.
Speculative projects are clogging up the pipeline to connect to the electric grid, making it difficult to see how much demand will actually materialize, they say. But investors will be left on the hook if inflated demand forecasts lead to more infrastructure being built than is actually needed.
“It definitely looks, smells, feels — is acting like a bubble,” said Joshua Rhodes, a research scientist at the University of Texas at Austin and a founder of energy consulting firm IdeaSmiths.
“The top line numbers are almost laughable,” Rhodes said.
More than 220 gigawatts of big projects have asked to connect to the Texas electric grid by 2030, according to December data from the Electric Reliability Council of Texas. More than 70% of those projects are data centers, according to ERCOT, which manages the Texas power grid.
That’s more than twice the Lone Star State’s record peak summer demand this year of around 85 gigawatts, and its total available power generation for the season of around 103 gigawatts. Those figures are “crazy big,” said Beth Garza, a former ERCOT watchdog.
“There’s not enough stuff to serve that much load on the equipment side or the consumption side,” said Garza, director of ERCOT’s independent market monitor from 2014 to 2019.
Rhodes agreed. “There’s just no way we can physically put this much steel in the ground to match those numbers. I don’t even know if China could do it that fast,” he said.
‘Not all real’
Data center requests have exploded in Texas since state legislation in 2023 required projects that have not signed electric connection agreements to be considered in power demand forecasts.
The number of big projects requesting an electric connection has nearly quadrupled this year. But more than half of them, representing about 128 gigawatts of increased potential demand, have not submitted studies for ERCOT to review yet. About another 90 gigawatts are either under review or have had planning studies approved.
“We know it’s not all real. The question is how much is real,” said Michael Hogan, a senior advisor at the Regulatory Assistance Project, which advises governments and regulators on energy policy.
The huge numbers in Texas reflect a broader data center bubble in the U.S., said Hogan, who has worked in the electric industry for more than four decades, starting at General Electric in 1980.
“As with everything else in Texas, it’s an outsized example of it,” he said.
The number of projects that have actually connected to the grid or have been approved by ERCOT is much smaller, at only around 7.5 gigawatts. It is still a large…
Read More: Red hot Texas gets so many data center requests that some see a bubble
