��������

Google’s announcement last month that it plans to construct three new data centers in Texas at a cost of $40 billion is the latest in a series of new projects proposed over the next few years.

At the present time, there are 375 data centers already operating in Austin, Houston, Dallas and San Antonio, with another 70 currently under construction, to research and advisory firm Baxtel.

Texas has attracted a significant number of data and AI centers, second only to Virginia. The state offers relatively cheap energy, great expanses of land and a business-friendly economic environment.

However, these facilities are power hungry. This either places more pressure on electrical grids already burdened with regular demand or means the centers themselves need to come up with their own power plan. That’s what Google intends to do.

“Google is committed to responsibly growing its infrastructure by bringing new energy resources onto the grid, paying for costs associated with its operations, and supporting community energy efficiency initiatives,” the company . “In Texas, this includes a new $30 million Energy Impact Fund to scale and accelerate energy initiatives, along with more than 6,200 megawatts of new energy generation and capacity contracted to date through power purchase agreements with energy developers.” 

However, it’s not clear whether all the new data centers and AI facilities planned for Texas will be self-powering. Some may be hybrids like the Stargate project near Abilene, which will draw power from its own natural gas generator as well as from the grid.

In September 2024, the Electric Reliability Council of Texas (ERCOT), the independent, non-profit organization that operates most of the state’s electric grid, was reportedly tracking 56 gigawatts in large load interconnection requests. That number almost quadrupled to 205 gigawatts one year later.

Kristi Hobbs, ERCOT’s vice-president of system planning and weatherization, a Public Utility Commission of Texas meeting in October the increased volume of the energy demand from large data centers, particularly those serving artificial intelligence, will require an adjustment of the planning processes to keep the grid reliable. 

The demand increase is likely to cause concern among traditional Texas consumers. Summer heat results in peak power demands. Back in July, the U.S. Energy Information Administration (EIA) were 24 per cent below the national average. In the current environment of data center growth, the cost of electricity is almost certain to increase significantly.

“The sharpest jump will occur in the ERCOT-North hub in Texas, where prices are forecast to surge 45 per cent due to high summer demand paired with limited supply,” Brien Sheahan, former chairman and CEO of the Illinois Commerce Commission. “While natural gas prices remain a major driver of power costs, the EIA notes that Texas’ 2026 increases reflect large hourly price spikes.”

The state needs to pull out all the stops in order to meet future forecast demands and renewable energy sources appear to be doing the job.

Sean Kelly, co-founder and CEO of energy forecasting company Amperon, over the last four years, ERCOT’s solar capacity had increased by more than 200 per cent. One reason is that renewables such as wind and solar can come online far faster than traditional natural gas power plants. Kelly also notes since solar has no fuel costs, it operates at a low marginal cost, thus pushing market prices down.

However, the Solar Energy Industries Association has concerns. It the Donald Trump administration “is using every tool at its disposal to slow down solar and storage projects,” and that “under Washington’s new energy permitting bureaucracy, projects large and small are being trapped in limbo.”

It estimates Texas alone accounts for nearly 40 per cent of the at-risk projects. Further suggests due to insufficient transmission capability, eight TWh of solar and wind power in Texas was curtailed in 2024.

Fortunately, and to Cleanview’s project tracker in November, politics are not slowing down renewable energy projects. There were 877 solar projects alone under development in Texas. In fact, as of August, ERCOT five times the number of solar and wind interconnection requests versus natural gas.

“Combined, wind and solar can now supply up to nearly half of ERCOT’s total electricity demand, which makes the market less reactive to increases in the cost of natural gas,” Kelly continues.

Renewables and accompanying battery storage also help to stabilize supply during peak periods or disruptions of fuel supplies to traditional power plants.

Hopefully, this could mitigate forecast energy cost increases over time. The continued growth of renewables in Texas is the best outcome for all concerned. As Kelly warns, if supply is pinched and electricity costs do in fact increase as much as some are forecasting, those data centers won’t be coming to Texas at all, unless they find the added investment capital to somehow power themselves.

Kelly’s conclusion is compelling.

“The highly politicized national energy debates are missing the point. It’s not about ideology; it’s about doing what works. And what works in Texas is competition, consumer choice and resources that prove their worth economically. If we continue to let data — not dogma — drive energy decisions here, Texas will be fine, and we might just show the rest of the country a thing or two in the process.”