Austin, Texas, January 21, 2026
Texas is on track to become the leading hub for data centers, driven by the rapid growth of artificial intelligence technologies. This expansion is expected to significantly increase the state’s power grid demand, raising concerns about reliability and the need for extensive infrastructure upgrades. Projections suggest data centers in Texas will exceed 40 gigawatts of power demand by 2028, up from about 8 gigawatts in 2025. Factors such as affordable energy and ample land have attracted numerous companies, but this growth poses challenges for the Electric Reliability Council of Texas, which must adapt to the rising demands on the power grid.
Texas Poised to Become Top Data Center Market, Raising Grid Demand Concerns
Austin, Texas – Texas is on track to become the nation’s leading hub for data centers within the next two years, driven by the rapid expansion of artificial intelligence (AI) technologies. This surge is expected to significantly increase the state’s power grid demand, prompting concerns about grid reliability and the need for substantial infrastructure upgrades.
Projected Growth in Data Center Demand
A recent report indicates that the grid demand from data centers in Texas is projected to exceed 40 gigawatts (GW) by 2028. In 2025, data centers in Texas had a maximum power demand of approximately 8 GW, compared to the state’s peak energy demand of 94 GW. One gigawatt is sufficient to power about 700,000 homes for a year.
Factors Driving the Expansion
Several factors contribute to Texas’s rapid growth in data centers:
- Affordable Energy: The state’s abundant natural gas resources provide a cost-effective energy source for power-intensive data centers.
- Available Land: Texas offers ample space for large-scale data center campuses, accommodating the expansive infrastructure required.
- Regulatory Environment: The state’s regulatory framework is more favorable to natural gas power, facilitating the development of new data centers.
These advantages have attracted numerous companies to establish data centers in Texas, supporting the growth of the AI industry.
Implications for the Power Grid
The rapid expansion of data centers poses challenges for the Electric Reliability Council of Texas (ERCOT), which manages the state’s power grid. In 2025, ERCOT received large-load interconnection requests, with data centers accounting for approximately 73% of these requests. This surge has nearly quadrupled the total capacity of large-load requests compared to the previous year, highlighting the strain on grid infrastructure.
To meet the growing demand, ERCOT is exploring various resources, including transmission, solar, storage, and gas generation. However, the rapid pace and scale of data center development present significant planning and implementation challenges.
Conclusion
Texas’s emergence as a leading data center market underscores the state’s role in supporting technological advancements, particularly in AI. However, this growth necessitates careful planning and substantial investment in power grid infrastructure to ensure reliability and meet the escalating energy demands.
FAQ
What is driving the rapid expansion of data centers in Texas?
The expansion is primarily driven by the growth of artificial intelligence technologies, which require substantial computational power, leading companies to establish data centers in Texas due to its affordable energy, available land, and favorable regulatory environment.
How much power do data centers in Texas currently consume?
In 2025, data centers in Texas had a maximum power demand of approximately 8 gigawatts (GW), compared to the state’s peak energy demand of 94 GW. One gigawatt is sufficient to power about 700,000 homes for a year.
What challenges does this growth pose to Texas’s power grid?
The rapid expansion of data centers has led to a significant increase in large-load interconnection requests, with data centers accounting for approximately 73% of these requests. This surge strains the Electric Reliability Council of Texas (ERCOT) and necessitates substantial upgrades to grid infrastructure to maintain reliability.
Key Features
| Feature | Details |
|---|---|
| Projected Data Center Demand by 2028 | Over 40 gigawatts (GW) |
| Data Center Power Demand in 2025 | Approximately 8 GW |
| Percentage of Large-Load Interconnection Requests from Data Centers in 2025 | Approximately 73% |
| Factors Driving Data Center Expansion in Texas | Affordable energy, available land, favorable regulatory environment |
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